This is the first in a multi-part series about career development in small businesses. This article looks at what career development involves and how it can support your employees as well as your business.
There’s a well-known quote attributed to leadership specialist and coach, Peter Baeklund:
“CFO to CEO: What happens if we invest in people and they leave?
CEO to CFO: What happens if we don’t and they stay?”
Reading this makes most people chuckle. We laugh because it raises an important, if not awkward, point. Providing career development costs time and money. Chances are if you’re a small business owner, you don’t have a lot of extra time or money. But as Baeklund’s imaginary CEO points out: if you don’t provide career development for your employees, you run the risk that they will stay with your organization and contribute at a level that doesn’t represent their full potential.
The imaginary CEO isn’t alone—most business owners understand the importance of employee development; however, most also admit that they don’t devote the necessary time and resources to this activity. As the Society for Human Resource Management reported, a study by the global staffing firm Randstad revealed that “73 percent of employers said fostering employee development is important, while only 49 percent of employees said leadership is adhering to this practice.”
Additional research conducted in the U.K by Roffey Park Institute indicates that small businesses are behind larger organizations when it comes to development. The researchers found that 71% of the largest organizations had formal talent development plans while only 19% of companies with less than 50 employees had similar plans in place.
From an organizational perspective, career development is focused on the progress that employees make within the company, and is often tied to succession planning. For individuals, career development is about the evolution of skills, decisions, life roles, and self-actualization of each employee. At the core, career development is about the fulfillment of one’s talents and potential, a need that many believe is present in everyone. As the National Career Development Association’s policy statement suggests, it’s not something that happens overnight. In fact, the association asserts that “the development of any person’s career takes place over most of his or her lifetime.”
How can career development benefit your small business?
Small business owners are focused on the growth of the business, and without an in-house HR expert, adding career development to the list of responsibilities may feel like an unnecessary headache. Of course business growth is important; however some owners haven’t yet realized that employee development directly impacts the growth of their business. Investing time and money in your staff is a critical part of a business strategy and a method to ensuring long-term success.
Use career development to recruit employees
Large businesses often have an entire team dedicated to recruiting and hiring new employees. Small business owners don’t have that luxury; in fact, the consequences of open positions or bad hires can negatively impact the entire business. With this in mind, it’s important to include career development as part of the package you use to recruit employees. Once you establish that you’re a business that invests in employees’ careers, you will earn distinction as a great place to work that will help attract top talent to your organization.
Use career development to retain employees
Once you recruit an employee, do everything you can to retain them. Ideally, career development should begin during onboarding, and be a key part of the employment benefits package. Sharing career development offerings with a new hire demonstrates that you’re invested in them for a long- term relationship. With this understanding, it’s likely they will become more engaged with your organization and will hopefully be less likely to seek out another employer.
Use career development to create a healthy organizational culture
Providing opportunities for growth creates loyalty and demonstrates your respect and your appreciation for what each employee offers the company. A commitment to career development establishes a shared vision around the benefits of growth, for employees and the business.
Use career development to build a consistent, stable business
The investments you make in employee’s careers contribute positively to the long-term stability of your business. When employees are challenged and experience career development, it’s less likely that they will leave. With a lower rate of turnover, you’re able to create a consistent customer experience. Furthermore, if you have open positions, those roles can be filled—without negatively impacting the business operations—by existing employees who have worked to develop new skills.
What career development advantages do small businesses have over big businesses?
Large companies may be able to offer employees excellent salaries, in-depth career development plans, and a vast network of opportunities for growth. But there are career development disadvantages, too. In larger organizations there may be more competition, there may be an elaborate hierarchy that’s difficult to navigate, and it can be tough for employees to stand out among a larger population of workers.
By comparison, a small business may not be able to offer an excellent salary, but employees can achieve a higher level of responsibility more quickly, and it’s easier for a leader to observe and recognize what individual employees are capable of contributing. Small businesses also offer employees the opportunity to gain hands-on experience (also known as career development) across all the functions of the company.
“The draw for small business is the ability to feel like you’re part of a family or group,” says Suzann Q. Parker, a business consultant who works for a small consulting agency in Seattle, WA.
“We’re all working towards the same goal, so we’re more engaged in the business. We may not have traditional opportunities for career growth, but we grow in other ways.”
How do employees benefit from career development?
As we mentioned earlier, career development is about the fulfillment of one’s talents and potential. When work becomes routine and no longer provides a challenge, people get bored. To nurture employees’ growth, Matt Heller the author of The Myth of Employee Burnout, suggests looking for areas where employees can develop other skills, work in another department, or get involved in a different area of your business.
“It was definitely part of my decision to accept the employment offer,” says Parker in regards to the career development opportunities her employer provides.
At the company where Parker works, each employee receives an annual development budget which can be used at the employee’s discretion. There’s enough money take a class, buy books for a college course, or participate in online training. In some cases the development activity relates directly to career goals. Or, as in Parker’s case this year, the money can be used for personal development. She’s using her development dollars to take a woodworking class.
In addition, there are other “no-cost” opportunities for learning and growth including a peer mentoring program, communities of practice, and in-house workshops taught by peers.
“The focus on employee development is one of the things I really love about this company. It makes us strong. We can learn from each other. We can pull on everyone’s strengths.”
What do you risk if you don’t provide career development?
According to the Bank of America’s 2015 Small Business Owner Report, small businesses are having difficulty finding the right staff. When asked about the top challenges small business owners have with employees, they cited finding talent (38%) and employee turnover (16%) as concerns. For 59% of the small business owners, the challenge of finding qualified candidates was related to the fact that potential employees lacked the necessary skillset.
Indeed the time and cost involved in creating a career development strategy and approach for your business aren’t small expenses. You must meet with employees, assess skill sets, and review training opportunities. Making this investment without a guaranteed return on investment is unnerving for the financially-conscious business owner.
However, as the report from the Bank of America indicates, not making this investment creates the potential for more risks including an inability to recruit top talent, difficulty retaining employees, and undeveloped skills.
“Small businesses have to have something to offer other than money, or upward mobility,” says Parker. “They have to have a strong culture, as well as a strong interest and belief in the employees’ strengths as an individual.”
Employees tend to feel more engaged when they believe that their employer is concerned about their growth, development, and personal goals. A career development strategy demonstrates your commitment by providing employees with a structure that can lead to higher performance in their current jobs, a possible promotion, or a new position.
This focus on providing career development can have a direct, positive impact on your small business by improving morale, as well as increasing job satisfaction, productivity, and a commitment to the organization. When small businesses provide avenues and the means for employees to develop further in their careers, it’s more likely that the company will be able to achieve its strategic goals as well.
Learn from the example of the imaginary CEO in the quote at the beginning of this article. Don’t worry about employees leaving after you’ve invested in their development. Instead, look for innovative, cost-effective ways that you can implement career development in your small business. You’ll be surprised by the difference seemingly small investments will make for your employees and your business.