Corporate education services industry

Industry Snapshot

GENERAL INDUSTRY: Education and Training

CAREER CLUSTER: Education and Training

SUBCATEGORY INDUSTRIES: Computer Training; Management Development Training; Professional Development Training; Quality Assurance Training

RELATED INDUSTRIES: Business Services; Private Education Industry

ANNUAL DOMESTIC REVENUES: Business coaching, $14.1 billion; business certification and information technology schools, $4.4 billion (IBISWorld, 2024)

NAICS NUMBERS: 611420, 611430

Summary

Corporate education services are provided by external firms or internal corporate divisions to provide workers with knowledge and skills that are helpful or necessary in fulfilling their tasks. An estimated two thousand corporate training programs are currently housed within larger companies in the United States—an approximate figure nearly equal to the number of the nation’s colleges and universities. This number alone is indicative of the importance that companies place on internal training and education. In fact, many executives list training and development as one of the most important initiatives within their organizations.

Corporate training programs and staff have a high level of accountability toward their employers and clients. Companies expect that investments in training and corporate education will contribute to their overall growth and profitability. The success of a training initiative, in fact, is no longer measured by the number of employees who receive training in a given time period. Instead, executive management teams evaluate training programs based on their quantifiable contributions to their organizations’ success.

Measuring the financial return on corporate training (return on investment, or ROI) is the most common way of measuring a training program’s effectiveness. Corporate education providers may themselves be tasked with measuring the long-term benefits of the training they provide. Training and development (T&D) groups find that measuring the ongoing effectiveness of training demonstrates the contribution of corporate education to their organizations over time. As employees apply new skills gained through corporate education to their work, continued education will further increase their skill level and cumulative knowledge, advance their organization, and elevate individual employees within a company. Corporate training, therefore, adds to the comprehensive institutional knowledge of companies, as well as to the career advancement of individual employees. The more a corporation invests in growing the knowledge and skills of its employees, the greater an interest the employer has in retaining those employees, both to maximize its ROI and to capitalize on the knowledge and skills the employees have acquired.

History of the Industry

The concept of learning and the organized teaching and acquisition of skills from one individual to another dates back to antiquity. Before reading and writing were ubiquitous skills, people acquired skills by watching others perform a task. After an individual achieved a certain level of competency, it was possible for that individual to train a less-skilled person. Training was thus accomplished through demonstration. It evolved into the practice of apprenticing, in which individuals observed others until their competency increased to the point of independence. Children often followed in the same profession as their parents, who trained their offspring in a particular trade or craft from an early age. Each generation took responsibility to pass along the necessary skills to the next generation so that the family could sustain itself.

For centuries, apprenticeship was, by and large, the sole means by which skills were passed on. As the printed word became more widely used and the literacy of whole populations increased, it became possible to supplement visual, verbal, and tactile training with written instructions. Much of modern training still involves demonstration combined with oral and written instruction. The advent of print also made it easier for one teacher to train multiple students. Instead of relying on pure demonstration, the teacher could provide supplemental printed materials to convey lessons to a group too large to conveniently train through demonstration alone.

In time, particularly after the advent of industrialism, the search for prosperity superseded subsistence living, and populations shifted from rural to urban areas. Large numbers of people left agricultural jobs and agrarian lifestyles to settle in urban areas and labor in mass, mechanized manufacturing industries. In contrast to a craft-based, artisan business or a traditional farm, an industrial factory employed far more people but gave each one a far less complex, often repetitive task. As the nature of labor changed, the nature of training changed as well. Lengthy apprenticeships were unnecessary to impart the limited skills required to work on a factory assembly line, and one-on-one training was insufficient to instruct the number of workers needing basic instruction. Thus, it became apparent that large groups of workers required more skilled managers to train and oversee them. The managers themselves required a certain level of training, both in manufacturing skills and in management. Much of modern-day corporate education emphasizes the need to train future organizational leaders, a trend that largely began during the Industrial Revolution of the eighteenth and nineteenth centuries.

Vocational education was introduced during the era that followed the American Civil War (1861–65) and preceded World War I (1914–18). It was during this time that the term “working class” emerged, as men and women alike joined the urban, mechanized workforce in increasing numbers. Vocational training, which combined classroom and on-site training, was largely employed as a means to impart job-specific skills. Vocational education continues to be widely used as a means to train tradespeople such as plumbers and electricians.

The Great Depression of the 1930s—the first great economic downturn of the twentieth century—created a surplus of workers. With too few jobs and too many workers, job-specific training became unnecessary and was largely abandoned. However, the lack of workforce preparedness after the Great Depression left many American workers ill-equipped to participate in the next economic boom. The larger the gap in preparedness, the longer it takes to train workers to appropriate levels of competency. Training is most effective when it is incremental and continuous, and employees benefit from using new skills immediately after they learn them. These lessons became apparent with the onset of World War II (1939–45), which helped end the Great Depression.

America’s entry into World War II in 1941 required a great deal of training. New military recruits underwent so-called basic training, while the manufacturers supporting the war effort with materiel had to train a great many people to work in their factories—including the women who entered the workforce to replace male draftees. The decrease in training caused by the Great Depression was felt acutely by industries that suddenly needed skilled line workers and the managers to supervise them. As more workers joined companies and prosperity reigned in the latter half of the twentieth century, training became commonplace at many companies. Manufacturing workers required training in new production processes, and much of this training was classroom-based.

After World War II, America and many other countries entered a period of unprecedented economic growth and prosperity. It was only toward the end of the twentieth century that manufacturing jobs started to shift offshore, where labor costs were much lower. Much of America’s economic prosperity was built on high-paying manufacturing jobs, such as those offered by the automobile industry. These jobs required extensive employee training at all levels—and increasingly to a white-collar workforce.

