ASTD Releases 1999 State of the Industry.

LAKE BUENA VISTA, Fla.--(BUSINESS WIRE)--Jan. 12, 1999--Although companies in the U.S. are spending more on training than ever before, the gap between the leading edge companies and the average company is widening - and companies that don't bridge that gap may face bottom line repercussions, the American Society for Training & Development (ASTD) said today.

The organization released its annual State of the Industry report today at the Disney Institute. The report takes a look at training data from more than 800 U.S. organizations in business, nonprofit and government sectors.

"Despite all the talk that employees need to take responsibility for making themselves more marketable, the truth is that companies need skilled employees. The leading edge companies are responding by providing more training because it makes sense, both from a business standpoint and from a recruitment standpoint," said Laurie Bassi, ASTD Vice President of Research.

Bassi said that the huge need for skilled employees was being driven by technology.

"Companies are scrambling to meet the technological requirements of their business," she said.

The State of the Industry report found that most firms increased the amount of money they spent on employees by about $150 per employee from 1996 to 1997, but that the leading edge firms surveyed doubled that with an average increase of $300 per employee. Typical total expenditures for training grew from $1.4 million in 1996 to $2 million in 1997 for average firms, and leading edge firms increased spending from $3.4 million to $4.1 million in the same period. Projected expenditures for 1998 show that the gap between the average firm and leading edge firms will continue to widen, with the industry average increasing to $2.1 million while leading edge firms are projected to spend $4.7 million on training.

"Companies in this country spend 10 times as much on technology as they do on training," Bassi said. "Leading edge companies know that they have to make smart investments in both the workforce and technology."

She cautioned that leading edge firms became that way not just by spending money on training, but by complementing that with enlightened management practices such as high performance work practices (i.e. self-directed teams, access to business information); innovative compensation practices (i.e. profit sharing and group-based pay); and innovative training practices (i.e. mentoring or coaching, and training information systems).

ASTD has found that companies that invest the most in workplace learning find higher net sales per employee, higher gross profits per employee, and a higher ratio in market-to-book values, compared with companies who invest less in workplace learning.

"A company can invest all the money it wants in technology, but if there is no one around who knows how to run the machines, to fix the machines, or to figure out how the machines fit in with the overall business goals, a company will never bridge the chasm between companies that thrive in a global economy, and those that fail," Bassi said.

Other findings:

--Not only do most companies not spend as much per employee on training as do leading edge companies, but most firms also train fewer employees (74 percent of employees get trained on average, as opposed to 86 percent for leading edge companies).

--The information technology and transportation/public utility sectors spent the most on training ($3.9 million and $3.8 million respectively) and these sectors also led in terms of money spent per employee on training ($1,004 per employee and $943 per employee respectively).

--Outsourcing of training grew by 20 percent, from $461,000 per firm in 1996 to $513,000 in 1997, and was predicted to grow to $522,000 in 1998.

--Job-specific technical skills (including the use of technology) were the most frequent kind of training delivered (17%), followed by management and supervisor training (12%), computer literacy and applications training (12%), and professional skills training (12%). Bringing up rear was executive development (4%) and basic skills (2%)

--The use of learning technologies in training was on the rise - with an increase of 50% -- but was still relatively low overall.