Running a successful business is about more than revenue, statistics and sales, as countless advisors have been warning of for years. Now, a recent study has confirmed these thoughts, bringing to light issues many leaders of companies large and small alike have faced over the years. Namely, the study by CEB, a leading advisory firm, found that neglecting high performing employees may result in both financial and human consequences. When employees feel underappreciated, the study stated, businesses run the risk of losing top performers to competitors.
Employee resources placed in the wrong hands
As has been confirmed by several major evaluations prior to this study, it is far less expensive to train and lead talent development programs with existing employees than to launch a search for new workers. Each year, top earning companies spend an average of $3 million on leadership, training and development initiatives, which in itself is hardly a misguided practice. However, as the study points out, a significant number of organizations apply these resources to individuals who are not best suited for these programs.
“Too often resources, training and career opportunities are directed at employees who lack the aspiration, engagement or ability to be effective at the next level,” Eugene Burke, chief science and analytics officer at CEB said in a statement. “This misidentification is preventing those with the strongest potential from reaching senior roles and could restrict an organization’s future productivity, innovation and performance.”
Burke further said that as a result, there is increasing pressure placed on businesses to recognize employee talent in order to improve return on employee investment. In a rush to stay on track with the trend, many business leaders have jumped on board, albeit without the most appropriate level of thought applied to creating a comprehensive and effective employee development initiative.
Improving employee performance without losing company talent
While employee engagement and education programs can improve retention rates and significantly increase tenure at an organization, when the wrong workers are invited to take part in these programs, the results can instead have little effect on a company. Based on a decade’s worth of research sampling for 6.6 million people, CEB recommended companies take the following into consideration when building an employee improvement program:
- Demand commitment: Employees who sign up for engagement and training opportunities should be asked to commit to the program for a specific amount of time. This will decrease the risk of a worker leaving a business suddenly and without warning – this method ingrains in workers a sense of dedication to their position.
- Reevaluate and measure potential in a new way: Although manager evaluations are valuable, due to the inherently subjective nature of the practice, those gauging talent and readiness for a program need to focus on more than just a good word from a colleague. Instead, workers ought to be evaluated using reliable and subjective methods such as sales figures and business success rates.
Despite the fact that around $3 million is poured into leadership and development programs each year, approximately 55 percent of those who partake in enrichment programs eventually leave the company within five years, marking the importance of a well designed training program.
In order to implement such programs and increase hiring in general, however, many companies need increased working capital to follow through. These endeavors can be costly and may take months to implement, making it imperative that companies have enough cash on hand to manage programs in an efficient and meaningful way. For those looking to explore their financial options and the possibilities of retaining current employees, talking to National Funding can help.