Employers who invest in professional development but don't also offer their staff clear career paths and opportunities for advancement could be wasting their money and even increasing their turnover rates, new research suggests.
American companies spend some $134 billion on employee development each year. But researchers from the University of Iowa have found that staff feel little compulsion to stay with an employer if they don't see any career advancement opportunities – irrespective of whether or not they provide good professional development.
"Only those employees who can see a way forward in their careers will stay with an employer," said Scott Seibert, associate professor of management and organizations in the UI Tippie College of Business.
"Otherwise, professional development opportunities might simply make their workers more employable by other firms."
In other words, Seibert said, successful employee development needs to offer more than just development opportunities. If the investment is to pay off, employers also need back this up with real career advancement opportunities.
Seibert and Maria Kraimer, associate professor of management and organizations in the Tippie College of Business, surveyed 246 matched employee and supervisor pairs at a Fortune 500 firm. They asked whether their employer provided adequate professional development programs, and if they believed the organization offered future career opportunities that were of interest to them.
They found that employees who participated in professional development opportunities were more likely to say they would stay with their employer only if they saw attractive career possibilities. Few felt a responsibility to stay with their current employer if they saw no career advancement opportunities.
"More developmental support is associated with higher performance and lower turnover generally," said Kraimer. "However, when career opportunities are low, development support was not related to performance and it actually increased turnover."
Given the high costs associated with staffing and turnover, expenditures for development support may be well justified, but only when employees perceive there are career opportunities within the organization," she added
However the researchers also found that not all employees saw career advancement opportunities simply in terms of climbing the career ladder. Mentoring and job rotations, as well as good relationships with their immediate boss, can create the feeling that career opportunities are available.
"Career opportunities are perceptual in nature, so raising perceived career opportunities for employees may be largely a matter of letting employees know more about the range of possibilities that are already available within the organization," they wrote.