The Increasing Need for Professional Development and Education Budgets
In a highly digitalized and post-COVID workplace, firms are beginning to place an even greater emphasis on the value of human capital. In an effort to remain competitive, companies must find new ways to attract and retain the best talent, and are relying on employee benefits beyond just monetary compensation. One such approach includes providing budgets to HR departments with funds allocated specifically toward employee professional development.
According to a survey from the International Foundation of Employee Benefit Plans (IFEBP), almost 92% of U.S. employers offer educational budgets. The most common include tuition assistance/reimbursement (63%), in-house training seminars (61%), attendance at educational conferences (51%), continuing education courses (50%), coverage for licensing courses and exams (44%), and personal development courses (35%).
One metric to put into perspective the newfound importance of educational development and re-skilling employees in the workplace is demonstrated through the concept of the half-life of a skill. According to the Society of Human Resource Management, the half-life of a skill was once 10 to 15 years, meaning that between 10 to 15 years after learning a specific skill, it was about half as useful. Today, the half-life is much shorter at a mere 5 years, and for certain technical jobs, it shrinks even faster. Studies have shown that recruiting talent in tech is extremely cumbersome and difficult: the average retention rate for an employee is 1.8 years. IBM found that around “half the executives who are having difficulty finding people with the skills they seek are not using any strategies to develop their current employees’ skills.” They also find that around 24% of companies rely on outside hiring as opposed to upskilling when filling in gaps. Investing in employee education internally can save employers time and energy and move the focus away from hiring new employees to upskilling their current workforce.
These shortcomings in the workplace can easily be mitigated if companies simply invest in their own employees. This need for increased attention to employee L&D initiatives is seen through a LinkedIn Learning study, which found that 94% of employees would stay at a company longer if it invested in their career development.
With an educational budget dedicated explicitly to upskilling employees, firms can retain and attract talent, while also ensuring that their employees are best equipped to complete their work. Beyond just this budget, it is essential that the power to pursue education is in the hands of employees, rather than a system in which employers require certain courses or limit the types of content employees can explore. With a truly employee-centric learning and development platform, the future of the workforce is sure to be transformed and provide companies with the best and brightest.
What does this industry lack?
This need for increased access to professional learning has not at all gone unnoticed. Key incumbent learning management systems like Learnerably and Degreed offer a platform where employees can sign up for courses, podcasts, conferences, certifications, etc. Employees have without a doubt benefitted from these learning management systems, however amongst the industry gaps still persisting one is especially noteworthy and needs to be addressed: the lack of flexibility and personalization.
To be truly effective, the learning experience for an employee must not be contained to a few select classes on a few select platforms. Imagine this: you are a full stack coder for a fast-growth tech company. To build your product most efficiently, you want to learn about new back-end API technologies, and begin to browse the internet. You find a course that is perfect, but unfortunately it is not offered on the learning and development platform offered by your company, and so you can’t be reimbursed for the course. You decide to just outsource this part of your work, causing the company to spend thousands of dollars on a job you could have learned to do in a week.
Unfortunately, this is quite often the case with courses, as well as more fleeting events such as conferences or seminars. A highly-functioning learning and development platform should allow any employee to pursue any educational avenue and still reimburse them.
How Big is this Market?
With over 1 billion knowledge workers worldwide, the market for a professional development platform is massive. Within the US alone, the serviceable addressable market is $75 billion, which includes the ~30M knowledge workers receiving an educational stipend. In short, as the workplace continues to adapt and grow, the market size for an employee-centric educational platform increases in tandem.
According to research from learning platform company, ACIES Edge, on average, 15% of US fast growth tech companies between the sizes of 50–1,000 people offer some version of an educational budget. Assuming that these companies would benefit most from upskilling their employees (remember, the half-life of a skill in tech is less than 5 years!), the potential market is still in the billions of dollars.
What is the Market Need?
Beyond just the lack of personalization, the learning and development industry lacks a company that integrates reimbursement into the educational platform itself. Many companies currently use operational tools such as Expensify to reimburse employees for educational endeavors. While learning experience tools like Degreed allow for employees to register for courses, employers must then go through the laborious process to use a third party to provide a reimbursement after searching through company policy to determine if the resource is covered for reimbursement. With a vertically integrated platform that allows employees to pursue their own, personal educational goals while also allowing for employers to provide a reimbursement, this larger market need can easily be addressed, allowing for companies and employees to flourish.
