Employee resignation is a costly problem for businesses. High turnover rates disrupt productivity, increase hiring expenses, and negatively impact company morale. While compensation and work-life balance are often cited as reasons for leaving, a significant factor frequently overlooked is the lack of career development opportunities. Studies consistently show that employees crave growth and advancement, and when these needs aren’t met internally, they will look elsewhere.
Executives often underestimate the power of internal promotions and career progression. According to a Pew Research survey, a staggering 63% of individuals who resigned in 2021 pointed to limited career advancement prospects as a primary motivator. Further solidifying this point, a 2022 McKinsey study revealed that the absence of career development and progression opportunities was the most frequently cited reason for employees choosing to leave their jobs.
New research from MIT Sloan Management Review, led by Abbie Lundberg, Editor-in-Chief and MIT Sloan senior lecturer, emphasizes the critical need for employers to actively cultivate employee growth and facilitate career advancement. This research, derived from a survey of over 1,000 employees and interviews with talent and learning leaders across more than 25 organizations, highlights a significant disconnect. While 67% of individual contributors express a desire for career advancement, nearly half (49%) report that a lack of effective career guidance has hindered their professional journey.
Often, companies place the onus on employees to navigate their career paths independently, mistakenly believing this to be empowering. However, this approach can leave employees feeling lost and unsupported. In other instances, managers lacking the necessary skills or motivation are tasked with mentorship responsibilities, leading to ineffective career development.
To foster genuine employee growth and prevent resignation, a more structured and systematic approach to career development is crucial. This includes proactively informing employees about internal opportunities, providing resources for skill development, and offering consistent feedback and coaching. While many organizations implement such programs for high-potential employees, as Professor Westerman noted at the MIT Sloan Management Review’s Work/23 event, the critical question remains: “Why aren’t companies doing this for everybody?”
Here are three key strategies companies can implement to build a robust career development program and significantly reduce employee resignation rates:
1. Enhance Visibility of Internal Opportunities and Career Pathways
One of the most impactful steps in preventing resignation is ensuring employees are aware of and can easily access internal growth opportunities. Human Resources departments, in particular, should prioritize internal talent pools when filling open positions. Instead of automatically looking externally, HR professionals need to evaluate whether roles can be effectively filled by existing employees across different departments or geographical locations.
Ideally, HR, managers, and employees should have a clear understanding of potential role matches based on employees’ skills and experience. This transparency empowers employees to proactively pursue internal opportunities without feeling the need to seek external options.
Detailed and informative internal job postings are also essential for fostering career growth. Often, job descriptions inadvertently deter internal applicants by emphasizing skills they may lack, even if they possess transferable skills and the potential to learn. Job postings should clearly outline pathways for employees to bridge any skill gaps through training and development resources. For example, GE Digital’s Career Discovery tool allows employees to input their skills and interests to identify potential internal roles, including those outside their current trajectory. The tool also highlights necessary competencies and relevant training opportunities.
Pernod Ricard North America utilizes Workday, a talent management platform, to provide employees with a clear view of potential career moves. Employees can explore vertical and horizontal opportunities, access organizational charts, and connect with local HR business partners for guidance on opportunities in other locations. This system provides transparency across all job grades and departments within the company.
Facilitating broader employee networks is another key component. Companies should actively encourage employees to build connections across departments, meet managers in different areas, and establish relationships throughout the organization. These networks build confidence in managers to consider internal transfers for growth opportunities, rather than solely relying on external candidates who may appear to have ready-made skill sets.
2. Provide Accessible Learning and Skill-Building Opportunities
Simply highlighting career paths is not enough; employees need tangible opportunities to acquire the skills necessary for advancement. A robust career development program must include readily available learning resources and skill-building initiatives. Identifying relevant training programs and courses is a starting point, but equally important is providing employees with practical application opportunities. Employees need chances to practice new skills, learn from mistakes in a supportive environment, and reflect on their learning experiences.
For instance, Fidelity Investments’ customer support representatives participate in a learning model where they acquire a new skill in the morning, practice it during live customer calls (with managerial observation) in the afternoon, and then engage in reflection sessions with peers learning the same skill. This immersive approach accelerates skill development and builds confidence.
Formal rotation programs are also highly effective and are often incorporated into new hire onboarding or high-potential leadership development programs. Schneider Electric launched an open talent marketplace in 2018, where managers can post opportunities for short-term projects, full-time positions, or mentorships. Employees can then engage with opportunities that align with their interests and career goals. These short-term assignments and mentorships provide a low-risk environment for employees to explore new roles and assess their suitability for future full-time positions. This also benefits managers by providing access to a diverse talent pipeline for project-based work and potential future hires, allowing them to assess internal candidates before making long-term commitments.
3. Implement Rich Feedback and Coaching Mechanisms
Consistent and constructive feedback is a cornerstone of effective career development and a powerful tool in preventing resignation. This includes understanding employees’ career aspirations and providing tailored coaching to develop essential skills. HR plays a crucial role in establishing clear feedback policies and ensuring managers actively implement them. Regularly soliciting employee feedback on the support they receive from their managers regarding career development is also essential for program improvement and accountability.
Providing feedback and coaching is not solely the responsibility of managers; managers themselves also require feedback and coaching on their mentoring capabilities. To facilitate this process, healthcare provider UPMC implemented check-in tools. Their Anytime Check-in system allows anyone within the organization to easily provide feedback to colleagues at any time. This can be used after project collaborations or to acknowledge noteworthy contributions. Feedback can be shared directly with the employee or also with their supervisor. Supervisors can also maintain private notes within the system to reference during annual reviews. This real-time feedback mechanism ensures employees receive honest and timely input from both peers and supervisors, fostering continuous improvement and a culture of growth.
Ultimately, investing in employee career development is a strategic imperative that directly benefits the company. While taking a chance on developing an internal candidate might be perceived as a risk, failing to do so exacerbates talent gaps and fuels employee resignation. Overlooking internal talent pools diminishes the applicant pool for open positions and sends a clear message to current employees that they must look externally to advance their careers, significantly impacting morale and increasing the likelihood of resignation. A solid career development program is not just a perk; it’s a vital retention strategy and a key driver of long-term organizational success.
Read the article: why employees should help every employee chart a career path
For more info Sara Brown Senior News Editor and Writer [[email protected]](mailto:[email protected] "email at mit.edu")