How a Formal Career Development Program Can Improve Profitability

CEO’s in smaller to mid-size organizations often think formal Career Development Programs are a part of the culture of large complex companies.  When an organization has matured, career development programs and processes are often put in place to grow the next wave of leaders. This is critical to ensure the organization is proactively replacing retiring executives as well as growth.

Having an established career development program for small and mid-size organizations is just as important.  Career Development is a key to sustaining growth, retaining human capital and increasing productivity and profitability.

So, what is a career development program?  A formal career development program is designed to improve the knowledge, skills, abilities and experiences of individuals within the organization.  The result is making your team members more productive which will have a direct impact on profitability.  Your team becomes more valuable which increases the organization’s human capital value.  Career Development is a long-term investment in individuals and the company.

Employees in your company understand the value of career development and how it impacts their career.  If an organization does not have a formal career development program, an employee will work for the company long enough to ensure they have adequately satisfied their requirement to move on to another organization that where they will be able enhance another skill set.  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.

Each turnover from a productive employee impacts customer service and profitability.  Studies have shown the true cost of turnover is the approximately six-months of an employee’s salary.  Losing an employee who makes $60,000 per year is costing the organization $30,000 to replace them.  The known and hidden turnover costs include: recruiting, management’s time to interview, temporary employee cost (or a supervisor performing those duties), background checks, orientation, training cost, loss of productivity until the new employee is fully productive,

Some of the components of a career development program may include:

  • Cross Training
  • Career Pathing
  • Internal Training Programs
  • External Training Programs
  • Performance Management
  • Coaching and Mentoring

Steps to Setting up a Career Development Program

Start with an organization chart.

  • Identify the competencies, knowledge, skills and abilities needed for each for each position starting at the leadership level and include 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.
  • Next, identify the most effective way to provide training and experiences within the organization for high potential talent.
  • Identify potential career paths that will enhance high potentials to take on additional responsibility.
  • Create a Career Development Planning Guide to provide to entry level supervisors. The guide should include education, skills, past experiences, self-perceived strengths and areas of improvement.  It is important to include the employee (supervisor or manager) short and long-term career goals and the training and experiences they would like for the organization to consider.
  • After the supervisor or manager completes their portion, their immediate manager should complete their section.
  • The manager will make their recommendations on training, potential job changes, etc.
  • The next step is for immediate supervisor and their immediate manager sit down and review the planning guide to gain clarity and ensure the employee understands realistic opportunities.
  • After this discussion, the manager will review all of their team members with their immediate manager.
  • 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.
  • The leadership team will make their recommendations.
  • The final discussion with the employee is with their immediate manager with a plan to help execute the plan.

Career Path Example for a Career Development Plan:
There is an up and coming engineering supervisor.  Their performance is exceeds expectations and they have the potential to be an excellent manager in engineering or the chief engineering officer.  You want to ensure over the next three-years you position them for a promotion to a manager in engineering.

  • The organization decides to assign the engineer as an operations supervisor so they may experience the challenges of the position. The employee receives training in various areas and develops their skills in managing front line staff.
  • The next year reassign them to be on the customer service team so they can learn the customer’s challenges. The employee receives training on how to sell and build client relations.
  • The following year you promote them to engineering manager.
  • During this two to three-year period, this high potential candidate has experiences that give them a better understanding of how their decisions impact operators, product quality and customers. They also become more valuable to your organization, which directly impacts the value of the human capital of the organization in a positive way.

Managers and leaders will remain with a quality organization if they don’t have to move from company to company to enhance their skills and if there is opportunity within the organization.

The organization has reduced turnover, which impacts employee morale, loyalty and profitability.

A quality career development program is not only practical for a small organization but it will have a positive impact on the bottom line.