Employee Loyalty Blog: Develop Them or Lose Them

Develop Them or Lose Them

July 31, 2006
Greg Robinson, Employee Loyalty Blog

Employers, welcome to the new millennium! You have no pricing power in the marketplace, barriers to entry into your markets are at all time lows, and your employees have tuned into WIIFM and are asking not what they can do for you but what will you do for them. Having fun yet?

There may be little you can do to change the market conditions facing your business, but there is a lot you can do get your employees to be more productive and committed to your business. And it all starts with employee development.

Employee development is has become increasing important as a retention strategy over the last two decades as the notion of lifetime employment with one company has become a distant memory. Layoffs, restructurings, outsourcing, {insert favorite program of the month}, have resulted in employees behaving like free agents in baseball—looking forward to get the best deal they can get for the future, not reflecting on past rewards and recognition—and who can blame them!

It would be easy to think that if one employee leaves, you can just go hire a free agent from one of your competitors. This may be true, but it is a costly strategy because research has shown that it costs about 25% of an employee’s total compensation to hire a new person. The turnover costs include accrued vacation/benefits, signing bonuses, recruiting fees, and training costs among others. For example, if you need to replace a person making $50,000 per year including benefits, you can project that it will cost you about $12,500 to replace this person when all out of pocket costs are considered. If you want to get really scared about the impact of turnover on your business, look at the impact of losing a key employee on customer relationships, team dynamics, and mentoring employees.

Why is development so important to employees? With no guarantee of employment, an employee’s safety net is the set of skills and qualifications that have attained in their career. The greater the set of accomplishments and experiences, the more marketable they are (and the more valuable they are to you!).

If you want to keep your employees, make sure you pay attention to how work assignments fit with the developmental needs and interest of your employees—for you it’s about getting the job done and for them it’s about what they will learn and how they will develop while doing the work. But avoid “sink or swim” assignments and provide employees with the mentoring and coaching they need to be successful.

What about training programs? Training has its place, but is only one tool to use in developing employees. In fact, over 85% of the development that takes place does not happen in traditional training settings. Development happens on the job, working on real projects, learning from peers, and using systems that both support the work and reinforce the desired process and behaviors. Training is appropriate when the skills learned are aligned with the company’s business strategy and an employee’s developmental needs.

What are your employees hearing when they tune into WIIFM? Are you meeting their developmental needs in a way that keeps them productive and committed? If you don’t know, you better find out now before you hear about it during an exit interview.