by Carolyn Kick | May 4, 2018 | Human Resources
Creating career paths for employees can be a challenging but worthwhile initiative. In today’s ultra-competitive job market, it’s becoming more and more important to invest in your employees, so you can retain them in the long-term. The problem is, many companies are simply not doing a great job at providing tangible vertical career paths for top-performing employees.
A recent survey by Gallup found that 93% of people advance their career by taking a position with another company. This means that just 7% of employees are being promoted internally. For high-growth companies, recruiting might seem like the only option to quickly obtaining the best talent.
However, promoting internally can save you the time and money that would traditionally be spent on recruiting external candidates. Beyond this, internally recruited employees typically have a far shorter “ramp-up time”—meaning they can start making a big impact in their new position immediately.
In this post I’ll explore the benefits of creating clear career paths for your employees and outline a step-by-step process to launch your own career pathing program.
What is Career Pathing
Career pathing is a structured employee development program which helps employees visualize career progression within a company. When done right, career pathing not only helps employees see their potential for career progression, but also sets clear milestones and provides the development opportunities necessary to reach these goals.
Career pathing involves, on an employee-by-employee basis, taking an inventory of career aspirations, skills, necessary knowledge, experience, and personal aptitudes. This information is then used to create a custom plan for achieving what is necessary in these areas to reach key career milestones.
As mentioned, organizations with the most successful career pathing programs provide employees with the support they need to develop the necessary skills and aptitudes in accordance with their career path.
Benefits of Career Pathing
For any growing business, implementing a formal career-pathing program is essential to developing and retaining a high-performing workforce. Investing in the creation of a strategic career-pathing program can bring your company many benefits including:
● Improved ability to attract top talent: In today’s competitive job market, many growing businesses are struggling to attract top talent. A robust talent development program can play a big role in your ability to bring in the right people for the right jobs.
● High employee engagement and improved employee performance: with effective career-paths in place, employees are incentivized to become top-performers and reach their career milestones. A motivated, engaged workforce means better outputs for your company.
● Reduced employee turnover: In organizations without clear career paths, entry-level employees are more likely to become stagnant in their roles and begin looking for other opportunities. This turnover can quickly become costly. By creating crystal-clear career paths, you give employees a vision for their career progression and help incentivize them to stay onboard for the long-term.
● Increase diversity in the leadership team: by investing in and recruiting internally, you ultimately build a more diverse leadership team.
Setting Goals for Your Career Pathing Program
Before implementing any new employee development initiative, you should set goals for your program. For example, if your company struggles with turnover, reducing turnover might be a good objective for your career pathing program. Or, if your team struggles with productivity issues, then increasing employee engagement might be a good objective.
To develop your goals, it helps to sit down with the leadership team of your business and discuss what they believe are the biggest retention and engagement challenges. After this conversation, decide on and document the goals of your new program.
Some examples of career pathing program goals might include:
● Build a strong internal pipeline of highly-qualified talent
● Reduce employee turnover
● Increase employee engagement
● Increase diversity in the upper management team
Creating Your Career Pathing Program
1. Create Career Roadmaps
For each of the key function areas of your organization, you should create a career roadmap. This is typically a graphic or diagram which represents the potential vertical and horizontal position changes with any given business function (i.e. marketing, sales, HR, operations, customer support, etc.). This framework will be the cornerstone of your career pathing program, as it highlights the opportunities for vertical employee career progression.
2. Create Position Profiles
Next, you should create “position profiles” for each of the roles highlighted in your career roadmaps. For each role you should outline and document the core responsibilities, skills, and general requirements. To add clarity to your career pathing program, you can outline more detailed specifications for each role. These might include recommended or required education, technical trainings, licenses, and certifications necessary for success.
3. Define Performance Standards
Next, it’s important to document expected performance standards. To do this, you should document the behaviors and benchmarks that are typically shown by top performers at your company. These behavioral competences will translate across all horizontal and vertical role changes.
4. Incorporate Training and Development
To further enhance your career paths, you should identify key training and development milestones for each position profile. These milestones might include leadership training courses, cross-functional training, revenue responsibility, or international exposure. Outlining key development experience in relation to relevant career paths will help upper management have more meaningful career progression discussions with employees.
Communicating Your Career Pathing Program
As with all employee engagement programs, effective communication is key. Sharing your career development philosophy with staff is a great first step in launching your new program. You should make it clear that you value your team and are committed to investing in their growth.
In organizations with particularly effective career pathing programs, providing new-hires with a document that overviews their progression possibilities is a commonly used tactic. This document should overview key progression milestones such as clearly-defined goals, timely training opportunities, and dates for performance reviews.
Establishing buy-in from your management team is also important in facilitating a new career pathing program. Managers should be kept in the loop on career pathing objectives and be encouraged to continuously have candid conversations with employees about their career aspirations.
Setting Up Systems to Optimize Your Career Pathing Program
When launching a career pathing program, you should establish systems to track and optimize its performance. A great way to do this is to conduct a company-wide survey. You might choose to do a career development survey before launching your program and then do another survey a few months after launch. Completing an initial survey will mean you’ll have benchmark data to compare.
