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Spending on training and development programs is steadily rising, partly driven by a tight labor market. This increase in demand, coupled with broader technology improvements, is leading to some new models for training.
One such model comes from the firm BetterUp Inc., which provides on-demand, professional coaching. BetterUp recently announced that it is making its services, via employee video training, available to customers 24/7. This means that a user -- for example, a manager who is facing a difficult meeting with an employee -- can get some coaching help with little advance notice.
The firm has a network of professional coaches with a range of specializations. It has coupled the coaching with employee assessments and machine learning technologies that seek to match the user with the most appropriate coach.
Employee video training network lowers costs
In the training and development world, the video coaching that BetterUp sells is, if not unique, at least rare.
"BetterUp has developed a model which no other company has done yet -- essentially, AI-based, customized 'coaching on demand,'" said independent HR analyst Josh Bersin. "It lowers costs and really helps companies spend money on coaching in a very deliberate and measurable way."
BetterUp, a startup, has also created a means for investment in a sector of training that is mostly made up of independent professionals. The coaching segment of training and development is very large, but firms have a hard time investing in coaching because of this fragmentation in the coaching world, Bersin said.
Indeed, Workday Inc., at its recent Workday Rising conference, announced it is investing in BetterUp. Earlier this year, Workday detailed its new $250 million venture fund.
Training and development spending sees steady gains
There has been a steady increase in spending on training and development since the market crash of 2008, according to Kristen Fyfe-Mills, spokeswoman for the Association for Talent Development (ATD).
ATD's most recent "State of the Industry" report from 2017 found that the average amount of money spent on direct learning per employee was $1,273, compared to $1,229 in 2014 and $1,081 in 2009. ATD's 2018 report will be out in December, and the association projects an increase in line with previous years, Fyfe-Mills said.
Josh BersinHR analyst
Coaching is usually confined to executives because of access and cost, and this is where BetterUp differs, according to its CEO, Alexi Robichaux. The employee video training service was designed to reach a much broader group, such as new hires, people who have been put into new roles and any range of managers.
Typically, BetterUp users do a weekly employee video training session of 30 to 45 minutes, but more immediate on-demand sessions are available as well. Along with the employee video training, users can also touch base, in between sessions, with coaches via messaging and texting.
BetterUp also uses a 360-degree model of appraisal, in which self-assessments are coupled with the assessments of peers and superiors. From that approach, employees can learn where they overrate or underrate themselves. Those results are followed up with further coaching, which BetterUp claims helps performance.
BetterUp said an economic advantage it has is its ability to create a new avenue of work for coaches. The coaching business isn't run very efficiently, and coaches are typically independently employed, Robichaux said.
The vendor buys "huge blocks" of time for coaches, which reduces the price and they pass that onto their users, he said.
Training demand outpaces technology
Talent development and learning are getting a lot of attention because "training is cheaper than hiring," said Cushing Anderson, the program vice president at IDC for HR and learning strategies.
Many firms today are focused on digital transformation, or creating technology-focused initiatives. This approach has become a driver of training, retraining and corporate learning initiatives in the past couple of years, but it's not enough to meet demand.
"This year alone, more than 70% of all organizations have adjusted project plans, delayed product or service releases, or lost revenue from lack of IT skills related to digital transformation and other technologies, resulting in more than $200 billion of lost revenue annually worldwide," Anderson said.