Lack of advancement opportunities negates benefits of professional development programs
American businesses spend billions of dollars training employees in order to develop a better, more productive workforce. But a new study by University of Iowa (UI) researchers finds that many of these programs might actually increase turnover while driving up company costs.
The study found that employees feel little compulsion to stay with an employer that provides professional development if they don't see any career advancement opportunities, says Scott Seibert, associate professor of management and organizations at UI.
Seibert and his colleague, Associate Professor Maria Kraimer, 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," says Kraimer. "However, when career opportunities are low, development support was not related to performance, and it actually increased turnover."
As a result, Seibert says, much of the $134 billion that businesses spend on employee development each year could be wasted if companies don't assure their employees that they have a promising career with the firm. This is compounded by the costs associated with hiring and training the employees who replace those who leave for better jobs.
"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," Kraimer says.
The good news is that the survey found that not all employees interpreted career advancement opportunities as simply promotions or raises. The researchers found that positive employee-supervisor relationships and programs, such as mentoring and job rotations, create the feeling that career opportunities are available.
"Career opportunities are perceptual in nature," the researchers wrote, "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."
Kraimer and Seibert's study, "Antecedents and Outcomes of Organizational Support for Development: The Critical Role of Career Opportunities," appears in the May 2011 issue of the Journal of Applied Psychology. It was coauthored by Sandy J. Wayne and Robert C. Liden of the University of Illinois-Chicago and Jesus Bravo of Arizona State University.