What is employee development? Definition and key benefits

Why go through all the trouble of hiring a new expert when you have an employee happy to expand their skills on board? I’m not saying that you can switch recruitment with training. But investing in employee development is one of the best ways to address the greatest nightmare of everyone in IT: skills shortage.

Arkadiusz Terpiłowski


Resource & Skills Management


What is employee development? Definition and key benefits

Table of contents

Providing development opportunities also helps to keep the experts you already have (and boost their motivation to a new level) and attract new hires looking for a workplace that cares about skill expansion.

I wrote this article to show you that investing in the skillsets of your people brings ROI on many different levels and helps your business become more competitive.

Employee development: definition

Employee development is the process of improving the existing competencies and skills of your employees and helping them to develop new ones, all with the aim of supporting your business goals.

Sure, employee development involves investment - we’re talking time, effort, and - of course - money. But trust me, it pays off over the long term.

Think about it this way:

Firing an employee with limited skills or developing those skills to your standards are both going to cost you money. 

But with the latter, you gain longer-term employee retention. Employee development also helps you to avoid the time-consuming and costly process of sourcing, recruiting, and onboarding new hires so they perform to your standards. 

Letting someone go just to launch a new recruiting process is a hard pill to swallow, especially in IT where talents are hard to get.  

In other words, development opportunities offer a win-win scenario for your employees and your business. If you build your employee development program on top of your strategic needs, you’re going to end up with a workforce that is perfectly aligned with your standards.

And it can happen thanks to a well-organized employee development strategy.

Benefits of providing development opportunities to your employees

1. Cost savings

Let’s start with the most powerful consequence of a good employee development program. It saves you money on many fronts - you avoid replacing employees, enjoy greater retention (which translates into the cost), and enjoy a more motivated workforce with the exact expertise you need to deliver to your clients.

But don’t trust my word on that. Trust the numbers, like the ones in this case study:

AT&T discovered that only 50% of its global workforce (comprising 250k workers!) had the right skills to bring the organization into the future. 

At this point, the company management had two choices:

  1. Letting all these employees go and finding new ones to replace them,
  2. Retraining their existing employees.

AT&T chose the second option, spending $1 billion on its “re-skilling” program. Doesn’t sound as if they saved any money on this right? 

Consider this: The median cost of replacing an employee who lacked the required skills was around 21% of that employee's salary. The employee base pay increases with time - and so does the cost of replacing them. That’s why retraining is a more cost-effective option. 

That way, AT&T didn’t have to start from the ground up with fresh hires - they could preserve valuable organizational knowledge by retraining (and retaining) their current workforce.

Simple, but so powerful. You probably don’t need any more convincing that employee development is a smart move, but I’m going to share some more benefits with you anyway.

2. Greater competitive advantage

Sure, you want to run a profitable business. But you can’t do that without your employees. And there’s a lot of competition for top talent in IT. 

So, think about it this way: 

You’re not only competing for market share. You’re also competing for top employees.  

And what IT specialists want is to work in a workplace that will help them upgrade their skills and keep them competitive with their peers working in other companies.

Attractive employee development programs can become your best asset when recruiting new talent, building a stronger competitive advantage for your business.

3. Lower staff turnover

Employee development gives a boost to employee retention. Not only because you’re literally not firing workers with lacking skill sets (and choose to enrich their skill sets instead) but also because those employees are going to stay with you longer.

What if you spend lots of money on employee training only to have those skilled workers take up a job somewhere else?

I feel you, this is a valid concern. 

But research showed us time and time again that employee training reduces turnover and absenteeism, increasing motivation and commitment.

4. Increased employee engagement 

A more engaged and motivated workforce is more productive. Research from the Dale Carnegie institute showed that a highly engaged workforce can bring about exceptional productivity improvements – even 202%! 

It’s simple. Employees feel more appreciated when you invest in their career development. If they get a lot of learning opportunities in your workplace, they’re more likely to feel more engaged and happier at their jobs.

Come on, you know what software developers are like. Most value growth and skill expansion like nothing else. As soon as they feel like they’re not moving forward, they’re going to start to look around for other opportunities. And I don’t have to tell you how easily they’ll land another job.

Read this too: How to track employee performance: expert guide

5. Stronger company culture

Employee development programs increase retention, allowing you to build a strong company culture (instead of building it from scratch whenever a bunch of new employees joins your business).

According to Building a Culture of Learning, The Foundation of a Successful Organization, businesses with a culture of learning and knowledge-sharing are more competitive and their workforce is more engaged.

