The business benefit of career development programs

CEOs in small to mid-size organizations often think formal career development programs belong to the culture of large, complex companies. But having an established career development program is important even for smaller businesses.

When an organization has matured, career development programs are often put in place to create the next wave of leaders. This is critical to ensure the organization is proactively replacing retiring executives. Career development is key to sustaining growth, retaining human capital and increasing productivity and profitability.

Here’s how to develop a career development program that effectively supports your people and organization.

Defining a career development program

To be clear, a formal career development program is designed to improve the knowledge, skills, abilities and experiences of individuals within the organization. The result is a more productive team that will have a direct impact on profitability.

As your team members become more skilled, they increase the organization’s human capital value. Career development is a long-term investment in individuals and the company. There are several components to a career development program, including:

• Cross training
• Career “pathing”
• Internal training programs
• External training programs
• Performance management
• Coaching and mentoring

Without a career development program, your organization is much more susceptible to turnover—which is an expensive problem to have.

The high cost of turnover

Employees understand the value of career development and how it impacts their careers. They will continue to change companies until they have amassed enough skills to get the higher-level position they desire, with each organization benefiting from the prior organizations.

Therefore, if an organization does not have a formal career development program, an employee will work for the company long enough to satisfy the requirement to move on to another organization—where they can develop another skill set.

Each turnover from a productive employee impacts a company’s customer service and profitability. Studies show the true cost of turnover is approximately six months of an employee’s salary. Losing an employee who makes $60,000 per year costs the organization $30,000 to replace.

Known and hidden turnover costs include recruiting, interview time, temporary employees (or duties performed by a supervisor), background checks, orientation, training and lost productivity until the new employee is fully productive.

Establishing a career development program

To create a career development program, follow these five steps:

1. Create an organization chart.
2. Identify the competencies, knowledge, skills and abilities needed for each position, beginning at the leadership level and including all manager positions. If you do not have an HR person who is comfortable with this process, the leadership team and their subordinate managers can document these areas.
3. Establish the most effective way to provide training and experiences within the organization for high-potential talent.
4. Determine possible career paths that will encourage those with high potential to take on additional responsibility.
5. Create a career-development planning guide for entry-level supervisors.

A note about the last step: Your career development planning guide should include education, skills, past experiences, self-perceived strengths and areas of improvement. It’s also important to include the short and long-term career goals of the employee, and the training and experiences they would like the organization to consider. After a supervisor or manager completes the appropriate portion of the guide, their immediate manager should complete the next section.

Implementing a career development plan 

Once you’ve written a plan, how should you implement it?

First, each manager should make recommendations on training, potential job changes, and so on for each employee. Next, the immediate supervisor and their immediate manager should review the planning guide to gain clarity and ensure the employee understands realistic opportunities.

After this discussion, the manager will review all team members with their immediate managers. The final step is for the leadership team to understand strengths, goals and recommendations for each supervisor and manager in the organization. This is done through a formal career development meeting.

Finally, the leadership team will make their recommendations, and the employee and immediate manager can discuss the strategy to execute the plan.

Case in point

Here’s an example: Imagine there’s an up-and-coming engineering supervisor whose performance exceeds expectations. The employee has the potential to be an excellent manager in engineering or as the chief engineering officer. You want to ensure that over the next three years you position this person to be promoted to an engineering manager.

The possible action steps include:

• The organization appoints the engineer to operations supervisor to experience the challenges of the position. The employee receives training in various areas and develops skills in managing front line staff.
• The next year, the organization reassigns the engineer to the customer service team so the employee can learn customer challenges and receive training on sales and building client relations.
• The following year, you promote the employee to engineering manager.
• During this two- to three-year period, the high-potential candidate experiences positions that create a better understanding of how decisions impact operators, product quality and customers. The engineer also becomes more valuable to your organization, directly impacting the value of the human capital of the organization in a positive way.

The bottom line

Managers and leaders will remain with a quality organization. They don’t have to move from company to company to enhance their skills if there is opportunity within the business. By encouraging career development, the organization reduces turnover and improves employee morale, loyalty and profitability.

In other words, a quality career development program isn’t just practical for a small organization. It will positively impact the bottom line.

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