The True Cost of Informal Learning

Before I start I want to note that in a very few instances I've been accused of not helping the cause when I question some of the research on informal/formal learning. My position is that I'm neither fer er or agin it, but rather discovering the truth so that we can make logical decisions in our performance efforts. For example, late last year I blogged a post defending informal learning. With that being said...

I'm sure most of you are familiar with this chart in which we are told that 20% of the learning is formal and 70% is informal, yet paradoxical we spend 80% of our training budget on the formal and only 30% on the informal:

formal informal spending paradox

Chart 1

The trouble with this chart is that while the percentage of learning is basically correct, the amount we spend on each is based on weak research. Even if all the numbers are correct, it does not matter what the Learning department spends, but rather what the organization spends. In addition, if informal learning was really all that efficient, why does it need it need our support?

One ASTD research project supported by the U.S. Department of Labor reported that the amount of employer investments in workplace training hovers around $210 billion annually and of that, $30 billion is spent on formal training, while the remainder, $180 billion, is spent on informal and on-the-job training (Carnevale, Gainer & Villet, 1990). Thus, informal learning gets 86% of all learning investments, while formal learning programs get 14% of the total investment.

Now if we chart those numbers out, it would look like chart 2 below; however, note that it is NOT correct either:

informal and formal learning

Chart 2

The reason it is wrong is that expenditure for training/learning departments do not count the learners time (hourly wage) spent in formal training, while informal learning expenditure count the workers hourly wages. To get a more accurate cost we need to add the learner' wages to formal learning's cost. Thus we need to add about 36 billion to the formal learning side, which would give us a chart similar to this:

informal formal learning

Chart 3

As we start to get the truer cost of informal learning, we discover that rather than being this highly efficient learning machine, it is probably just about as efficient as formal learning. And if you really think about, it makes sense — just because I'm informally learning does not mean my brain starts working 3 or 4 times faster than when I'm in a formal environment. In addition, formal learning would get the edge if you have a lot of people learning a particular task because because rather than each one of them "building" their own learning package, you have one designer doing the initial legwork for everyone.

Thus rather than being this highly efficient learning machine that we can ignore, it may require just as much of our attention as the formal side of learning.


Carnevale, A., Gainer, L., & Villet, J. (1990). Training in America: The Organization and Strategic Role of Training. San Francisco: Jossey-Bass.


elearn said...

one might argue that, depending on how informal learning is done (partnership with more experienced peer in the workplace doing tasks - what used to be called OJT or over lunch in the company cafe) it can be cheaper even when tracking salaries: if OJT it's the old "two birds with one stone" adage and since during lunches wages aren't usually paid it's cheaper still

cpoole said...

Good catch regarding how the investment is quantified for both types of learning. I think what’s really clear is the fact that most organizations don’t understand how to measure and quantify the impact of their training & development programs. That’s problematic given the intense ROI pressure coming from the executive suite these days.

Rick McKinnon said...

The efficiency of informal learning is not because the brain works faster, but rather because the things learned are more relevant. It's like that scene in "Good Will Hunting" where Will says something like -- "These academics buy all these expensive books and put them on their shelves. They spend a lot of time reading them. The problem is, they're reading the wrong books." In informal learning, it's much more likely that you're reading the right books.

Donald Clark said...

elearn - but is the majority of informal learning accomplishes during lunch? And with OJT you now have two wages rather than just one.

Rick - Why is formal learning not considered relevant? And just because I'm informally learning does not mean I have choosen the "right books" to learn from. In fact that is one of the problems we need to help informal learners with because for so long they have been told what to learn, not how to learn.

David L Jacobs Jr said...

Nicely stated. It is always nice to see someone put together logical reason for unlogical theories. Training and development is always trying to come up with ways to justify their being and most of it is usually large formal programs.

Now the question is how do you put a dollar amount to informal training, how do you measure that?

Rick McKinnon said...

Hi Don. My question is: how much of what folks learned in school (mostly in formal mode, i.e., content focused) do they actually use in their jobs? Is that efficient? Informal learning tends to be more process oriented, and thus maintains relevance across different environments (school to work; one work environ. to another, etc). This means that figuring out 'how to learn' IS the learning.

Donald Clark said...

Hi Rick,

I tend to deal more with corporate and organizational learning rather than our education system. However, primary schools are not designed to "teach us a job" but rather to prepare us for the future. As for me, I received a degree in Human Resource Development and again, it was not designed to teach me a particular job, but to give me a broad set of skills and knowledge in a particular area.

My post is primarily aimed at the formal and informal learning that occures in the workplace. I list two examples in a recent blog post: http://bdld.blogspot.com/2010/01/three-words-your-customer-must-know.html. They are under the section of "Training."

BunchberryFern said...

Good points.

About the budgets and the financial cost (and recording of ROI) on training - you're right to question the amount of involvement that Training Departments have.

When I work with any organisation, I always request the presence of the Training Department at initial meetings. And this is nearly always blocked.

The managers who pay me see themselves as working against the Training Department, not with them. (If you extrapolate, you'll get a sense of how they feel about the HR people. . .)

Last year, a project with 250 people each working an average of 5 days involving 30 departments was budgeted as marketing/business development/research - all of which was true. But I'm a Learning & Development person. And I delivered (some) training.

The training was targeted and just-in-time input for the informal learning project. But it would have been idiocy of the highest order to not try to identify the learning outcomes that I could achieve through structured learning - it's simply more efficient.

You shouldn't have to preface your posts with defences of why you're not an informal learning hater - but I understand why you do.

There's no dichotomy here. It's not formal or informal, but both.

(Last note: we can extend this to 'management' too. Lots of managers are idiots. And lots of people don't need 'managing'. But just as many like being managed and value their managers' experience and ability to take responsibility and make decisions.)

SatichDash said...
This comment has been removed by a blog administrator.
Unknown said...

Excellent catch.if u want to understand this matter u must have some efficency about informal learning.I think what’s really clear is the fact that most organizations don’t understand how to measure and quantify the impact of their training & development programs.yeast infection

Peter Casebow said...

good thought provoking article which adds to the debate on informal learning. As you and others have pointed out informal learning is happening anyway and we need to find the most effective and efficient way to support it and maximise the investment. I've been intrigued by what activities managers actually do for informal learning and what they find most effective. So we have just published some independent research conducted by ComRes on "How Managers Learn (in their own words)" at http://goodpractice.com/toolkits/what-are-online-toolkits/the-learning-and-performance-link-how-managers-learn-in-their-own-words/

No surprise the most used and most effective way of learning was talking to a colleague.