How it’s done: 7 methods of employee development

1. Mentoring

Mentoring is a very popular tactic used in IT. The idea is that you match less experienced employees with those who have more years of experience on their backs. In developer terms, this means parking up juniors with mid-level and senior developers.

Mentoring can happen informally (via your culture) or through formal programs.  A successful mentoring program:

  • Brings together workers based on their skills but also career development needs,
  • Has a clear goal that can be tracked,
  • Establishes a minimum time commitment from both sides,
  • Holds both parties accountable for the outcome,
  • Aligns mentoring to the broader talent management and business strategies. 

2. Coaching

Coaching is a little more involved than mentoring. How does it work? You bing in a more experienced specialist to provide a worker with advice and guidance to help them gain new skills and improve their performance.

As you can tell, coaching needs to be fully personalized and customized to match specific career development and business objectives. Coaching sessions are usually based on one-on-one meetings over a period of time. 

To work, coaching requires commitment from both your business and the person who is coached. You also need a plan to obtain results and a follow-up evaluation to make the most of coaching.

3. Individual development plans

This is a great method to speed up the learning process. An individual development plan (IDP) is a document that details an employee's intentions, learning outcomes, and support required to meet their growth goals. 

The best IDPs are based on research into adult learning strategies, experiential learning, and other methods. 

4. Cross-training

Cross-training means training employees to carry out tasks other than those normally assigned to their role. Cross-training can take on many forms - it can be a short-term arrangement or an ad hoc fix. Or you can make it an ongoing and fully planned process. 

But don’t expect immediate skill development among employees engaged in cross-training. Treat it more like an experiment that shows you whether the employee is interested in learning new skills. 

For example, you ask a frontend developer who might like to become a fullstack developer to work with your backend team for a while. Building such skills in an existing worker is easier than hiring a new backend or fullstack developer.

To make cross-training, start by identifying the knowledge and skills required for a given position and check the employee’s current skills. This is how you can spot gaps in their skill set and fill them with cross-training effort. 

5. The 9-box grid

This is a handy employee assessment tool that helps to evaluate their current and potential levels of contribution to your business.

The grid is often used in succession planning to identify potential leaders. But it’s a great tool for visualizing assessment data that helps managers see their employees' actual and potential performance. You can use insights from the grid to design IDPs. 

6. Job shadowing

Job shadowing has one employee follow a colleague around all day to learn what their job looks like on a daily basis. 

But here’s the coolest part of job shadowing: the employee gets to see your business from another perspective. They see what challenges people face in different departments and build a greater understanding of their daily struggles. 

This perspective is invaluable if the employee is looking to transition into a different department. For example, it can prepare a senior developer for the role of the team leader. 

7. Job enrichment

Job enlargement expands the employee's role by adding more tasks and responsibilities. Businesses use this tactic to redesign jobs and increase employee motivation. 

But enlarging a job isn’t enough. You also need to enrich it to get your hands on these motivational benefits.

Common challenges in employee development programs (and how to overcome them)

What’s there not to gain with an employee development program? Just like any other initiative, employee development comes with a number of challenges that you should know:

  • Lack of accountability - does your business hold managers accountable for developing people who report to them? Are they tracking the utilization rate of your employees? This is a common problem in many companies.
  • Lacking talent development capabilities - not many companies out there have the managerial capability that allows growing people in their jobs or offer feedback that supports employee development. Do you have it? 
  • No alignment between workers and business strategy - is your workforce aligned with your business strategy? If not, realizing this via employee development programs is going to be more challenging.
  • Inconsistent execution - you probably have some core processes already in place (like workforce planning) but are you executing these programs consistently?
  • Lack of analytics tools - just like in any other project, you need to track all the metrics that matter (like the effectiveness of your talent management programs). How else can you tell whether your programs are worth the spend?

How project management software can help 

In Primetric, you can create the entire history of an employee’s experience and development to track it better. Using the integration with ATS systems, you can get all the key information about the projects they worked on - and which ones they liked or disliked - in one place. 

Thanks to such insights, you can take these variables into account when allocating people to projects and manage employee development through these allocations successfully. Basically, you’ll become a resource management pro at your company.

To see how it works, request access to Primetric - or better yet, book a demo to get a walkthrough of the tool and answers to all your questions.

Arkadiusz Terpiłowski


Arkadiusz is Head of Growth and Co-founder at Primetric. Prior to that, Arkadiusz was at the helm of his own software development company where he oversaw operations. A great enthusiast of process improvements, his personal mission is to make software companies more profitable and efficient on their path to growth.

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