Training Budget Unaffected amid Economic Uncertainty

Talent development programmes focus on nurturing
high-potential leaders and managers to ensure continuous corporate development

 [14 Nov 2012 - Hong Kong]  Despite the challenging business environment, employers remained committed to investing in talent development while leadership training is the most important target to ensure corporate sustainability. These are the major findings of the 2012 Training and Development Needs Survey by the Hong Kong Institute of Human Resource Management (HKIHRM), which has been conducted annually since 1999 to identify the overall training and development needs of employees as well as the most important training topics during the year.

A total of 128 companies, employing over 140,000 full-time employees, joined the 2012 survey conducted during the period from July to August 2012. Key findings of the survey are as follows:

Investment in Training and Development

102 companies (80%) out of 128 responding companies indicated that they had a training and development budget for 2012.

The proportion of training and development budget to total annual base salary was 2.7% on average (reported by 86 companies), same as last year’s figure. (Chart 1)

The transport/logistics sector allocated the highest budget (6.2%). The construction/real estate/property development sector reported the lowest budget (1.4%). (Chart 2)

“Although business prospects are currently uncertain under a volatile economy, the survey results revealed that companies were still investing in training and development of employees. This is a strong indication that companies in Hong Kong see the important relationship between sustainable business success and employee training and development. With a very low unemployment rate and a persistent shortage of talent in Hong Kong, companies investing strategically in human capital development pave the way for long-term business success and build their employer brand to attract and retain talent,” said Mr Francis Mok, President of the HKIHRM and Co-chairperson of its Learning and Development Committee.

Training Hours

Among all responding companies, 102 companies provided data on this area. The average number of training hours per employee per annum was 19.1 hours this year, similar to that recorded in 2011 (19.9 hours). (Chart 3)

84.3% of respondents indicated that their employees received on average more than five hours of training per annum. (Chart 4)

The banking sector provided the highest number of training hours (25.6 hours), followed by business services/professional services (19.3 hours), and wholesale, import/export, trading/sourcing sectors (18.7 hours). (Chart 5)

Training Topics

91 (71.1%) out of the 128 responding companies reported that they organised a talent development programme. Talent development programmes continued to focus on “development of high-potential leaders/managers” (83.5% of the 91 respondents) and “development of high-potential employees” (70.3% of the 91 respondents). “Ethics/conduct/corporate governance” remained one of the top five important training topics for all levels of employee.

“Hong Kong is facing the challenge of a shrinking workforce with a retirement wave of baby boomers and a low birth rate. Many baby boomers hold critical positions in their companies. Their forthcoming retirement makes succession planning a more pressing need for their employers, as a shortage of effective leadership may ultimately jeopardise business growth. Effective talent development programmes help unleash employees’ potentials to enhance the quality of human capital, and demonstrate a long-term commitment to employees’ career development and to grow and retain talent. This applies particularly to Gen Y who will be the major pool of talent now and in the coming decade,” said Mr Chester Tsang, Co-chairperson of the Learning and Development Committee of the HKIHRM.

Application of Mobile Learning

This year, mobile learning was included as one of the survey topics for the first time. 98.4% of the 127 responding companies indicated that they did not have a budget for mobile learning.

Key Challenges in Formulating Training Plans

The top three challenges indicated by 124 responding companies are:

1. 1.the need to solicit full support and championship from management (50%)
2. 2.training and development priority is overshadowed by other business priorities (43.5%)
3. 3.uncertainties of business prospect and training needs with the economic situation (38.7%)

Conclusion

“During the economic slump from 1997 to 2004, some companies over-used training budget cut as a cost-saving measure. As a result, when the economy bounced back in 2005, they found themselves lack the human capital to capture the rebound opportunities, thus losing their competitive edge to competitors who had better human capital reserve. Some of them could not survive in the new economy. It is glad to see that companies are still investing well in training and developing their employees. However, the issues of an ageing population, low birth rate and skills mis-match cannot be resolved by the business community alone. We are pleased to see the government’s decision to re-form the Steering Committee on Population Policy, which is a positive move for long-term manpower planning and talent development in Hong Kong,” concluded Mr Mok.

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