Why Employee Training May Not Pay Off

A new study finds that professional-development programs might actually increase turnover.

American businesses spend $134 billion each year training employees to help produce a better, more productive, and more satisfied workforce. But a new study by University of Iowa researchers published in the Journal of Applied Psychology, finds that many of these programs may actually increase turnover while driving up a firm's costs.

The study found that employees feel little obligation to stay with an employer that provides professional development if they don't see any career-advancement opportunities.

"Only those employees who can see a way forward in their careers will stay with an employer," says Scott Seibert, associate professor of management and organizations in the UI Tippie College of Business and coauthor of the study. "Otherwise, professional development opportunities might simply make their workers more employable by other firms."

These findings suggest that successful employee development is more than just providing development opportunities. Seibert says that for employee-development investments to pay off, employers need to also show they offer adequate career-advancement opportunities.

Seibert and fellow coauthor Maria Kraimer, associate professor of management and organizations in the Tippie College of Business, surveyed 246 matched employee and supervisor pairs at a Fortune 500 firm. They asked whether their employer provided adequate professional development programs and if they thought the organization offered future career opportunities that were of interest to them.

"More developmental support is associated with higher performance and lower turnover generally," says Kraimer. "However, when career opportunities are low, development support was not related to performance, and it actually increased turnover."

However, not all employees interpreted career-advancement opportunities as the traditional climb up the management ladder (e.g., promotions or raises). They found that programs such as mentoring and job rotations, as well as good relationships with their immediate boss, can create the feeling that career opportunities are available. Another note: The authors say letting employees know about the range of opportunities available within the organization may raise perceived career opportunities.