Blog + Human Capital Management
Blog + Human Capital Management
Article originally published on trainingindustry.com.
Following years of an overheated labor market, organizations are as focused as ever on reducing costly attrition. The challenge is knowing where to focus efforts to have the biggest impact. It’s often easiest to concentrate talent management initiatives on blanket retention strategies like employee surveys or improved compensation and benefit packages. Yet, bringing professional development teams into the conversation to personalize solutions can make a big difference.
Organizations most often rationalize investments in skill-building efforts as preparing the company for the future of work. As automation and digitization become more common, employers are increasing investments in reskilling and upskilling programs to build future-ready workforces. Employee retention as a case for skill-building efforts and programs is generally an afterthought.
Understanding why and how employee skill building boosts retention will give your organization a competitive advantage in today’s tight talent market. Building programs that support each employee’s unique goals and skill sets is essential. There are four key reasons why prioritizing personalized skill-building efforts can boost organizational retention:
The most straightforward way that internal skill building boosts organizational retention is by increasing employee engagement. As remote work opportunities flourish, switching costs to leave one’s position are lower than ever. One way to combat attrition is to prioritize engagement efforts that maintain or improve morale. Companies often focus on tangible morale boosters like free meals or bonus paid time off (PTO) days. These tactics may improve sentiments temporarily, but do not engage employees any differently in the long term. They are also generic solutions that do not personalize employee experience or engagement to the individual employee’s needs.
Employees report that learning and growth opportunities are important drivers of a good work culture. One sustainable way to create a culture of learning is investing in personalized employee skill building. By creating development opportunities that allow employees to chart their own learning paths, organizations can boost engagement — and therefore retention.
Research into employee motivation and mindsets tells us that workers today increasingly value non-monetary benefits alongside monetary ones. According to PwC, 77% of workers want to reskill or completely retrain, yet many are leaving their current companies to do so elsewhere.
Implementing skill-building programs and promoting them as a tangible employee benefit can set employers apart in today’s talent marketplace. For existing employees, doing so promotes retention by providing personalized reskilling and upskilling pathways within the organization, eliminating the need to look elsewhere for the same benefit. Not only do skill-building programs build goodwill among existing employees, but these efforts attract new talent to the organization who are drawn to the company’s support for individualized learning and development (L&D). These new employees often come with a learning mindset, eager to grow within the organization over time instead of outside it.
Employees value opportunities to grow within an organization by utilizing new skills, even if those opportunities are not formal promotions. In fact, 89% of U.S.-based workers would consider a lateral career move without a financial incentive. In other words, opportunities for internal mobility (vertical or lateral employee movement within an organization for career transitions or development) increase retention when aligned with employees’ personal goals.
Reskilling and upskilling are the building blocks for internal mobility. To take on more advanced roles within a function (promotion), or to succeed in a new function completely, employees first need to hone relevant skill sets. Employees stay at companies that hire regularly from within 41% longer. Organizations that offer employees opportunities to reskill and upskill create these personalized pathways for internal mobility and increased retention.
Nationally, employers are reconsidering degree requirements for a wide range of roles. Given that 62% of Americans over the age of 25 don’t hold a bachelor’s degree, this shift is necessary as demand for talent exceeds supply across industries. McKinsey recently published a study highlighting that skills built on the job account for almost half of an average person’s lifetime earnings. This share only increases for employees without college degrees. Relatedly, employees without traditional four-year degrees stay with an employer 34% longer than their degree-holding peers.
Skills-based hiring (bringing in talent based on demonstrated competencies) provides organizations with a clear understanding of the capabilities and gaps of each employee. Those hired under this model benefit from targeted, personalized reskilling and upskilling opportunities to grow directly within the company. For a group that is already more likely to stay within the organization, this type of investment only boosts retention further. Take Accenture, for example. The firm launched an apprenticeship program in 2016 and has since hired 1,200 people into it, 80% of whom joined the program without a college degree. Senior managing director Jim Coleman reports, retention rates for apprentices in the company are “through the roof.”
Prioritizing skill building to better engage, incentivize, grow and hire talent can shift employee sentiments and behavior in meaningful ways that impact retention. By personalizing these efforts according to employee desires and existing skill sets, professional development teams can boost retention in sustainable ways that benefit both employees and the broader organization in the long term.