The competition for talent has heated up in recent years, leaving companies of all sizes with longer recruitment cycles to back-fill key roles, potentially slowing growth (they key external challenge named by CEO's in that Q3 report). According to a 2012 report from the Center for American Progress, companies spend on average 20% of a worker's annual salary to replace them when they leave -- on a $50,000-salary, that's $10,000. In their 2014 State of the Industry Report, ATD noted that the average company spends just over $1,200-per-employee annually on learning and development. That gap between replacement and retention costs, then, makes a compelling case for investing in developing the skills not just that your employees need today, but more importantly, the skills they need for where midmarket leaders want to take the businesses in 3 to 5 years.
Where do you begin?
First, be sure your performance management process is exactly that -- an ongoing process, and not just an annual event. Done right, you should be providing coaching and feedback throughout the year. That said, your employees should have a clear sense of their career path in the business, and what they need to do in order to advance. One simple way to do that is to provide an Individual Development Plan (IDP) that outlines an agreement between you and your direct reports on their role in the business strategy and what steps they can take to grow.
The following infographic from Harvard Business Publishing's "Developing Employees" module of the Harvard ManageMentor (HMM) program shows a simple, 4-step process for driving toward an IDP. IDP's should be simple, and easy to understand. It should include no more than 3 goals, and have clear objectives, measures, and milestones. Identify which skills and behaviors require formal training vs. those that can be developed through on-the-job exercises (and strive for the latter whenever possible), as well as identify what support your employees will need to complete their development assignments. Last, agree on how you'll monitor progress and when the development needs to be completed. Working together, you may be able to foster a more engaged workforce that turns over less frequently and allows your midmarket firm to win in the war for talent.