Closing the Employee Development Gap: A Compelling Case for Why It’s Essential for Business

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MassTLC member Ace-Up, a leader in helping to close the skill gap with a mix of one-on-one coaching and technology-enabled learning, regularly conducts research on data-backed trends in the talent world. They have been kind enough to share the results of their latest Learning & Development Briefing research with us here at MassTLC, including the full text of their white paper Closing the Employee Development Gap: A compelling case for why it’s essential for business.

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EXECUTIVE SUMMARY
Corporate America has been dealing with an ever-growing employee development crisis, and it’s starting to reach its head. 70% of employees are unhappy with their career opportunities at work, and the majority believe it’s because their companies are not providing the development resources that employees need in order to succeed and grow1.

Meanwhile, companies are spending close to $170 Billion on traditional learning & development solutions in the United States alone2, yet 77% of employers believe their employees lack the skills needed to be effective organization leaders3.

This employee development gap – or the gap between what support employees expect from their employers and what skill set employers expect from their employees – has never been wider, and is a pressing concern across a wide range of industries4. Employees who do not receive development opportunities lack the tools they need to succeed when they face increasing leadership responsibilities, with potentially disastrous results for companies’ bottom lines5.

With companies spending considerably on employee development, the question on everyone’s mind is: why is there still such a large development gap? We here at Ace-Up led an in-house research project that interviewed many forward-thinking business and HR leaders, learning and development professionals, and professional coaches in order to find an answer.

In this paper, we share the challenges and successes we uncovered through our many interviews, as well as our own proposed solution for how companies can tackle the employee development gap within their own organizations.

The Importance of Closing the Employee Development Gap
The employee development gap and the lack of support provided by employers dramatically decreases employee engagement, performance, and retention. In 2017, Gallup has estimated the cost of employee disengagement in the US to be $450 billion to $550 billion per year6. And those costs don’t just apply to disengaged employees who stay at companies. According to Brian Kropp, HR practice leader at CEB, “Increasing job satisfaction does more than keep employees happy – it can save significant money by reducing unwanted turnover”7.

If that wasn’t enough of a problem, 90% of HR and business leaders state that they have “an inadequate leadership pipeline”8. While the importance of leadership development is widely recognized by learning and development professionals for decades, “the majority of managers receive little or no training in how to manage and get the best out of their people”, according to Vlatka Hlupic, Professor of Business & Management at Westminster University9.

This leaves companies vulnerable to even more employee dissatisfaction, and therefore higher turnover rates. On average, HiPos leave their company after less than 3 years, and most mention the lack of career development as the reason for their departure, with expectations around mentoring and coaching most often unmatched10.

Between spending on ineffective learning and development solutions, high employee dissatisfaction, loss of potential revenue due to disengagement, and the lack of qualified leaders, the negative impact on the economic and human capital of companies is such that solving this gap should be one of the first strategic priorities for businesses this year.

What Development Methods Have Companies Tried?
Supporting employees in their development of core leadership skills remains one the of biggest challenges for companies, and they are scrambling for ways to develop employees to become the leaders their organization needs. So what are companies doing to develop their employees’ skills?

IN-HOUSE TRAINING
One software development company that we interviewed runs an “in-house MBA program” targeted specifically at employees who have recently been – or are about to be – promoted into managerial roles with direct reports. However, that program is run in cohorts, which means that these new managers are left on their own to sink or swim before the program begins, leading the company’s Lead of Talent Management to express, “I think we could do a better job of giving people the tools and the resources that they need immediately.”

Another company we interviewed also has an internal L&D program that provides “onboarding, training, and ongoing development throughout [employees’] first two years”. However, according to their Chief Human Resources Officer, the majority of development takes the form of “on-the-job learning” and “on-the-fly mentorship and coaching,” because “as a fast-growing company, we’re building the ship as we sail it.”

Another interviewee who also uses a similar type of on-the-job learning and mentoring, the COO of an ed-tech firm, said however, “we’ve had challenges helping our people understand internal expectations and helping them develop their skills as quickly as we thought they could”

ONLINE LEARNING
Many people we interviewed mentioned the use of a Learning Management System (LMS) for developing their employees’ skills, including the Chief Learning Officer of a large biotech company. It was a popular method of development for companies due to its easy implementation and scalability.