The Industry Today

The twenty-first century has ushered in a new kind of economy—the knowledge-based economy. It is an economy that is fueled as much by the transmission of knowledge and data as it is by the manufacture of goods and services. Workers no longer perform the same task on a daily basis, as they did on assembly lines. Instead, a typical worker is likely to undertake work that requires learning and applying new skills on an almost daily basis. It is often the responsibility of the worker to learn new skills independently. Problem solving and knowledge creation are the mainstays of knowledge jobs.

In the knowledge economy, the training of employees requires a broad-level approach. It emphasizes skills that help employees improve workplace relationships and manage projects and time lines. Additionally, the global marketplace requires that employees be more culturally aware, as their colleagues are just as likely to live in another country or region as they are to be situated down the hall. Often, companies employ labor forces in emerging markets such as India and China, where communication is paramount. This changing corporate landscape, in which projects and people are managed around the globe, is driving a new model of corporate education.

The delivery of corporate education services has been transformed radically in the early twenty-first century. As manufacturing continues to shift to countries where labor costs are much lower, such as India and China, the United States and other mature economies will focus on the creation of knowledge rather than the creation of goods. Corporate education will be essential to support this new type of economy. The advent of the Internet and the ability to deliver information quickly and inexpensively through a digital medium has redefined many aspects of corporate education and helped meet this growing need for education. While many companies still offer in-house or on-site classroom training, the training room now extends to a virtual space that is often accessible twenty-four hours a day, seven days a week.

Corporate educators face the challenge of determining how to train a very diverse workforce. The baby-boom generation has begun to retire, and the pace of retirements will continue to increase into the second decade of the twenty-first century. Moreover, the generations following the baby boomers are far less likely to have the same occupation throughout their lives. As they continue to change jobs, they will need to acquire new skills sets to work effectively in new occupations. Thus, as skilled workers and workers experienced in a given industry retire, companies will need to rely on corporate education services to train their replacements. Without such training, there would be a skills void that could be detrimental to many industries.

When compared to the production-line-based structure of the manufacturing economy, the knowledge economy is much more complex. Time-to-market pressure and competition among businesses to be first to release new products to market require a highly trained and motivated workforce. As a result, corporate education and continuous job training are no longer considered to be merely an employee benefit. Rather, they are seen as having a large impact on a company’s financial health. Because many employees now work with ideas and knowledge rather than with tangible products, employees are in a state of constant learning. Processes and practices change rapidly, so employees must continuously develop their skills and maintain the agility to multitask and move rapidly from one project to another.

Industry Outlook

Overview

According to the BLS, training and development positions are expected to grow by 6 percent between 2022 and 2032. This figure represents a faster than average rate of growth. T&D must also adapt to cyclical and technological developments. Computerized information applications for tracking administrative functions in human resources are expanding to encompass T&D and will eliminate some of the more administrative T&D positions. Mergers and acquisitions will also cause a number of redundant positions to disappear. However, an increased need for specialized training and trainers will increase jobs within the industry. As the general complexity of jobs increases across the national and global workforce, so does the need for job-specific training. To that end, vocational certificate programs and skill trainings are increasingly being offered online through colleges and universities and public-private partnerships to prepare prospective employees. The rapid pace at which technology and computer applications have developed has also increased the need to keep existing employees abreast of emerging technologies. Without continuous training, employees are often easily and quickly left behind, especially in terms of technology.

Based on this experience, most contemporary companies believe that the preferred course of action in tough economic periods is to reevaluate their training needs and to retrench. This strategy is likely to be superior in the long run to cutting training completely. Nevertheless, training budgets were again slashed in the recession of 2007–2009. On average, two to three positions per one thousand employees were eliminated. In the wake of the recession, however, many companies are identifying training best practices to maximize the value of their continued investments in corporate education. These best practices include retaining skilled high performers and taking advantage of mentoring and informal coaching from one employee to another. Another challenge for the industry was the federal government crackdown on unscrupulous for-profit postsecondary institutions in the mid-2010s, which resulted in a certain distrust of career and technical education services generally.

Experts in the 2020s note the market for T&D is increasing and by 2027, T&D will have become more digital. In the future, T&D will have a stronger focus on mental health and diversity training. Soft/life skills, such as emotional and social skills, are in demand. Experts predict an increase in technology training as well. They note that the workplace in the 2020s has four generations--Gen-Z, Millennials, Gen-X, and Baby Boomers--with each needing training with unique goals.

Employment Advantages

Corporate training offers better pay than traditional teaching positions, but it is also more competitive; according to the BLS, the median annual wage for training and development specialists in 2022 was $63,080, while the median pay for T&D managers was $120,000. Corporate trainers, like any good teachers, must be engaging, entertaining, and knowledgeable of their subject matter. Individuals who are interested in a teaching career, but prefer to teach adults, may enjoy careers as corporate trainers. The BLS projects that college graduates with certification in human resources will be the most in demand to meet corporate education challenges. Course work in technology, business administration, and organizational psychology will also provide students with skills that are sought after by companies hiring training staff.

Trainers must be comfortable with technology and constant interaction, specifically through video and chat. The learning experience exists on a continuum and is no longer necessarily an event that takes place in a classroom on a given day. A discussion may start prior to training and continue long after the formal training ends. However, the future of corporate education will possibly leverage traditional classroom instruction where it is most effective, and supplement employee knowledge with online training when that is the best option.

Annual Earnings

The Bureau of Labor Statistics (BLS) predicts faster than average growth from 2022 to 2032 for both T&D specialists and managers, with annual salaries of $63,080 and $120,000, respectively. The market research firm IBISWorld estimated annual domestic revenues of $14.1 billion for business coaching, $368.5 billion for management consulting, and $4.4 billion for business certification and information technology schools in 2024.

Bibliography

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