It’s clear that people expect more from work than a pay check these days, and research shows that employee career development is at the very top of the list. Employees want to know where their hard work is going to take them, and if employers want to keep top talent on their teams, they need to play an active role in that journey.
You’re probably already aware that investing in employee career development makes good business sense, but today, we’re taking a deep dive into the reasons why. Drawing on the latest research, we’re sharing some of the irresistible benefits of building an employee career development plan for your teams. So let’s get stuck in.
Why is Career Development Important? 7 Reasons to Create an Employee Career Development Plan
1. The cost of upskilling or reskilling existing talent is exponentially lower than the cost of hiring new employees
It’s difficult to compare the cost of developing your people with the cost of hiring externally - when you factor in the positive effects on employee engagement, productivity and culture, the financial benefits are exponential. But we do know that, while the cost of replacing an employee is somewhere between 50% and 250% of their annual salary, the average cost of training and development per employee represents less than 2% of the average employee’s salary (1). Case studies can be useful here too - a study of telecommunications company Telenor reported savings of $9 million by upskilling internal talent and reducing the need for increased hiring, outside contractors, and consultants (2).
2. Career development helps retain top talent
In an extensive study by McKinsey, researchers learned that lack of career development and advancement was the number one reason why people quit their jobs between April 2021 and April 2022 (3). Clearly, this is something leaders can’t leave to chance, with career development proving more important to employees than compensation, leadership and flexibility.
3. Non-linear career pathways provide a solution to a major talent challenge
A report from The Josh Bersin Company highlights a huge area of potential for employee career development - of those who changed jobs during the pandemic, 45% moved to other industries (4). This means that companies could hugely reduce attrition if they supported atypical career paths for their people, i.e. transitions to roles in departments outside their current area of experience. No wonder industry analyst Bersin claims that career pathways are “an innovation that could transform the economy.” Career development tools for employees, like Frankli, are already digitising this process for teams, allowing people to build linear and non-linear career paths in collaboration with their managers.
4. Career development programs enhance DEI
Lack of career development support is just one of the reasons why people in minority groups are often left behind at work - one study shows that, for every 100 men promoted from entry-level employee to manager, only 87 women make the same transition. The same report tells us that Latinas and Black women are less likely than women of other races and ethnicities to say their manager shows interest in their career development (5). While DEI is top-of-mind for many companies during the hiring process, experts warn that employers need to invest just as much time and energy in supporting people from diverse backgrounds to stay and move into new roles.
5. Career development builds a culture of continuous improvement
Investing in upskilling, reskilling and digital career development tools for employees that support people-centric career pathways has an undeniably positive impact on a company’s culture and it’s one of many ways to build a culture of continuous improvement. This is definitely something we should be striving for - in a culture of continuous improvement, people are more likely to innovate, make changes to their routines and find efficiencies in their workflows.
6. Greater career growth leads to greater employee engagement
The research on this one is clear - career growth has a positive impact on multiple factors that lead to higher employee engagement, including commitment and employee perception of organisational support (6). This is good news for everyone on the team - according to Gallup, highly engaged teams are 21% more productive (7).
7. Digital career development programs can help remove biases associated with hybrid and remote work
Research shows that remote employees struggle more with career development, with many leaders falling into the proximity bias trap and valuing the contributions of in-office employees over remote team members. In one report, 21% of respondents said remote work made their contributions less visible, and that the lack of visibility negatively impacted their career development (8). With digital career development programs, like the ones you can create through Frankli, employees get equal access to support and opportunities to build inspiring career pathways, regardless of whether they work remotely or in an office.
1. ATD’s State of the Industry report. 2. Udacity, How investing in data science saved a telecommunications company over $9M. 3. McKinsey, The Great Attrition is making hiring harder. Are you searching the right talent pools? 4. The Josh Bersin Company, Career Pathways: Building Tomorrow’s Workforce Today. 5. Lean in and McKinsey, Women in the Workplace 2022. 6. The Impact of Career Growth on Knowledge-Based Employee Engagement: The Mediating Role of Affective Commitment and the Moderating Role of Perceived Organizational Support. 7. Gallup, What Is Employee Engagement and How Do You Improve It? 8. Bamboo HR, Covid-19 & Careers: The Effect of the Pandemic on Career Progression.