Learning & Development

Exploring L&D Budgets Around the World: Here’s What’s Interesting

What does L&D stand for?

Learning and development, also known as L&D, is a systematic and continuous process of improving employees’ knowledge, competencies, and skills to increase their job satisfaction, productivity, and work efficiency. Having a learning and development strategy is valuable for everyone included: It is essential in order to provide learning opportunities and career growth for employees, but it also helps organizations increase their work capabilities and gain and maintain a competitive advantage.

The importance of the L&D budget:

For the purpose of ensuring a wide range of benefits of L&D strategies, firstly they need to be planned, organized, and conducted in an effective way that is suitable for all parties involved. One of the first steps in planning an L&D strategy is forming a sustainable budget, which needs to be sufficient for the realization of our organizational goals but not redundant in order to avoid unnecessary costs. A strategy that will result in upskilling and empowering employees and their contribution to organizational performance and profitability should be considered an investment rather than a cost. Correspondingly, the job of an HR or an L&D specialist is to evaluate how many resources an organization is required to invest to receive the most optimal results that will affect its market performance in the most desirable way.   

L&D budgets around the world

The importance of L&D strategies is internationally recognized, and according to the Training Industry Report, the global investment in this department was 395.2 billion dollars, and it is expected to increase approximately 1.2 % in 2023 and 1.4 % in 2024. The importance of the L&D department is being acknowledged by some of the biggest companies in the world, such as Apple, which invested 50 million dollars in their L&D department in 2022, while Amazon announced an investment that is going to reach the amount of 1.2 billion dollars by the year 2025. Another big investment in L&D was made by Google in 2022: This tech giant launched 100 million dollars to help more than 20 000 people  go through a training program that will provide them with important skills. It was stated that Google expects that this investment will deliver approximately 1 billion dollars in wage gains. Given the examples of big companies, investing in L&D is a wise choice for investing in an organization’s future, and as it was said by a manager of Google’s project:  ‘’The money is going to follow the results’’.

L&D and job satisfaction

Aside from encouraging employees’ process of learning new skills, a good L&D strategy enhances employees’ job satisfaction by investing its resources in them and making them feel appreciated. This kind of treatment helps create a sense of commitment and loyalty among the employees, who tend to be more motivated and engaged in fulfilling the organization’s goals. Due to dissatisfaction with their jobs, a total of 48 million people quit their jobs in 2021 and over 50 million in 2022, causing the phenomenon called “The Great Resignation”, which had an adverse effect on numerous companies by decreasing their organizational productivity and competitiveness. On the contrary, over 70% of employees cited that they would prefer to stay with companies that provide them with continuous growth opportunities, and 54% of employees stated that the main reason for quitting their job is not feeling valued by their organization. Another benefit of having a strong L&D strategy is higher employee retention, which also positively affects an organization’s profitability: 79% of interviewed L&D professionals stated that training an existing employee costs less than hiring and training a new one. Therefore, in order to avoid mass employee turnover, to help our employees build a strong career pathway that is aligned with the employer’s goals, and to help an organization be more productive and profitable, a well-planned and conducted L&D budget is a necessary investment to keep all parties’ interests well satisfied.

Importance of human capital

Another study has shown that 71% of CEOs consider human capital the most important sustained economic value. Having an active and secure L&D culture is one of the ways to attract and retain  ambitious and hardworking employees who will actively participate in achieving the organization’s goals and deliver satisfying results. Employees who intend to grow their careers will search for a workplace that enables them to do so. Therefore, it’s a two-way street, a perfect proportion of mutual benefit, where a top-talent employee will be determined to invest his quality work in the organization if the organization is ready to invest its resources in nurturing and growing his skills.

The world of constant change:

In this time of the constant rise of new technologies and a fast-changing environment, investing in the learning and development of a workforce is a necessity in order to stay up-to-date with the new trends and to stay successful in today’s competitive market. Personal growth and the ability to adapt to new circumstances are important existential traits not only for humans but for their organizations as well, and those who do not devote themselves to constant improvement are not going to be able to catch up with the future and the world of constant change.

 

Author: Koviljka Vuletic

 

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