What is employee development? It's benefits and importance (2023)

In this guide, we will first examine what employee development means. But then we will also examine various other facets of it, including the benefits to the organization and different methods and approaches to employee development.

We'll also detail how HR professionals and L&D professionals create comprehensive,actionable employee development plansfor their organizations.


  • What is employee development?
  • Benefits and importance of employee development
  • What are the most effective employee development methods?
  • What areas of employee development are there?

As Human Resource (HR) specialists or Learning & Development (L&D) professionals, employees are one of the most valuable “commodities” we deal with.

Making decisions about interviews, hiring, and evaluating and evaluating them is part of day-to-day work for most of us. A very important aspect of our work is to focus on ways to develop these assets.

While it may seem like a fairly simple challenge to tackle - just give them some training! – The reality is very different! How we develop the company's human resources - whether they are as good or better than those of the competition - could very well determine the competitiveness of the organization.

What is employee development?

employee developmentis a process in which the existing competences and skills of the employees are improved and new ones are developed to support the goals of the organization.

Inherent in this definition are the following finer points of interest:

  • People development is not just about developing organizational L&D strategies
  • It's about more than just conducting mandatory employee training
  • It goes well beyond an annual meeting with employees to discuss their shortcomings and identify areas for improvement

Done right, these investments will more than pay off in the long run, even though employee development requires investment (time, effort, and funding) on ​​the part of the company.

For example, sometimes it costs money to fire an employee with limited skills or to develop those skills according to the organization's standards. However, if these development efforts lead to long-term employee retention, it is a win-win situation for everyone involved - thanks to a well thought-out employee development strategy.

What did employee development do in the above scenario?

  • It has avoided the costly (and sometimes lengthy) process of hiring a replacement for a departing employee
  • It has received a lot of “sunk capital” already invested in this employee in terms of their organizational experience and expertise
  • It enables HR professionals and L&D professionals to build on (rather than build from scratch) the organizational culture (which differs from the technical experience and expertise) that has already been instilled in the employee.

All in all, the advancement of an employee results in making human assets work much more efficiently to meet organizational standardsOnboardingor indoctrination training for newly hired employees.

Benefits and importance of employee development

A well thought-out personnel development strategy is important on several levels. And when executed well, it can bring numerous benefits to everyone involved, including employees, HR managers, and the organization as a whole.

Some of these benefits include:

1. Performance improvement

For companies to remain competitive in their niche, the organization must continue to outperform the competition.

People development can help the organization meet – and even exceed – performance expectations.

What is employee development? It's benefits and importance (1)

Those:2017 CSO Insights – Sales Manager Enablement-Bericht

In a 2017 report that focused on the impact of employee development on performance, CSO Insights (Miller Helman Group's research arm) showed how developing sales leaders can dramatically improve performance metrics such as quota attainment, revenue attainment, and win ratios. In some cases, you invest as little as $500 in employee developmentyielded a 46.1% win rate improvement, while a $5,000 investment brought 51.4% more profits for the company.

2. Deal better with unexpected situations

Today's business world is all about constant change. And this change not only entails challenges (for the workforce), but also opens up previously unimagined opportunities if handled correctly. It is therefore of crucial importance for the workforce to be able to deal with constantly changing situations quickly and effectively.

“More than two-thirds of executives believe that unless their company becomes significantly digitized by 2020, their company will no longer be competitive.”
- Brian Kropp, group vice president of Gartner's HR practice.Those.

Adaptable employeesare great at improvising solutions where employees with less developed skills would simply accept the status quo.

One of the benefits of a well-defined employee development program is that it can empower employees to better deal with the unexpected.

3. The learning culture within an organization helps to attract new employees and improve loyalty

HR managers can confirm that it is not enough to post job advertisements - it is just as important that interested parties want to apply for these positions.

Lacking the latter, companies won't attract the best and brightest to help them stay competitive.

According to a white paper prepared by ATD Research (sponsored by Paradigm Learning) entitledBuilding a culture of learning, the foundation of a successful organization– Organizations are more competitive and agile and their workforce more engaged when there is a culture of learning and knowledge sharing across the organization.

What is employee development? It's benefits and importance (2)

Assisting in the development of employee talent, including through tactics such as personalized development plans, creates a highly attractive work environment.

According to the study, such organizations that have maturitylearning culture, are three times more likely to use this fact as a recruitment tool. And implementing a solid employee development program is the first step in that direction.

4. Save money by retaining employees

Investing in internal employee development programs is important to ensure the workforce can do what they need to do to “keep the ship afloat”. However, employee development can also save a lot of money in the long term.

"Global Talent Monitor's Q2 2018 HR Activity Report shows that a lack of future professional development remains a major driver of employee turnover - cited by 40% of departing employees as a factor of dissatisfaction with their job."

AT&Tdiscovered that only 50% of its 250,000 employees worldwide had the right skills to lead the company into the future. As a result, company management launched a $1 billion retraining program (the company calls it "retraining"). So how has this internal employee development program helped the company save money? Mathematics!

