Business leaders explain how professional development benefits help with employee retention
If you’re involved with your organization’s leadership, you’ve inevitably had conversations about employee retention and turnover. Nancy Salzman, vice chancellor of partnerships for University of Massachusetts Global, notes that most organizations today are actively working to address this issue.
“It was the top workforce management challenge cited by 47 percent of human resources professionals in a recent Society for Human Resource Management (SHRM) and Globoforce survey,” she points out.
While some employee turnover is unavoidable, not all of it is. Nearly three-fourths of the turnover we see today could be prevented by employers, according to the Work Institute’s 2018 Retention Report. As you examine this issue with your own organization in mind, it’s important to consider both the impact of employee turnover as well as the most effective preventative measures your business can take. We reviewed research on the subject and consulted a handful of business experts to help you get the information you need.
The negative impact of employee turnover
Reem Darwish, principal business partner of learning and development at Hyundai Mobis, understands the ins and outs of employee turnover all too well. She’s been in the organizational development industry for 20 years.
“A common thing I see is that people feel like they’ve already learned everything they can in their current role — that they’ve reached their capacity and they’re hungry for more enrichment,” she notes. “After a couple years in a position, people start thinking, ‘What’s next?’”
The same Work Institute report reveals that approximately one in four U.S. workers quit each year. 2020 projections indicate that this rate will increase to one in three. One possible contributor is that professional development benefits are often among the first things to go when budgets get cut. But eliminating those opportunities can actually cost your business more in the long run.
“I would make the argument that it costs more to hire and train someone who leaves than it costs to develop them and have them stay and be productive,” offers Mike Warren, adjunct business professor at University of Massachusetts Global who also serves as founder and CEO of Alethia Strategic Business Solutions.
Numerous sources indicate that every time a business replaces a salaried employee, it costs six to nine months’ salary on average. Funds spent on recruiting and hiring, onboarding, lost productivity and lost engagement due to the overall impact on employee morale can add up. The Work Institute report reveals employers paid approximately $600 billion in turnover costs in 2018, and that figure is projected to increase. In an attempt to curb these mounting costs, companies across industries are in search of ways to strengthen their employee retention efforts.
According to data from a recent EdAssist survey, 60 percent of respondents said they’d choose a job with strong professional development opportunities over one with regular pay raises. On top of that, 53 percent of survey respondents reported that having access to learning or professional development opportunities would entice them to stay longer than planned at any given job.
“[Businesses] are learning the hard way that if they don’t start developing people at every level of the organization, profits will suffer and people will leave,” Warren says. “If you want to attract and retain people, you must provide a clear path to how someone is going to advance in their career. That conversation starts with how you as an organization are going to develop that individual.”
The positive impact of professional development opportunities
According to the EdAssist study, 72 percent of survey respondents do not believe their schooling effectively prepared them for the workplace. This doesn’t have to be the case.
“Professional development opportunities provide today’s employees with an opportunity to maintain and obtain the skills required for their current jobs – as well as steps up in their career path,” Salzman points out. “Employees who do not see a clear path are at risk of leaving.”
Yet SHRM data indicates that just one-third of employees are satisfied with their organization’s commitment to professional development. In fact, 21 percent cite a lack of career advancement opportunities as a reason to leave their current position.
Darwish and her team at Hyundai Mobis recognize the need for providing employees with opportunities to learn and grow. As such, Hyundai Mobis offers its employees an array of professional development options. They host regular in-house training sessions, one-on-one coaching opportunities, monthly roundtables with members of leadership and instructor-led, competency-based training through an online learning management system. The team has even gone a step further by partnering with institutions like University of Massachusetts Global to offer a tuition reimbursement program.
“It pays back in multiple ways,” Darwish says. “You’re giving employees a reason to stay engaged and keep investing in your organization. We see an increase in retention, overall morale and even openness and communication. When people feel you really do care about them and that you’re working for them, they can’t help but continue to commit.”
She also notes that offering professional development opportunities can help greatly with succession planning. You might find employees have capabilities you never would have considered.
“Once they are able to bring their interests in learning and development in-house, it opens your eyes so you can start looking at them from a different angle for a different position,” Darwish explains.
This anecdotal evidence is hardly a fluke. A recent survey of more than 2,000 employees reveals organizations that offer professional development opportunities have employees who are 15 percent more engaged in their work. Such businesses also see 34 percent higher retention rates than those that don’t offer similar opportunities.
The Cigna Corporation, for example, provided employees with millions of dollars in tuition assistance. An analysis of their educational benefits program from 2012 to 2014 revealed a 129 percent return on investment as a result of avoided talent management costs.
Case studies like this are influencing the professionals most concerned with hiring and retention. Nearly half of human resources professionals surveyed by SHRM indicate that increased efforts to offer training and development opportunities to existing employees has become the most effective recruiting strategy for hard-to-fill positions within their organizations.
Warren puts it simply: “Organizations that don’t provide these services are encouraging their employees to seek help outside the company; they’re setting themselves up for that person to eventually seek employment somewhere else.”
Attract and retain top talent with professional development benefits
It’s clear that employee retention and recruiting are topics of intense focus for organizations across the nation. As data supports the importance of professional development opportunities, it may be time for businesses like yours to consider ways to cultivate paths for employees to grow.
“The bottom line is that any organization that doesn’t provide development incentives to their people is not optimizing its human capital,” Warren says. “These days, you can’t afford to not develop your employees.”
Now that you’re armed with the information you need to take the next step for your employees, it’s time to learn more about your options. To find out how teaming up with a school could provide great education opportunities to your workforce, visit University of Massachusetts Global’s Partner Organizations information page.