EXTERNAL TRAININGS & RESOURCES
Using external executive coaching, trainings, and workshops also proved to be a popular option amongst interviewees. The Senior Director of Talent Engagement at a company in the product development services sec-tor explained, “to develop true leadership development trainings, we always go outside for that, and/or work with a company to build something and then have people do it in-house.”

What Obstacles Have Arisen From These Methods?
HR professionals have seemingly unlimited options when it comes to choosing employee development solutions. Nevertheless, the vast majority of HR leaders (82%) are dissatisfied with program results11, and nearly three-quarters (73%) of high potential programs fail to deliver desired business outcomes12.

As many industry leaders can attest, successfully implementing an employee development program requires companies to clear a number of hurdles, including securing the appropriate budget, overcoming resistance to training by certain employees, maximizing employee adoption of the development solutions provided, determining the appropriate balance of internal vs. external development efforts, and accurately measuring impact, among many other challenges.

CONTENT ISN’T PERSONALIZED
Some of the obstacles with effective development solutions come from the development method itself. The Chief Learning Officer of a large biotech company said that many solutions “haven’t yielded the expected results”, and some of them, such as LMS, “had a very low adoption rate” from their employees. The HR professionals we interviewed observed that standardized content accessible from a software was “not adapted to individuals’ needs” and “not effective to develop managerial skills”.

LOW EMPLOYEE ADOPTION ENTHUSIASM
Meanwhile, other obstacles can arise from internal attitudes towards these employee development methods. Regarding internal mentoring, while “it’s a great idea on paper”, in reality “managers don’t have the time” to provide their subordinates the support they need. This mentorship and “on-the-job” training form of employee development has shown “mixed results,” and employees who are “more intuitive about asking for help do better than [their peers]” according to the company’s Chief Human Resources Officer.

Employee adoption was one of the most popular obstacles mentioned with regard to employee development. The CEO of a digital marketing agency told us that training programs “without ongoing reinforcement are useless” and can even be perceived as punitive “when forced on employees”.

“The success of a development program depends on how open employees are to support,” explains the Vice President of Talent at a large education technology company, and that “most employees are open [to our programs], but some don’t want to be bothered”. The professionals we interviewed mentioned that “how the development is [deployed] is as much important as the content of the the program itself”, and that telling employees they need to engage in a development program with their already heavy workload often “leaves them feeling even more overwhelmed”.

LACK OF DATA ON L&D ROI
Some of the most interesting feedback we received was about the difficulty with tracking and measuring the impact of their learning and development initiatives. Some described measuring outcomes as “impossible” due to the fact that there are “too many variables to track accurately.” The Chief Human Resources Officer of a market research firm explained that they track employees’ progress during onboarding, “but after one year, we don’t track upward mobility.”

Multiple industry leaders confirmed that while they see the value of quantitative data, their assessment remains largely qualitative and anecdotal. “We feel a bit blind,” admitted one respondent. However, companies who are taking actions to measure impact are getting better results, with more engagement from both employees and senior management. “[Human resources] is considered a cost center, not a revenue center,” explains the senior director of talent engagement at a product development firm. “As part of a company that is focused on growth, we have to be able to validate those dollars [spent on employee development].”

What Development Methods Have Been Proven to be Effective?
Despite all of the obstacles companies face, there is some light at the end of the tunnel for HR and L&D professionals looking to implement more effective employee development solutions in their companies.

Personalized coaching is considered one of the “most effective solution [used] for supporting managers in their development”, according to the Chief People Officer of a software company. Another interviewee, the Chief Human Resources Officer of an insurance company, agreed. “External coaching has proven to be an excellent solution” to provide a learning experience “adapted to their needs”.

The founder of a training company mentioned that combining group training, to foster “peer support and peer accountability”, with one-on-one coaching, to provide “a personalized learning experience” was a highly-effective solution to ensure “sustainable behavioral change”. Indeed, while group training can improve leadership skills by up 22%, when combined with one-on-one coaching it can jump to 77%13.