The company found that the median cost of replacing a worker who lacked the necessary skills was approximately 21% of that worker's salary. And as employees' base pay increases, so does the cost of replacing them -- making retraining a much more cost-effective option. Not only do companies not have to start from scratch (as they would with new hires), but as AT&T found, companies also retain valueinstitutional knowledgeB. by retraining and retaining their current workforce.

"It's important for companies to hire and reskill at the senior level, rather than constantly taking to the streets to hire new people."
- Bill Blase, Senior Vice President of Human Resources, At&t.

5. Help turn potentially good employees into great leaders

If an organization is to grow, survive, and thrive over the long term, it must develop a steady stream of would-be leaders.

Unfortunately, leadership skills rarely come from attending Ivy League institutions or weekend leadership training sessions — although that helps.

Companies with strong leadership show +37% revenue growth per employee and +9% gross profit margin, according to the report by Bersin of Deloitte –Leadership with high impact. The new maturity model for executives.

Financial performance indicators in organizations with low versus high leadership maturity*

Financial performance indicatorMean for low-maturity organizations (†)Mean value for organizations with a high degree of maturity (‡)Difference in performance of organizations with high maturity versus low maturity
turnover per employee402.35551,65+37%
Bruttogewinnmarge§43%47%+9 %

Those:Bersin von Deloitte, 2016.
* The impact is significant at the 95% confidence level. We controlled for organizational size via regression analysis, using both headcount and revenue as control variables where appropriate.
† An organization is categorized as “low maturity” if its composite score is in the bottom 50% of all organizations included in this study.
‡ An organization is considered “Very Mature” if its composite score is within the top 50% of all organizations included in this study.
§ To calculate the percent difference, 47 percent minus 43 percent divided by 43 percent and multiplied by 100 equals 9.3 percent.

Die American Management Association®outlines 10 leadership qualities that aspiring leaders must possess. Typically, those qualities needed to turn good people into great leaders come from within the organization.

One benefit of establishing an in-house employee development program is that these leadership skills can be tailored to the standards of the organization.

List of the top 10 leadership qualities

  • Be result-oriented
  • Be customer centric
  • have a vision
  • Be strategically focused
  • Do your work effectively through others
  • Be good at dealing with conflict
  • Ask great questions
  • Make quality decisions
  • Be a trusted leader
  • Be an incredible communicator

6. Improve employee engagement and motivation with good training

Having a workforce that is fully committed to the company at all levels is critical to success. To goemployee engagementto keep them motivated to the company's mission is a function of various factors such as

studies ofthe Dale Carnegie Institutefound that ahighly engaged employees can lead to extraordinary productivity gains - up to 202%. Actually,85% of executivesbelieve employee engagement is a strategic priority.

According to Gartner, employee engagement is low worldwide and has been low for at least the last two decades. The latest Gartner Global Talent Monitor finds that only 32% of employees worldwide report a high intention to stay and only 14% report a high level of volunteering in their day-to-day work.

A well-defined employee engagement program can balance all critical employee motivation factors, including training and skills development, to deliver the benefits of a fully engaged workforce across the organization.

7. This gives the company the flexibility to expand, innovate and compete more robustly within its niche

In order to be a true market leader in its niche, it is important for companies to be agile, flexible and responsive to the needs of their customers and partners.

Having a balanced workforce equipped with the skills to innovate and compete for new business opportunities is an advantage that robust employee development plans offer organizations.

Such programs not only develop existing skills, but can also be used for implementationlonger-term competitiveness by teaching new skillsthis may be necessary in the future.

In summary, a well-trained, dynamic and highly motivated workforce is essential for any organization. And the best way to bring employees up to such standards is to invest in their continuous development. Such employees not only provide financial benefits to the organization in terms of profitability and performance improvements, but they also contribute to employee morale and retention.

What are the most effective employee development methods?

When it comes to employee development, there are many methods and types, but of course some are more effective than others.

As you will see, employee development is about more than just creating a training program, although training is one of the methods listed.

It's much more robust than that and involves exposing employees to new information and ideas in a variety of ways, from putting them in other roles, building a mentoring program, and even using virtual reality!

As with all types of learning, people respond to each type differently, and success depends on the person being trained - and what they are learning.

Despite these differences, there are some methods that are more effective than others and they are:

  • education
  • The task/job rotation
  • Coaching
  • maintenance
  • workshops/committees/working groups
  • simulations
  • conferences
  • on-the-job training
  • self-study

If you want a thorough explanation of each of these methods, check out our in-depth article onMethods of employee development.

What areas of employee development are there?

It's not enough to simply decide that your organization needs employee development, you also need to be able to pinpoint exactly which areas need specific development.

Without a full understanding of this, you will not be able to develop an effective oneemployee development plan.

Each of these critical areas encompasses many different types of skills, fromconflict managementfor relationship building. Some areSoft Skills, others areDifficult Skills, but in general they will all help your people become more effective and ultimately lead to better business outcomes.

The 7 most important improvement areas of employee development are:

  1. flexibility
  2. communication skills
  3. Conflict resolution, tact and work ethic
  4. leadership skills
  5. Organizational skills
  6. creativity skills
  7. coping with stress

For a comprehensive guide to all of the areas listed above, check out our article onareas of employee development.

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