If you’ve had to hire any employees lately, you already know retaining great employees is tough in our tight labor market. In today’s strong economy, many employees have jumped ship or are considering jumping ship because they’re confident they will find another job — one that provides better pay, career advancement opportunities, and/or a greater sense of personal fulfillment.
In PayScale’s latest research on the reasons an employee quits, we found more pay is the primary driver for quitting — twenty-five percent of respondents stated higher pay was the reason they sought a new job.
But money isn’t the only thing that matters.
When asked what attracted employees to another organization, 27 percent cited the opportunity to do more meaningful work, while 17 percent said increased responsibilities and 16 percent said increased pay was the primary driver.
This data probably doesn’t surprise to you. How many times have you heard in an exit interview, “I’ve enjoyed working here, but I am leaving this firm because I got this opportunity to do this really exciting work elsewhere?”
The reality is your best employees, the self-starters who lift up those around them, are more likely to quit than the average employee when they don’t see new challenges and stretch opportunities in front of them. Yet too often, organizations are not intentional about creating growth opportunities for their staff. Sometimes, managers even take actions to ensure their top talent remains on their team longer than what is good for the company and the employee. This phenomenon is known as talent hoarding.
But, the costs of losing a high performer can be astronomical. According to Jorgen Sundberg, CEO of Link Humans, an employer agency in London, the cost of recruiting, hiring and onboarding a new employee can be as much as $240,000. Costs incurred include recruitment advertising fees, staff time, relocation and training fees for replacement hires, the disruption to incomplete projects, lost customers, weakened employer brand and more.
So, what can you do intentionally to keep good employees onboard? One of the keys is to make sure people have opportunities to move forward and laterally within your organization.
The Business Case for Investing In Employees’ Development
There is a clear business case for creating an internal talent mobility strategy. Your actions or inaction to promote internal mobility have a ripple effect on your ability to retain employees and recruit future ones. In the age of social media, your employer brand, which impacts your ability to hire, lies in the hands of your existing employees. Happy employees can act as brand ambassadors and help fill your pipeline with quality candidates. Unhappy employees can post negative reviews on Glassdoor to hurt your employer brand and ability to recruit effectively.
Additionally, research has shown investing in employee development is positively correlated with better overall company performance. A study cited by a Bersin by Deloitte article compared and contrasted the talent practices of low-performing and high-performing organizations. The researchers found at many low-performing organizations, talent and strategy are seen as separate channels. Yet, at high-performing organizations, recruitment, retention and internal mobility are “inextricably linked”. The researchers concluded:
These high-performing organizations expend meaningful effort and energy on creating experiences and expectations for talent that encourage growth, learning, engagement and communication. They spend far more time coaching and developing employees, creating cross-training and stretch assignment opportunities, and focus more on workplace values rather than solely the kinds of capabilities that can be claimed on a resume.
With the business case established, here are seven practical ideas on how to create exciting growth opportunities for your employees.
1. Give employees models and narratives for advancement
Employees, especially ones just starting their careers, need models for where their work can go.
By giving employees a vision of where they can go in their career, it helps raise the sight of those who might not otherwise believe they can move forward in the organization.
For example, you can organize lunch-and-learns where seasoned employees share their career experience within your organization, so younger employes can see real and practical ways for how they can achieve the same level of success.
A mentorship program or mentorship marketplace is another version of this idea. For example, you might create a program where seasoned professionals sign up to mentor less experienced professionals and share their domain knowledge with any employee who is interested in learning about new areas of the business. A previous employer of mine did this. They published all mentor profiles — including their areas of expertise — onto an intranet, so employees can easily review the list of mentors and contact those they are interested in speaking with.
Additionally, consider creating a structured career-plan for entry-level roles. For example, many business-to-business organizations hire a team of Sales Development Representatives (SDRs) — roles typically filled by recent graduates. The team of SDRs are responsible for qualifying prospects on the phone and setting demos or appointments for sales reps. For an entry level role like an SDR, it’s beneficial to lay out a clear career plan, set expectations with employees about how they will progress through the role and move beyond the role.
At PayScale, we conceptualize the SDR path in three phases. The first six months is considered a training/ramp-up period; the next six months is considered the time in which an employee “proves” themself in role. After the initial 12 months, an SDR is expected to be fully productive and can take on additional responsibilities such as training and coaching new hires. There is also a Captain level — this is considered a team lead role.
