Part
01
of seven
Part
01
Market Size and Growth - Diversity and Inclusion (D&I) Training Market: United States
The 2019 market size for the U.S. diversity and inclusion (D&I) training market is $8 billion. While overall spending on D&I initiatives is growing at a CAGR of about 6.50%, spending on D&I training is decreasing at a rate of about -8.35%. This means the 2020 D&I training market size will be about $7.4 billion. Details are below.
Market Size
- Companies in the United States spend about $8 billion per year on diversity and inclusion (D&I) training.
- In 2016, the average budget for D&I programs was $1.1 million per company and it was spent in the following ways:
- Diversity conferences represented 29% of the D&I budget, or about $319,000.
- Training and development represented 25% of the D&I budget, or about $275,000.
- Employee resource groups represented 20% of the D&I budget, or about $220,000.
- Community outreach represented 17% of the D&I budget, or about $187,000.
- Supplier diversity represented 16% of the D&I budget, or about $176,000.
- Recruitment and retention represented 13% of the D&I budget, or about $143,000.
- This means that the average annual D&I training budget per company in the U.S. for 2016 was about $275,000 per year.
- The budget for D&I training has decreased since 2016, representing just 21% of the overall D&I budget in 2018. Assuming the average overall D&I budget remained the same in 2018 as it was in 2016 ($1.1 million), this would mean D&I training budget decreased to $231,000 in 2018.
Growth Rate
- For universities, the average dollars allocated to D&I budgets increased 33.7% between 2014 and 2019.
- If that percentage is extrapolated to the $8 billion per year spend on D&I training overall, this would mean that in 2014, the overall spend on D&I training was $5.84 billion.
- Using a CAGR calculator, the compound average growth rate between 2014 and 2019 would be 6.50%.
- However, between 2016 and 2018, there was a total decrease in annual budgets dedicated to D&I training of 15%. This would represent a CAGR of -8.35%.
- It appears that companies are finding D&I training less valuable than they used to, so it may be that the growth rate is currently trending negative.
- By taking the -8.35% CAGR, this would mean that the 2020 market size for D&I training would be about $7.4 billion.
Research Strategy
The market size of the D&I training market was readily available, as it was quoted in numerous credible sources such as McKinsey, LinkedIn, Time, and Forbes. The CAGR was less readily available. We searched through formal market research reports from sources such as Winters Group, MarketsandMarkets, MarketWatch, and others. The only data we found was related to the D&I Technology market. We switched strategies to looking for studies conducted on D&I training including company budgets. We found a 2018 report from Diversity Best Practices that provided the average budget per U.S. company for all D&I programs for 2016 and the percentage spent on D&I training for both 2016 and 2018. We also found a report from Insight Into Diversity that showed an increase in D&I spend of 33.7% over a period of five years. This allowed us to use the $8 billion market size to estimate a CAGR of 6.50%. However, the Diversity Best Practices study found that budgets for D&I training actually decreased at a CAGR of -8.35% between 2016 and 2018. Using the evidence from reputable articles from sources such as Forbes, Time, and McKinsey, we determined that companies are finding D&I training less valuable than they have in the past, which supports the decrease in D&I training budgets. So, while companies may be spending more on D&I overall, their actual spend on training is decreasing. In fact, budgets for employee resource groups (ERGs) has increased from 20% to 22% of the total D&I budget between 2016 and 2018, and recruitment and retention has increased from 13% to 14% of the total D&I budget, which account for the 4% drop in budgets for D&I training from 25% to 21%. This indicates that companies are allocating less money to training and more money to other D&I segments.
Calculations
- To calculate the amount budgeted for diversity conference out of the total average $1.1 million D&I budget, we multiplied $1.1 million by 0.29 to get $319,000.
- To calculate the amount budgeted for D&I training and development out of the total average $1.1 million D&I budget, we multiplied $1.1 million by 0.25 to get $275,000.
- To calculate the amount budgeted in 2016 for employee resource groups out of the total average $1.1 million D&I budget, we multiplied $1.1 million by 0.20 to get $220,000.
- To calculate the amount budgeted in 2016 for community outreach out of the total average $1.1 million D&I budget, we multiplied $1.1 million by 0.17 to get $187,000.
- To calculate the amount budgeted in 2016 for supplier diversity out of the total average $1.1 million D&I budget, we multiplied $1.1 million by 0.16 to get $176,000.
- To calculate the amount budgeted in 2016 for recruitment and retention out of the total average $1.1 million D&I budget, we multiplied $1.1 million by 0.13 to get $143,000.
- To calculate the amount budgeted in 2018 for D&I training and development out of the total average $1.1 million D&I budget, we multiplied $1.1 million by 0.21 to get $231,000.
- To get the total market size of D&I training in the U.S. for 2014, we divided $8 billion by 0.37 to get $5.84 billion.
- Using a CAGR calculator, the initial value of $5.84 billion, the ending value of $8 billion, and the intervening five periods, we found the CAGR of 6.50%.
- To find the percentage decrease in training budgets between 2016 and 2018, we divided $231,000 by $273,000 to get 85%. We then subtracted 85 from 100 to get a 15% decrease.
- Using a CAGR calculator, the initial value of $275,000, the ending value of $231,000, and the intervening two periods, we found a CAGR of -8.35%.
- To estimate the 2020 D&I training market size, we divided $8 billion by 0.0835 to get $7.4 billion.