Employee development critical for U.S. employers


American companies risk an exodus of organisational knowledge and experience because they are failing to put in place formal employee development programmes to compensate for the retirement of millions of working Baby Boomers.

The 2005 Employee Development Survey Report from the Society for Human Resource Management (SHRM) and Catalyst argues that firms need to develop structured employee development process and training programmes to compensate for the effects of the predicted labour shortage.

More than a quarter of the current working U.S. population will reach retirement age by 2010.

More than a quarter of the current working U.S. population will reach retirement age by 2010.

In terms of the actual development methods used, the study found that training programmes, such as generic and cross-functional training, top the list of training methods most organisations use.

But the survey of 248 HR professionals found that only a minority of companies use formal methods of employee development, including succession planning, job rotation, and career mentoring programmes.

In addition to seeking new talent to replace the flood of retirees expected in the next few years, organisations must develop their current employees to avoid the loss of organisational knowledge and experience from those retiring, the SHRM said.

Last month, a report from consultants Accenture also found that many U.S. organisations were failing to capture critical knowledge and experience from older employees approaching retirement and few seem able to transfer valuable knowledge to newer employees.

A quarter of those surveyed by Accenture said that their employers will let them retire without any formal transfer of knowledge.

According to Debra Cohen, Chief Knowledge Officer of SHRM, employers need to work much harder if they are to head off a major exodus of institutional knowledge.

"Many employers feel that the knowledge, experience, and skills employees acquire in their day-to-day tasks is sufficient for developing talent," she said

"However, with so many key employees positioned to retire in the near future, companies need to take formal steps to ensure smooth transitions and business continuity.

"When the talent and knowledge of retiring workers walks out the door, every organisation needs to make sure they have others ready to fill the gaps."

The survey found good reason for companies to invest in employee development programmes. Although few organisations measure the return on investment of employee development programmes, of those that do almost all show a positive ROI.

Despite this, the majority of organisations do not invest in formal practices, programmes and methods meant to address employee development.

With the growing presence of women and minorities at all levels in organisations, there is also need to specifically focus development efforts on these groups. The study showed, for example that representation of women and minorities in managerial positions decreases significantly, as the level of management increases.

"What we see is the business case for developing the talents and leadership of women and minorities, including people of colour, which will become even more important in the years ahead," said Paulette R. Gerkovich, Catalyst senior director of research.

"For example, Catalyst research shows that companies with a higher than average representation of women in top management significantly outperform companies with lower than average representation. Companies will find ways to develop talent across all lines because it's simply good business and smart to do!"