Hong Kong's Average Employee Training Budget of 3.5% of Annual Salaries at 10-Year High

Hong Kong companies have continued to invest in employee training and development to enhance human capital, with a ten-year high figure at 3.5% of staff annual salaries in 2014, according to the 2014 Training and Development Needs Survey released by the  Hong  Kong  Institute  of  Human  Resource  Management  (HKIHRM)

Sustained Growth in Training and Development Budget

Ninety-six companies (82%) out of 117 responding companies indicated that they had a training and development budget for employees in 2014. The amount of training and development budget was equivalent to an average of 3.5% of the annual base salary, the highest percentage in ten years, and the uptick has sustained since 2012.

Of all the business sectors covered in the survey, construction/real estate property development, wholesale/import/export/trading, retail,  banking/financial  services/insurance,  and  transport/logistics  recorded  a  training budget percentage higher than the average figure.

“We are pleased to see that employers were more willing than ever to invest in employee training and development, as evidenced by the average training budget of 3.5% at 10-year high," says Barry Ip, Co-Chairman of the Institute’s Learning and Development Committee.

Despite some economic uncertainties looming over Hong Kong and a drop in mainland visitor numbers, Hong Kong companies in general see the importance of investing in human capital to strengthen local competitiveness against it rivals in Asia, and will not cut their training budget easily.

Companies also realize that providing more training  opportunities  for  employees  is  one  way  to  retain  staff  in  the  employee-led employment market.

“The data reflect the mature business mindset of the management of Hong Kong companies who champion human capital in bad or good times. We expect the growth momentum in training budget for employees will continue for the rest of 2015,” adds Ip.
Training Hours

While the average number of training hours per employee per annum was 17.5 hours, more than two-thirds (67%) of the responding companies offered up to 20 hours of training to their employees. Eighty-two companies provided data on training hours.

In terms of business sectors, the statutory body/NGO sector offered the highest number of training  hours  for  employees  (24.1  hours),  followed  by  retail  (18.3  hours)  and construction/real estate property development (18.2 hours), all above the average level.

Training Areas

More than half of the responding companies (57%) out of 117 responding companies reported that they had a talent development programme.

Talent development programmes were more prevalent in sectors such as construction/real estate property development (89%), statutory body/NGO (78%), and retail (64%). The major focuses of these programmes, as revealed in the survey, were “development of high-potential employee” (84%) and “succession planning” (66%)  while  57%  of  the  polled  companies  reported  that  they  run  graduate/management trainee programmes.

Larger companies with 500 employees or more tend to have talent development programmes in place.

According to the responding companies, competency-based training in areas such as strategic management, people management and corporate governance and compliance were generally more important to employees at senior and middle management levels while functional and skill-based training were important to supervision level and frontline staff.

Findings also reveal that business ethics is a major topic in training programmes. 59% of the
117  responding  companies  reported  that  they  had  conducted  ethics  training  for  their employees in  the  past two years,  with the  banking/financial  services/insurance sector topping the list at 85%, followed by the construction/real estate property development and manufacturing sectors at 67% and 64% respectively.

The majority of large companies included ethics in their manpower training. Major areas focused on by companies in 2014 for ethics training were anti-corruption/anti-money laundering, the most popular topic among the respondents at 93%, followed by data privacy and security, and corporate governance, risk and compliance.

Non-Traditional Technology-Enabled Approach to Training

Delivering staff training through non-traditional technology-enabled learning platforms continued to be popular among employers according to the findings.

Sixty-four companies (55%) out of 117 responding companies indicated that they had technology-based programmes in place for course delivery (chart 7). Among them, 44% increased their budget in 2014 while 53% kept their budget unchanged and only 3% had their budget deducted.

In terms of business sectors, technology-enabled training programmes were prevalent in the transport/logistics (73%), banking/financial services/insurance (69%), business/professional services (67%), statutory body/NGO (67%), followed by telecommunications, and wholesale/import/export/trading.

The retail sector is less likely to provide staff training through technology-enabled training platforms, with only 21% of the employers in the sector reported using this training mode.

Regarding the types of technology-enabled training programmes, online training through videos was the most preferred mode, with 66% of the respondents using it, followed by the webinar/virtual classroom (38%) and serious games (14%).   

With a high penetration rate of mobile usage and ownership in Hong Kong, 22% of the employers reported that they subscribed to mobile-enabling technology to deliver training programmes, a jump from 11% in 2013.  

Key Challenges in Formulating Training Plans

Difficulties in measuring effectiveness/ROI (Return on Investment) of training programmes (52%) is the top challenge in in 2014 as indicated by all 117 responding companies when they formulate training plans.

Other challenges include training and development priority overshadowed by other business priorities (51%) and lack of systematic processes to survey training needs (40%).

When asked the business objectives that drive their companies to formulate training plans for
2015, more than half of the respondents (55%) indicated that reinforcing corporate culture with training programs for achieving strategic business goals topped the list.

Other objectives  include  meeting  changing  customer  demands  or  expectations  to  enhance
competence & quality, building leadership bench strength & pipeline through talent management, meeting business expansion creating demands for training new hires for newly created positions, and meeting regulatory requirements to ensure compliance.