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Are You Developing Your Employees?

Afro-American leadership working with his team

In our leadership development courses, we teach executives how to develop future leaders and management on their current staffs. While this may seem like a futile exercise to many, identifying and developing leaders in the workplace can provide benefits that far outweigh the time, money, or resources that may be expended in doing so.

No Australian studies on the cost of training employees are currently available, but a few global studies have been conducted. The consensus is that it costs approximately 16% of a menial employee’s annual salary to replace and train them. For a skilled worker, the cost is approximately 20% of their annual salary.

However, when finding, hiring, and training a skilled leader for a management position, the cost has been estimated to be between 150% and 213% of that manager’s salary. When these numbers are taken into consideration, developing leaders is much more cost-effective than hiring them from outside your staff, even if you pay for some leadership courses for them.

One of the great benefits of being known as a company that develops and hires leaders from within is that the quality and number of job applicants rises. It might not seem like it sometimes, but young people like jobs that provide the opportunity for a better future through hard work. A company that only offers “dead end jobs” is going to get mostly “dead end” employees.

Companies with a culture of reward in the form of career advancement for hard work usually have employees with better attitudes, and a more efficient workplace. Employees are more motivated when they see what they do as a “career” instead of a “job.”

Developing leaders from the employee base can also contribute to an environment of consistency. There is much more continuity and a much easier transition when a manager leaves and the replacement has been a part of the company for a while, and is perceived as having earned their job.

An international study of over 1,200 men and women with an average age of 30 years, who were classified as “young high achievers,” was recently published as an article in the Harvard Business Review. The article was called “Why Top Young Managers are in a Nonstop Job Hunt.” The people surveyed all had degrees from elite universities, high grade-point averages, and international internship experience. They were surveyed about their experiences on their first jobs in their field after finishing their educations.

The base statistics were surprising at first glance, but if one considers their situations, fully understandable. Most of all, they should serve as a wake-up call for executives who don’t think it’s important to develop employees. During their first year, 75% contacted search firms, sent out resumés, and interviewed for other jobs at least once during their first year.

Approximately 95% of “young high achievers” updated a resumé or looked for another job. The average length of employment of the 1,200 in the survey was 28 months. Virtually every employee in the survey who changed jobs found a higher-paying position for his or her next job.

In the past, “job hopping” was frowned upon and seen as a weakness. For most workers, it was more financially advantageous to stay where they were and climb the ladder. In this era, though, workers are more likely to get a promotion and a raise by leaving than they are by staying at current jobs.

Many companies have reacted to what they see as “job-hopping” by decreasing opportunities for current employees. This creates a negative feedback cycle where companies are afraid to develop leaders in fear of training them, only to watch them take that training to a different job, and future leaders feel that they have to change jobs because they aren’t getting any training.

So, what does this Harvard Business Journal have to do with leadership development in Perth? It means that savvy companies are going to start investing more in leadership development and management courses, and that those who do are going to leave other companies behind.

That is where we come in. It takes a great leader to develop a great leader, and we specialise in developing great leaders. We have over 25 years of experience in the field of leadership development, and many Perth businesses have obtained great results from our training.

We offer executive coaching for CEOs and leadership development programs for management. Our training programs can help your business institute a culture of teamwork, achievement, and high production.

Remember: if you aren’t developing your best employees, they will find an employer who will, and it will cost you money to replace them. Contact us to learn more.

Ron Cacioppe

Ron Cacioppe is the Managing Director of Integral Development and holds a BSc, an MBA and a PhD. He has taught in the Graduate School of Management at Macquarie University, Curtin University and the University of Western Australia.

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