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It’s not businesses that generate new ideas or offer superior service – it’s people. But despite the fact that managers are fond of saying, “Employees are our most important asset” many still manage their employees as costs. Businesses expect to pay big salaries and offer enticing benefits to attract the most talented professionals, but once they are hired and on board, managers often fail to make the connection between continuing to develop this talent and employee retention.
Career development opportunities should be a strategic goal for every organization because it provides a competitive advantage not only for business performance, but also in talent acquisition. By creating a culture in your organization that fosters development, you will set the foundation for making employees the unique asset that you claim they are to your business. According to Nobel Laureate Gary Becker, Professor of Economics and Sociology at the University of Chicago, “Every company must recognize that not only is the human capital of their employees a major asset, it is also a depreciating asset that needs continuing investment.”
Studies have shown that creating an environment where jobs are regarded as investments results in employees being more productive, focused and passionate about their careers – and their organization. Don’t make the mistake of assuming that trained employees are more likely to look for better opportunities, because the opposite is true: employees who have access to career development programs are more likely to stay at their company.A Louis Harris and Associates poll found that among employees with poor career development opportunities, 41% planned to leave within a year. Compare that to employees who considered their company’s development opportunities to be excellent and only 12% planned to leave. That is a two-thirds higher retention rate which directly impacts a company’s bottom-line as turnover costs are often estimated to be between 100% and 300% of the base salary of a replaced employee. Successful retention also means retention of priceless corporate and product knowledge and better customer relationships. Investing in in-house talent is much more efficient than bringing on new people; they know the culture, the business, and if you provide them with the opportunity to acquire new skills and give them big challenges – they will usually rise to the occasion.When you look at it that way, career development doesn’t actually cost, it pays.
According to the American Society for Training and Development, an increase of $680 in a company’s training expenditure per employee generates, on average, a 6% improvement in total shareholder return. In addition, investing in career development:
- Improves employee performance in problem solving, leadership, motivation and attitude
- Provides enhanced communication between managers and employees on all business issues
- Creates a more productive and engaged workforce with improved morale and job satisfaction
- Develops confident employees with skills to manage their own careers who can better handle organization change