Another benefit of personalized coaching is that it provides employees a self-directed learning experience – an empowering process through which the employee is responsible over the learning endeavor – while also adding commitment and accountability to the process14. It provides an opportunity for employees to have an honest relationship with an expert who can provide continuous guidance and support, all while focusing efforts on the employee’s specific development needs.

As for the financials? When investing in coaching, Fortune 500 companies have observed a 70% increase in employee performance and collaboration, a 50% increase in employee retention, and estimated a 6x Return on Investment15. Personal coaching appears to come out as an optimal professional development solution for both employees and companies.

CONCLUSION
The employee development gap is one of the biggest HR crises facing companies today, and despite an effort by companies to tackle it, it’s only growing. Employees – especially high potentials – are unhappy with companies’ efforts to address the gap: CEB estimates that HiPos are 91% more valuable to their organization than other employees16, yet 64% are dissatisfied with their development experiences17. Employees who don’t feel they are adequately supported become disengaged and are more likely to leave their position, potentially costing the company as much as double their annual salary in lost productivity18, and leaving a hole in the leadership pipeline that companies struggle to fill.

Our research helped us realize to which extent the employee development gap was an important challenge for companies, resulting in employee disengagement, decreased productivity, and high turnover rates. Many employees lack the skills needed to succeed, both in their current roles and in the case of increasing leadership responsibilities, with disastrous impact on companies’ bottom line. The lack of proactivity when it comes to employee development explains why many companies fail with the implementation of their programs. When the development solutions are not adapted to individuals’ needs, not consistent, and forced on employees, the outcomes can be very disappointing.

If employees are unhappy and unengaged with the current development solutions, companies must respond by adopting self-directed, flexible solutions that make learning opportunities more accessible for their people19. According to our research, personal coaching is one of the best and most effective solutions, and has seen considerable more progress at closing the gap than other more traditional L&D solutions. Business leaders, L&D professionals, and experts who were surveyed were generally in agreement that an effective talent development solution was a program combining group training and self-directed, ongoing reinforcement through personalized coaching, along with a robust capability to track progress and measure impact.

Companies urgently need to consider people development as an essential strategic priority to build today the leaders they need for tomorrow. Ace-Up solves the employee development gap by helping employers reward their top employees with personalized coaching delivered by a renowned expert. By doing so, employers help their people develop the competencies needed to succeed in their role and beyond, and empower the rest of their organization.
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END NOTES

  1. Seventy Percent Of Employees Unhappy With Career Opportunities
  2. Why Leadership Training Fails—and What to Do About It
  3. Rewriting the Rules for the Digital Age: 2017 Deloitte Global Human Capital Trends
  4. Rewriting the Rules for the Digital Age: 2017 Deloitte Global Human Capital Trends
  5. Bad Bosses At The Heart Of Employee Turnover
  6. How to Tackle U.S. Employees’ Stagnating Engagement
  7. Seventy Percent Of Employees Unhappy With Career Opportunities
  8. Rewriting the Rules for the Digital Age: 2017 Deloitte Global Human Capital Trends
  9. Bad Bosses At The Heart Of Employee Turnover
  10. Why Top Young Managers Are in a Nonstop Job Hunt
  11. The HR Guide to Identifying High-Potentials
  12. Companies That Fail to Retain High-Potential Employees Groom Top Leaders For The Competition
  13. http://www.ricsearch.com/pages/services.asp
  14. Hiemstra, R. (1994). Self-directed learning. In T. Husen & T. N. Postlethwaite (Eds.), The International Encyclopedia of Education (second edition), Oxford: Pergamon Press
  15. ICF Global Coaching Client Study. (2016). International Coach Federation
  16. https://www.cebglobal.com/talent-management/high-potential.html
  17. https://hbr.org/2017/10/what-science-says-about-identifying-high-potential-employ-ees
  18. http://news.gallup.com/businessjournal/162953/tackle-employees-stagnating-en-gagement.aspx
  19. https://hbr.org/2015/07/7-ways-to-improve-employee-development-programs

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