Another brick in the wall: what are companies spending on training?

Training budgets are set to increase as employers struggle to ensure that employees have the skills they need to do their jobs – and that managers can get the best out of them, according to new research out today.

The research, from Personnel Today sister publication IRS Employment Review, shows nearly nine out of 10 (87%) of employers surveyed say that a key objective of training was to ensure that employee skills were up to scratch – a reflection of the difficulty employers have finding the right people in a tight labour market. Six out of 10 (60%) cited the need to improve line managers’ people skills.

Just over one-third of employers (35%) plan to increase their learning and development budget in the next year, while just 12% plan to spend less. Half (50%) expect to keep the budget at the same level.

Sector specifics

The amounts paid for training vary according to the sector concerned; annual training budgets in the private sector are generally higher, with the average spend per employee at £413 in private sector firms, compared with £150 in the public sector.

IRS Employment Review managing editor, Mark Crail said: “Employers are finding it very difficult to fill jobs at present – a reflection of the fairly healthy state of the economy. So one obvious solution is to providing existing staff with the skills they need to do their jobs better and to take on new responsibilities.

“We also know that employers which provide training are more attractive to people looking for work, so there is a ‘double positive’ effect.

“A key challenge for HR is to ensure that line managers take training seriously and that they themselves are equipped to develop their staff. Too many organisations expect their managers to train others without themselves having the skills to do so.”

Other key findings

  • The amount allocated to training per employee appears to reduce as the size of the organisation increases. The approximate spend per employee varies from £110 to £870 in smaller organisations, while the median figure is £420. For medium-sized employers, the amount spent on each employee ranges from £41 to £2,363, with a median figure of £208. Among larger organisations, the lowest spend per employee is £37 and the highest is £1,266, with a median of £167
  • 40% of respondents have not offered basic skills training, despite publicity about low levels of numeracy and literacy among the UK workforce
  • Similarly, more than half (54%) the employers surveyed offer no language training, despite an increasingly international marketplace and a growing recognition of the value of foreign language skills
  • Face-to-face learning methods are more popular than passive techniques, and are considered to be more effective. Formal classroom training, one-to-one coaching and external conferences are seen as most successful.
  • At least nine in 10 respondents (94%) use an external provider to deliver some training.
  • An increased emphasis on staff coaching means that coach training is now an important aspect of management development. More broadly, 88% of the IRS panel of respondents expect line managers to carry out at least some training activities
  • The research revealed that coaching has become an important element of management training, with less than one in 10 (4%) respondents say this is irrelevant at their organisation
  • Although only half the employers surveyed train managers to train others, almost nine in 10 (88%) expect line managers to carry out some training activities
  • Most  (82%) of the respondent organisations provide a specific management development programme. Of those that do not, 10% state that managers use their own resources to further their development
  • More than one-third (40%) of respondents have concerns about the adequacy of their organisation’s training provision.

Key considerations behind planning
learning and development activities
% of organisations
citing factor as
“very relevant”
Giving employees
required skills for job
Improvement of line managers’
people management skills
Compliance with
regulatory requirements
Improvement of
products/service quality
Aligning capabilities
with business goals
Development of higher competence
and technical skills

Development of
high performance working

Improvement of
employee motivation
Increased productivity 35%  
Improvement of staff
recruitment and retention
Reduction of customer complaints 32%
Improvement in employer/
employee relationship
Improvement of diversity
and equal opportunities
Reduction of employee
Reduction of sickness absence 26%
Meeting employee expectation
to provide continuous
professional development
Succession planning/promotion  18%  
Remodelling of workforce 12%

Source: IRS

The survey was conducted in March 2005 and includes responses from 68 HR managers and professionals across all industrial sectors. The research is published in the new edition of IRS Employment Review (

Among the 68 organisations that responded to the survey, 44% (30 organisations) were private sector service companies, 30% (20 organisations) manufacturers, 22% (15) public sector organisations, and 4% (3) were from the voluntary sector.

The respondents are split fairly evenly by size, with 35% having more than 1,000 employees, 38% having 250-999 employees, and 26% with fewer than 250. More than half of the panel (59%) have Investors in People accreditation.

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