A precarious development

UI study finds employee training might actually increase turnover

American businesses spend billions of dollars training employees to produce a better, more productive workforce. But a new study by University of Iowa researchers finds that many of these programs might actually increase turnover while driving up a firm's 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 in the UI Tippie College of Business.

"Only those employees who can see a way forward in their careers will stay with an employer," says Seibert. "Otherwise, professional development opportunities might simply make their workers more employable by other firms."

This suggests that successful employee development is more than just providing development opportunities. Seibert said that for those investments to pay off, employers need to also show they offer adequate career advancement opportunities.

Seibert and Maria Kraimer, associate professor of management and organizations in the Tippie College of Business, 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.

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 company. This is compounded by the costs associated with hiring and training the employees who replace those who leave for better jobs.

The good news is the survey found that not all employees interpreted career advancement opportunities as the traditional climb up the management ladder, such as promotions or raises. They found that programs like mentoring and job rotations as well as good relationships with their immediate boss can create the feeling that career opportunities are available. "Career opportunities are perceptual in nature, 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," they wrote.