This is an exciting time of change in enterprise learning and talent management. The tight labor market, coupled with the increased focus on integrated performance and learning strategies, will force further alignment between training and HR. Learning technologies will evolve, and self-published content and collaboration will become a significant element in enterprise learning solutions. Organizations will continue to evolve toward shared services and struggle to build integrated business plans that incorporate learning across the organization.
Below are the top trends shown by our research. Readers can find further details in the free report, Enterprise Learning and Talent Management 2007. To download, go to http://www.bersin.com/contactus/2007_predictions.asp.
1. Increasing training budgets
Bersin & Associates research is showing dramatically increasing training budgets. According to recent research, corporate training budgets in the United States increased on average by seven percent in 2006 - the largest increase in five years.
Most corporations are investing more in training for three primary reasons:
2. Changing structure and operations of corporate training
The most successful learning organizations have moved away from the corporate university model to a shared services model. We define shared services as an internal business function that provides consulting and operational services to various groups throughout the enterprise. The role of a shared services organization is to support business units in achieving their business goals.
This shift is resulting in organizational changes. Shared services organizations spend more on technology and outsourced services, thereby allowing internal staff resources to focus more on strategy, business alignment, measurement, and performance consulting. An indicator of this trend is the fact that payroll spending is flat or declining in most learning organizations – despite the overall increase in training budgets. In 2006, the percent of training budget spent on payroll declined by 11 percent.
3. New economics lead to increased use of outsourcing
Like IT and marketing, learning organizations are cost centers. Historically, learning has been based upon a variable cost model. With such a model, costs are directly dependent upon the number of employees trained.
However, with the advent of e-learning, learning in most companies is now based on a fixed plus variable cost model. This is because the use of e-learning requires up-front investments in technology, development tools, and content. These investments are fixed, no matter how many employees are trained. This model gives companies the ability to reach more employees and deliver more content for the same cost.
As a result of these new economics, learning organizations must reallocate resources. Delivery-based positions are being replaced with new positions in technology, content development, measurement, and support.
Because technology and sophisticated content development require specialized skills, learning organizations are relying more on outsourcing services to help meet these needs. By implementing an infrastructure that reaches many more employees at a far lower cost per hour, the training organization can selectively outsource areas, which are not core to the company’s expertise and focus.
4. Leadership development takes center stage
Leadership development and management education is the largest single program area of spending in corporate training today.
This is not news; in our 2005 to 2006 research, we found the same result. What is new is the push toward integrating leadership development into talent management processes, such as succession planning. Our talent management research indicates that, among all the talent-related processes in HR, more focus is being given to leadership development and succession planning than almost any other area (with performance management coming in second).
The war for talent and changing workforce demographics mean that companies in almost every industry sector are suffering from a lack of middle managers. Companies must build from within their ranks. 41 percent of HR managers tell us that one of their top talent challenges is building and maintaining their leadership pipeline.
5. Talent management drives changes in HR
Just as learning organizations are evolving, so is the HR organization. The talent management drivers discussed throughout this article are moving HR into the role of “steward” for its company’s talent management processes. Today, it is not enough for HR to partner with lines of business; it must understand and develop organizational capabilities.
In this new role, HR managers and executives must identify critical talents required by the organization; integrate the business processes involved in retaining and developing employees with these talents; and provide ongoing workforce planning.
This integrated approach requires eliminating silos of processes and information for compensation, performance management, leadership development, and succession planning. It also requires better integration of HR systems for a more complete view of the workforce.
HR’s changing role impacts learning organizations in these ways:
6. E-learning matures and continues to evolve
In 2006, e-learning continued its evolution into a mainstream approach to corporate training. Almost every organization we talk with has some form of e-learning now available to their employees.
Questions that we now hear are those related to more sophisticated uses of e-learning, covering topics such as:
One of the most significant indications of e-learning maturity was the acquisition of NETg by SkillSoft. From 2000 to 2005, these two companies were among the fastest-growing e-learning companies in the market. Today the off-the-shelf content market has become more and more commoditized. The success of the “new” SkillSoft will depend on its ability to answer these and other questions.
7. Learning content management is growing
Our research members tell us that delivering up-to-date content, coupled with performance support, is now one of their top training issues. They want to be able to:
These are all issues related to content management. We have maintained for years that the LCMS market (learning content management systems) would become more robust – and in 2006, this has happened. LCMS companies such as EEDO, OutStart and Giunti Labs have implemented solutions. Nearly every LMS vendor offers an LCM solution with its platform. And almost one-third of our research members tell us they are searching for and selecting some form of LCMS
8. Self-published content is becoming part of learning
Over the last 12 months, there has been an explosion in the use of blogs, wikis and podcasting. This self-publishing trend has had a major impact on our political systems and social networks. This same paradigm is starting to change corporate organizations and we believe the training organizations should try to harness it.
For instance, in any company, employees are continuously learning, interacting, and developing new approaches to solving problems. How does an organization share this collective wisdom, which is occurring in real-time among workers? The answer appears to be through the use self-publishing technologies.
Many companies are now experimenting. While there are no proven approaches yet, they are showing tremendous potential.
9. e-learning approaches continue to evolve
In 2006, we saw significant growth in the use of application simulations (made possible largely through low-cost, easy-to-use tools such as Captivate) and rapid e-learning (through the use of tools such as Adobe Connect, Articulate and others). We have also seen tremendous growth in the use of online video (through Flash), business simulations and performance-support portals to complement e-learning programs. Webcasting continues to grow, with more than 10 different solution-providers offering low-cost, live e-learning tools.
Big changes that took place in 2006 include the following.
10. LMS market continues to change
According to our research, the LMS market grew significantly in 2006. More than 40 percent of all organizations and more than 70 percent of large enterprises have an LMS. Many companies are trying to consolidate multiple systems. The LMS market for mid-sized companies is now exploding, driven largely by the wide range of proven on-demand solutions now available.
Most LMS vendors grew in 2006: Cornerstone OnDemand, GeoLearning, Learn.com, NetDimensions, Oracle / PeopleSoft, Plateau, Saba, SAP and SumTotal all saw significant growth.
The LMS market is also evolving. Companies are now looking to their LMSs to integrate with other HR systems as a talent management platform. Vendors have responded by aggressively building and buying technology to deliver an integrated solution for performance management, learning and development planning.
Our research indicates see great benefits from integrated learning and performance management systems. While only a small number of companies have implemented such a solution today, we believe that in 2007 most large LMS buyers will look for such integrated solutions.
Josh Bersin is president and founder of Bersin & Associates.