“Here at PayScale, we have a sizable SDR team; we see this role as training ground for great employees for the rest of the company”, says Rachel Gruenwald, Manager of SDR team. SDRs have multiple paths to advance at PayScale. For instance, many move into sales roles and others take on various roles within PayScale’s Client Success organization. These career opportunities are communicated to SDRs during the hiring process.
2. Create Clear Career Ladders or Frameworks
Role clarity is a critical component to productivity and employee engagement. To create role clarity, employees should know what is expected of them in their current role versus what it takes to get to the next job level.
To facilitate role clarity, it’s important to develop some type of career framework to easily communicate to employees the paths available to them. It typically makes most sense to create a framework for each job family or job group.
Keep in mind you may not want to create a traditional career ladders with different “rungs” or levels, for a couple of reasons. First, many organizations are relatively flat which doesn’t leave much room for employees to move up or be promoted in the traditional sense. Second, not everyone in an organization wants to move up and be a manager. Some employees want to go deeper in their field as a technical leader; others prefer lateral moves that allow them to increase their exposure to various areas of an organization. It is important to keep your culture in mind when you create a career framework. For ideas on creating career paths for your employees, check out this article.
Buffer’s Engineering Career Framework
Buffer has publicly shared their engineering career framework. Buffer is a flat organization; they did not want a lot of engineering managers. Thus, they created this particular framework to help engineers advance to bigger responsibilities and harder challenges as engineers (e.g. grow horizontally).
This track goes from “Software Engineer” all the way up to an “Engineer of Distinction.” Where someone currently is on the path is determined by two factors: the scope of influence they have and the ownership to which level engineers commit and are held accountable.
Buffer decided to use scope of influence instead of a matrix of hard skills because they felt they can never make a complete enough skill checklist to avoid unfair negotiations on skill A vs. skill B. They also don’t want engineers to grow in an artificial direction by following a random checklist rather than their true interests. However, they did add a description of “how the work is conducted,” as a proxy for tech skills.
Buffer also decided to tackle this concept of ownership in their career framework. Because their culture values ownership and accountability, they decided to articulate what ownership is and ownership expectations at each point in an engineer’s journey.
Other organizations like Rent the Runway and Facebook have opted to create dual-tracks (an IC track and a manager track) for their technical professionals. Employees can progress through increasing salary levels in each track.
An internalship is an internship for an internal applicant. Here at PayScale, we’ve had high potentials and high performers from non-engineering teams (e.g. Data Analytics) move into Engineering department (software engineer roles). We are small enough where we can create custom plans for these employees to learn X and Y and also try A and B, over a period of four to six months to see if they’re ready to move into a different role.
During this time, the employee gets to evaluate themselves in the new role and the manager is able to evaluate their aptitude. We call them “internalships”. Additionally, we’ve had individual employees speak up about moving into a new role they have self-identified. If someone can see a business need for a new role and make a case for why they should be in that role, we’re willing to consider creating a new role.
3. Have a transition plan for new managers
Many employees associate mobility with being a people manager and often, becoming a manager is the only way to get a significantly bigger paycheck. Yet, it is detrimental for organizations to have too many managers, or to put the wrong people into management roles. The work done by managers can be vastly different than the work done by an individual contributor (IC). Thus, it’s critical for organizations to create a transition plan for their new managers.
Here at PayScale, the engineering department has created an intentional transition program from an IC role to a manager role. The plan takes about six months. For the first couple of months, the manager-in-training starts to take on a few extra managerial tasks (e.g. running daily standup meetings). After a couple months, the individual checks in with their manager. If things are going well, the manager-in-training gets more responsibilities added to their plate. Several checkpoints are built into the process. If things are going well at a checkpoint, that person continues on the management path. If things aren’t going well, the person can revert to their IC role, without penalty.
According to Barnaby Dorfman, Chief Engineering Officer at PayScale, “It is important to create ways for people to try out the manager path, decide it’s not a fit for them, and go back happily to an individual level position. And, make sure there is no stigma associated with testing out the manager role and then going back.”
