Will investment in learning and development grow in 2018? It should.


As many of you know, investment in learning and development programs has, at best, stagnated since in the recession of 2008 and, at worst, experienced severe cutbacks. As we look ahead at 2018, the question is –- with what seems to be a more robust economy — is funding for investing in people in general and specifically for L&D growing too? So far, the answer is, not really.

At Cerebyte, we watch two key metrics that have not risen along with the overall market and economy – capital asset spending and wage growth. Capital asset spending is a good indicator of an organization’s willingness to invest in the future. Since 2008, organizations have built up huge reserves of cash but they have not been spending it on capital assets which is a future-oriented investment. If organizations are unwilling to invest in their future through capital assets, they are typically unwilling to invest in the future of their people.

Similarly, wage growth is a good indicator of competitive forces in the market and therefore of organizations’ willingness to put more money into keeping their people. Since 2008, wage growth has been flat meaning that organizations have seen little need to increase wages to keep their people happy and motivated. If organizations don’t see a need to pay their people more to retain them, they typically also don’t see a need to invest more in building their people’s capabilities.

We do not watch things like the stock market and earnings reports numbers because these are often driven by short-term cost reductions that are the opposite of investment. We also don’t particularly watch the productivity numbers because these are a function of both the capital spending and human investment.

So, what do our two key metrics tell us about the near term future for L&D? I recently saw a report that indicated a slight, but not particularly robust increase in capital asset spending which may suggest a least some increased willingness to invest in the future.

The wage growth numbers are more perplexing. With the economy nearing full employment and with huge labor shortages in some skill areas, it would be logical to think that wages would start to increase too. But, this hasn’t happened. Wages are still stagnant which suggests that organizations are not yet feeling pressure to develop and keep their people.

Based on these metrics, we expect there so be a slight uptick in investment in people development, but not much, which is pretty much what we are seeing. Given that organizations are still hesitant to invest anything long-term, the only way forward in the short-term for L&D seems to be to have a very narrow focus on short-term financial impact.

Is your organization increasing its investment in people development? Obviously, we think that you should increase your investment in your company’s people because the benefits can be transformative for your company — as our other clients will tell you.

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