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Learning & Development Blog

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How Much Does Informal Learning Actually Cost?

Current research indicates that 20% of learning is formal and 80% is informal, yet 80% of training budgets are spent on formal learning and only 20% on informal learning.

According to Don Clark in Big Dog, Little Dog: The True Cost of Informal Learning, the trouble with this research is that although the comparative percentages for formal and informal learning are correct, information on what is actually spent on each is based on weak research.

He says that even if all the numbers were correct, what the organization spends is more important than what the learning department spends. And he poses an even more important question—if informal learning is so efficient, why does it need training budget support?

A report coming out of an ASTD research project supported by the U. S. Department of Labor states that employer investment in workplace training is about $210B annually. Of that amount $30B is spent on formal training, and $180B is spent on informal and on-the-job training. Informal learning gets 86% of all learning investments, while formal learning programs get 14% of the total investment.

The problem here is that the expenses for learning departments do not include the hourly wages for the learners’ time in formal training, whereas informal learning expenditures do include their hourly wages.

Clark says that to get more accurate costs, the learner’s wages need to be added to the cost of formal learning. This means adding about $36B to formal learning.

He says that as we understand more about the actual costs of informal learning, we will realize that rather than being a highly efficient learning machine, informal learning is probably about as efficient as formal learning. This is especially the case if we look at numbers with the strongest research behind them, that is, 70 % of learning is informal and 30% is formal.

In addition, if there are a large number of employees learning a particular task, formal learning would get the edge. It would be more effective for a single instructional designer or a design team to create the learning design for all affected employees rather than each learner creating his or her own informal learning package.

The question is whether informal learning really is such a highly efficient learning machine that we can ignore it or whether it requires just as much of our attention as formal learning. Clark says we should be spending the majority of our time on the 20% of the learning taking place that is most important. He says we shouldn’t support something just because there is more of it, but rather what will best benefit the organization.

We need to ask:

  • What processes are critical for delivering our product/service and do we need to ensure that our worker learn them correctly?
  • What tasks are so vital to our processes that we have to ensure we educate someone to be a backup?
  • How can we best develop our workers so that we continue to grow as an organization?

In the end, it is the answers to these questions that should determine the relative budgetary allocation to formal versus informal learning.

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