4. Have one-on-ones focused on job satisfaction and career development
Because everyone goes through ups and downs in their work life, it is important for managers to check in with their employees periodically to gauge their job satisfaction and job fit. For example, a manager and a direct report might have a one-on-one each month solely focused on job satisfaction with the goal of uncovering areas where a manager can take actions to improve an employee’s job satisfaction. Here are some questions we like to ask for these check-ins:
- On a scale of 1 to 5, how satisfied are you with your job?
- Once the employee provides a rating for their job satisfaction, follow up with “what does this rating mean to you?” and “What can I do as your manager to get you to a 5?”
By asking these questions, managers can detect job satisfaction/job fit issues early and address them head on.
Then, on a quarterly basis, each employee has a conversation with their manager about the big picture — where they want to be two to three years from now. These meetings give employees the chance to work with their manager to identify stretch assignment opportunities and ways to craft their jobs.
The best managers are not concerned about keeping an employee in their current job as long as possible. Instead, their goal is to keep the great employees within the firm as long as possible.They seek to understand an employee’s strengths and aspirations early, and help the employee find those opportunities to leverage their strengths.
As I manager of a Sales Development Reps team of 30 people, I believe it’s important to understand what motivates each individual employee. Everybody is motivated by something different. I have conversations with each individual early in their tenure, to understand their career aspirations and how they measure success. I like to have employees come to me with an idea of what they want to do next in their career, and I work with each individual to create a tailored career plan,” says Rachel Gruenwald, Manager of the Sales Development Reps team at PayScale.
5. Offer role clarity and a transparent promotion process
Talented employees can become disgruntled if they feel like their organization does not have a fair and transparent promotion process. One way to ward off this issue is to create clear guidelines around how promotions happen and when they happen, at the departmental level, and make it available to all employees. For example, the Drift Marketing team has created a 9-point checklist they use to justify career progression. Although it’s not flawless, it does a good job of emphasizing the importance of abiding by certain company values.
Below is a portion of the promotion checklist.
6. Train managers to be coaches
Employees are looking for meaningful work and advancement opportunities from their employer. A coach can help employees discover what they want to do, assess job-fit, take ownership of their career path and accelerate the timeline in which they move into the right role. If you have a larger organization and the resources, consider having a coach on staff.
Even if you don’t have the budget to hire a coach on staff, you can train your managers on how to be good coaches. For example, don’t let your managers bark commands and set unattainable goals for their employees. Instead, coach managers on how to ask employees questions and listen, and then use their position as a manager to help employees achieve those goals.
7. Have clear pay progressions
Research we’ve conducted shows employees feel fair pay is a prerequisite for engagement and job satisfaction. As employees learn new skills and increase their value to their employer, they expect to receive meaningful pay increases. Thus, you need a compensation plan that supports your internal talent mobility strategy.
To create a clear compensation plan that motivates performance, you must determine what you want to reward (e.g. skills, tenure, etc.), figure out how competitive you want to be in the market and then establish a pay range for each position plus guidelines for how employees will move through their range. When you have these items in place, it’s much easier to communicate pay decisions with employees and back up your claims with data — which will improve employees’ perception of their pay.
In fact, having an established pay range for each role is no longer optional in many states. For example, Washington state recently passed a law stipulating if requested, organizations with 15 or more employees are required to disclose the minimum wage or salary range: (1) to the applicant for a position if the applicant has been offered that position; and (2) to an existing employee for a new position or promotion if such employee is offered the new position or promotion.
Additionally, if the employer must provide a minimum wage or salary expectation prior to posting the position, making a position transfer, or making a promotion.
Under Washington’s law, individuals are allowed to bring a private right of action and seek compensatory and statutory damages and their attorneys’ fees and costs. Organizations may have to spend anywhere from $20,000 to $100,000 or more per claim responding to settling a meritless claim. Other states have pay transparency laws in place too. For example, California also has a law in place where if requested, an employer is required to disclose the salary range for a position to an applicant.
If you don’t have a clear salary structure and pay ranges for your positions, now is the time to create them so that you can build trust with employees around compensation decisions, stay compliant with pay transparency laws and avoid costly fees resulting from legal actions.
Internal mobility, pay progressions are interconnected and make up the framework for retaining your top talent. Like any sturdy framework, you will not be able to reach your full potential without these three pieces working together.