L&D Functions Are Feeling the Squeeze: What This Means for Organisations

As we head into graduate season in 2024, the outlook for L&D investment isn’t looking positive:

• 49% of organisations will be spending less on their programmes as a result of economic downturn
• In the UK, the average investment in training per employee has plummeted 27% since 2011
• 36% of L&D teams cite “limited budget” as their main barrier to supporting their organisational and people goals
• While spending on skills has fallen across all types of organisations, some have scaled back more than others:
  • Larger businesses are spending 35% less
  • Public service sectors are spending 38% less
  • Primary sector businesses are spending 44% less

Headlines like these raise serious questions over how L&D functions are expected to address issues like stagnant productivity and early careers skills gaps, when few have the budget to properly upskill their people amidst tightening purse strings.

A perfect storm for stalled growth?

At a time where “productivity” is the priority for many organisations, the long-term trends of underinvestment in L&D create a perfect storm for stalled growth. Here’s why organisations should be concerned:

• An unskilled workforce can hinder innovation and leave organisations behind. The World Economic Forum estimates that the global skills gap could lead to a productivity loss of $8 trillion by 2030. In today’s rapidly changing technological landscape, a skilled workforce isn’t a nice-to-have, it’s a necessity to ensure your organisation is keeping pace.
• Skill gaps can lead to employee dissatisfaction and disengagement. When people feel they lack the skills to excel in their roles, frustration and a decline in morale follows. This trend comes at a time when organisations need to prioritise retention more than ever, particularly for early careers recruits: According to a recent report by The ISE, employers in 2016 retained 83% of their graduates after three years, but in 2023/24 this figure has dropped to 70%.
• Untapped potential can stifle productivity. Productivity is particularly important at a time where the Office For National Statistics estimates employee outputs fell 0.6% in Q4 of 2023. Could L&D teams mitigate this? With proper upskilling, your people can become more efficient and productive in their roles – research by McKinsey & Company estimates that organisations that prioritise upskilling and reskilling see a 6 – 12 percent increase in productivity.

What can Early Careers teams do?

Despite the challenges, there are steps L&D functions can take to help meet the goals and needs of both their organisation and their people.

• Focus on cost-effective solutions. Traditional L&D solutions provided by multiple and dispersed suppliers are often as costly as they are complicated. Consider streamlined and consolidated alternatives from suppliers who can manage multiple aspects of your L&D journey. Learn how >
• Prioritise in-demand skills. Over 50% of employers believe today’s graduates aren’t entering the workforce with the skills or knowledge needed to perform their roles. L&D functions should focus efforts on providing the foundational skills that are most critical for your organisation’s success. Learn how >
• Demonstrate the value of L&D at your organisation. 19% of L&D functions cite lack of stakeholder buy-in as their biggest barrier to achieving their development goals. Clearly measure and communicate the impact of your L&D programmes on key business metrics. Learn how >

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