Deepening worker skills deepens satisfaction, too

As competition for talent heats up, companies are giving priority to employees’ career development as a low-cost way to keep them around.

By paying for classes, mapping paths to desired positions and even hiring internal career coaches to sharpen resumes, employers are grooming workers to be better candidates for more positions at a time when the vertical career ladder has been knocked away.

That can sound like priming employees to be poached by a competitor, but some research suggests the opposite is true.

“They actually become more loyal,” said Brian Kropp, human resources practice leader at business advisory firm CEB.

Lack of career opportunities is the No. 1 reason employees say they leave an organization, a change from five years ago, when pay was the leading reason, Kropp said.

Career development tops the list of perks employers say they plan to increase this year, according to a survey from Korn Ferry Hay Group that examined forms of compensation beyond base salary, benefits and bonuses.

Asked which alternative rewards they planned to increase in the next 12 months, two-thirds of 242 employers polled named career development or training programs for managers and professionals or clerical, technical and skilled trades.

Spot cash bonus programs were the next most popular, with just under half of respondents saying they planned to increase their use.

Tom McMullen, rewards practice leader at Hay Group, said he was surprised that career development, at 57 percent, was tops even for executives, suggesting they are concerned about remaining relevant at a time of rapid change.

“If I feel that I’m not being competitive with peers, if I’m stagnating, I’m at risk,” McMullen said.

Alternative forms of compensation grew during the recession when money was tight, raises faltered and some companies froze or cut pay. The median annual base salary increase fell to 1.5 percent during the depths of the recession, from 3.5 to 4 percent pre-2008, McMullen said.

With the economy improving, pay raises, now tracking at about 3 percent, are staging a comeback. But many companies, still reluctant to raise fixed costs, are continuing to invest in alternative rewards that, relatively, don’t cost as much.

“We’re turning the corner on organizations knowing that if you want to keep somebody, it’s really about the nonfinancial rewards,” McMullen said.

Career development is particularly relevant for retention, with about 70 percent of employees saying they are dissatisfied with growth opportunities at their companies.

That frustration stems in part from the influx of millennials, who value varied experiences, Kropp said.

But the chance for promotion has also declined as companies cut layers of middle management to save costs, flattening traditionally hierarchies and leaving employees with nowhere to ascend.

The average tenure in a position in 2014 was 30 percent longer than it was in 2010, according to CEB.

“Being able to have an upward, predictable, fairly linear career path doesn’t exist anymore,” Kropp said. Employers have been slow to catch up, and the vast majority still model careers on promotions, but some are shifting their focus to career growth, he said.

When Trading Technologies underwent a reorganization a few years ago, it did away with many titles and layers of middle managementnd flexibility, said Katie Burgoon, vice president of human resources at the Chicago-based company, which makes electronic trading platforms.

To keep employees motivated, the company increased its budget for employee requests to attend professional conferences or take career-related classes. It offers full tuition reimbursement to employees who wish to pursue higher degrees.

Several employees already have transferred to different departments in diagonal moves.

The company, which has 378 employees globally, including 272 in Chicago, is now rolling out an internal career development program that will offer, for example, introductory technical training for employees who aren’t in technical jobs, courses for new managers, and improvisation classes to help teams and employees build communication skills and confidence.

“If we want to retain the smartest and most curious minds, we have to keep those people excited and feeling like they’re moving,” Burgoon said.

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