People Management Series Part 2: The Importance of Career Development Conversations

career development

People Managers across every industry sector are competing to find ways to engage and retain the people they can’t afford to lose as global economies improve and skill shortages reach new peaks.  Historically, career development has been regarded as the responsibility of the employee – ‘I want my people to be empowered and to be accountable for their own career decisions’.

Sadly, when team members don’t have a clue where to start, and with no access to career development tools and resources, the inevitable happens – career focused people quickly feel stuck and start to look for another job where development aspirations can be met.  The Manager or HR find out at the exit interview that the loss of a valued employee could well have been avoided.

When one employee leaves a team through lack of development opportunity, it’s not unusual for others to quickly follow. This ‘domino effect’ can have a significant and unexpected impact on the performance and productivity within the team and across the business. Multiple studies have shown that when an employee leaves, the cost of replacement is at least three times the person’s salary, up to five times if the person holds a sales role and takes key clients with them.

The Hidden Cost of Turnover

While cost of turnover doesn’t usually appear as a single line on a profit and loss report, it pays for People Managers to do the maths!

James Garner, is the Senior Software Manager for IT Limited, responsible for a team of 25 people, on an average salary of $75K per person. The company has a reasonably flat structure which means cross company development opportunities are not highly visible – unfortunate when the average age of the workforce is just 38 years so a significant number of Gen Y employees are looking for that next step in their career.  Other than the occasional training course to up skill technically, James is at a loss to understand the development opportunities that can be provided for people within his team.

In the last year James has lost 4 people within his team. Exit interviews has shown a clear trend with resignations caused by the lack of development opportunity.  For each of the 4 resignations, it has cost the business 3 x the average salary of $75K to replace each person. In James’ team alone, in the last 12 months, turnover costs due to lack of development has cost $900,000.

Don’t believe it? Check out our paper on how true cost of turnover is calculated.

Career Development Conversations are Important in Driving Motivation and Engagement

People Managers need to actively demonstrate to team members and potential new talent that their company is a place they can grow professionally and where job satisfaction is maximised.  From a business perspective, a study of more than 3,100 U.S. workplaces by the National Center on the Educational Quality of the Workforce (EQW) found that a 10% focus on development for an organisation’s people yields (on average) an increase of 8.6% in team productivity.

While some People Managers focus on technical skill development for their people, true leaders create opportunities for horizontal as well as vertical movement. For those companies with a flat structure, this means that team members are no longer waiting for a more senior resignation, a retirement or a death notice to be considered for promotion.

Then, there’s the burgeoning baby boomer generation and the ageing workforce for People Managers to consider. By 2031, 65+ year old employees will make up 31% of the New Zealand workforce. For those managers who have the skills to hold regular development discussions with their people, ‘transition to retirement’ conversations come naturally as just another stage to be discussed.  When age starts to impact productivity, then People Managers are equipped to handle potential performance issues sensitively, age discrimination is avoided and the transfer of knowledge and experience is planned for.

Creating and maintaining a culture of development is a critical strategy for all People Managers who want to …

  • Attract industry high performers to their team
  • Improve Manager – Employee relationships
  • Address low levels of motivation and job satisfaction within the team
  • Engage and retain their key talent
  • Manage poor productivity and performance issues
  • Prepare for the impending baby boomer exit
  • Ensure there is a succession planning structure place
  • Increase the team’s bottom line results

Career Development – it’s no longer a ‘nice to do’ on an ad hoc basis. When a Manager focuses in on the career development needs of their people, it’s a key differentiator between the manager who manages and the leader who others respect and want to follow.

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