HR's Guide to Explaining: How Are Employee Development Practices Strategic?

HR professionals stand at a crossroads. They must decide between continuing to use current development practices or trying a new, actionable way of improving employee development.  This crucial decision comes at a time when your organization’s leaders are focused on key strategies for the new year. They might ask you—or you may be asking yourself—“How are employee development practices strategic?”

It’s a big question! It’s not always obvious for executives, or for busy HR leaders, to see how important employee development (or the lack thereof) can be.

HR leaders must get beyond the prevailing view of development as simply skills training or, in more advanced cases, succession planning. Employee development should actually be considered a pillar of an organization’s entire talent retention strategy. In this article, we’ll cover how you can start thinking with this mindset, why it’s important, and how you can reposition employee development as a strategic priority. 

How Employee Development Practices Are Strategic

As HR leaders, you’re constantly faced with the challenge of justifying your employee development strategies. In organizations of all sizes, it’s hard to fight against inertia to change how things have always been.

So how are employee development practices strategic?

Developing talent isn’t a point solution; we’re not talking about backfilling specific skill gaps that an employee needs for their current role. Rather, it’s a holistic approach to improving an employee’s overall human capital—something that serves to benefit your company as well.

Remember that a company is constantly in the business of selling itself to its employees. You should be treating them like you treat your customers. When replacing an employee can cost up to 200% of their salary, it’s important to invest in development. In a world where employee stress is at an all-time high, showing loyalty and development to your talented employees is extremely valuable.

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It Lays the Groundwork for Future Success

It's not just employee retention that is changing, but the composition of the workforce as a whole. According to McKinsey, 90% of companies say they will have a meaningful skills gap within their organization in the coming years.

Much of this change is being driven by broad trends in the digitalization and automation of standard work activities. About 40% of Americans and 34% of Western Europeans will potentially need to switch occupational groups by 2030. That’s a huge structural change—something that, by definition, most companies won’t be able hire their way out of.

It bears repeating: there is a skills crunch coming where the skills needed for 2030 aren't going to look like the skills currently available in the workforce. Companies are going to have to build instead of buy, because there just isn't going to be enough of these skills to go around. This is a major strategic move that executives need to understand.

It’s not all bad, though. Within your organization, there is certainly untapped potential in folks from diverse backgrounds who need mentoring. Think about the Marketing Manager doing the most innovative work or the FP&A Analyst who is seeking out and advocating for the latest planning tools. These are the people who are already the informal or emerging leaders of your teams and by 2030 they are the people who will be formal leaders of their marketing and finance teams—whether in your organization or in someone else’s.

Cultivating this internal pipeline signals to your emerging leaders that they are valued and that their growth, whether horizontal or vertical, is integral to the company’s future. Such investment fosters loyalty and is a testament to the organization’s commitment to its employees.

Employee development is not just HR buzzwords or a one-off tactic but instead is a pivotal element of your organization’s strategy. Start developing your talent immediately, with a focus on actual growth (horizontal or vertical!).

This brings other results too: according to research by Sounding Board, 67% of HR leaders said that leadership coaching increased employee engagement and satisfaction while 60% said it improved employees’ perceptions of the quality of leadership.

By focusing on developing skills and capabilities now, HR leaders are building a reservoir of talent that ensures resilience and adaptability in the face of change. That’s why the role of HR in strategic employee development is to be a proactive facilitator.

It’s not just about preparing for an inevitable succession when leaders retire, but creating a continuum of excellence. If employees gain new skills and a career path within your organization, that inspires loyalty. This is vital when only 2 in 10 employees feel connected to their organization’s culture.

As an HR leader, here are some steps to get you started:

  1. Identify your organization’s top talent based on a combination of assessment and intuition. 

  2. Focus on developing this talent through practical experiences, mentoring, and employee coaching or training

  3. Create a strategic plan for your employees that invests in their talent. Remember, it's not just skills that are changing, but the composition of the workforce as a whole.

  4. Emphasize the importance of strategic talent development at every organizational level.

“Online training opens the door to a wealth of possibilities and a potential solution to the lack of accessibility to workplace training. This allows employees the freedom to train from anywhere at any time.”

The Pursuit of Effective Workplace Training

Now You Can Answer: How Are Employee Development Practices Strategic?

Employee development practices are strategic because the workforce as we know it is changing, and companies will no longer be able to ‘buy’ talent to fit their gaps. Leaders need to start preparing for the workforce they will have in five years.

By recognizing the inherent potential in every level of your organization, HR leadership can protect their teams against the coming skill gap.

Treat your employees well and help them feel part of the organization by developing their skills, and you’ll be in a place where your talent pool becomes your advantage in the coming years.

And remember, promotion isn't the only valid outcome from this development. Everyone can improve their human capital, tackle new challenges, or feel more fulfilled without changing boxes on the org chart. 

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