In additional to using career development surveys, in the months after implementing a career pathing program you should also monitor changes in turnover rates and employee performance metrics.
Career Paths Key Takeaways
Developing and implementing a proactive career pathing program isn’t easy, but it can have a big impact on your organization’s long-term growth. Here are some key take-aways from today’s post:
• Career pathing affords many benefits including higher retention rates, increased engagement, reduced talent acquisition costs, and increased leadership diversity.
• Documenting career roadmaps and clear position profiles is the best way to start a career pathing program.
• Communicate your career development philosophy across all levels of your organization.
• Establish buy-in from management so employees can have more productive career path conversations.
• Leverage a career development survey to benchmark and monitor the impact of your career pathing program.
Does your company provide clear opportunities for career progression? If not, do you think you’ll implement a career pathing program in 2018? Drop your thoughts in the comments box below.
by Carolyn Kick | May 4, 2018 | Human Resources
In today’s market, it’s becoming more difficult to attract and retain top talent. Offering competitive benefit packages has become increasingly important for organizations looking to add top-performers to their team. Standard benefits packages with medical, 401K, and two weeks vacation are quickly becoming overshadowed by more diverse, unique, and impactful employee benefits packages. One unique benefit competitive companies have begun to offer is unlimited PTO.
The concept of “unlimited PTO”—offering employees paid time off with no cap—originated in Silicon Valley as part of the emerging startup scene. Startups offered this perk to help attract top talent they might otherwise have not been able to afford. However, what was once a “trendy” employee benefit limited to emerging startups has now begun to appear in more established companies. Research by the Society for Human Resource Management (SHRM) indicates unlimited (or unstructured) PTO programs are becoming more popular. In fact, General Electric recently implemented a “permissive time off” policy, which effects over 30,000 salaried employees in the U.S.
That being said, current research estimates the total percentage of companies in the U.S. offering unlimited vacation time at around 2%. A survey by HR association WorldatWork indicates that only 1% of large companies offer unlimited PTO.
With such a small amount of companies offering unlimited PTO, it could be your secret weapon to build an attractive, high-impact benefits package that stands out to top candidates. However, there are several pros and cons to implementing an unlimited PTO policy.
In this post I’ll explore the pros and cons of an unlimited PTO policy, the financial implications of unlimited PTO, tips on deciding if unlimited PTO is right for your organization, and guidelines to successfully implement an unlimited PTO policy at your company.
Benefits of an Unlimited PTO Policy
Implementing an unlimited PTO policy can have several positive impacts on your organization including:
- Less time spent managing accrued time off. With unlimited PTO, HR staff is no longer making constant changes to employee PTO for taking a half day off, a one hour dentist appointment, etc. They also no longer have to field inquiries from employees about how much time off they’ve accumulated, or what they have left for the year.
- Reduced financial liability. Under an unlimited PTO plan you no longer have to pay out accrued, unused PTO when an employee leaves the company. Research conducted by Oxford Economics found the average vacation liability per employee to be $1,898. This translates to $65.6 billion in accrued time-off liabilities on the books of U.S. companies.
- Fewer time off conflicts. In organizations with “use-it-or-lose-it” PTO policies, there is often a mad dash in November and December to use up any leftover PTO. This can cause severely understaffed departments at year-end. With unlimited PTO, there’s no end of year rush to use up expiring PTO.
- Employees take off time when they actually need it. Under traditional PTO plans employees (especially those with young children) are inclined to save up their PTO days in case of unexpected illness or another family emergency. However, it’s important to encourage employees to take time off to relax and rejuvenate, so they can function optimally when at work. Unlimited PTO policies help encourage this behavior.
- Attracting and retaining top talent. Most high-performing employees are self-sufficient and self-motivated. This means they appreciate work environments built on personal accountability, trust, and autonomy. Unlimited PTO programs can help foster a work environment where top talent thrives.
- Empowering employees. Motivation studies indicate that when employees feel trusted, their motivation, morale, and productivity increase substantially. Unlimited PTO can help foster an environment of trust.
Challenges of an Unlimited PTO Policy
While there are several pluses to implementing unlimited vacation time, there are also several challenges related to this policy including:
- New logistics. Although an unlimited PTO plan might eliminate your team’s need to meticulously track each hour taken off, you’ll still have to have a system in place to track PTO days used.
- Policy abuse. When it comes to unlimited vacation time, there’s always a risk of policy abuse. Many companies worry that employees will take off frequently or take off for long periods of time. This policy abuse can have an impact on the company through performance problems and project delays.
- Low policy usage. In some cases, an unlimited PTO policy may discourage employees from taking time off. Some organizations with unlimited PTO have found that unclear expectations around what amount of PTO is appropriate have encountered issues with employees taking off less than what is recommended. In organizations that prioritize work-life balance, this can be a potential con.
- Unmanaged PTO. Unlimited PTO can quickly become unmanaged PTO if the proper procedures are not in place. A more formal time-off policy means more formal procedures around how vacation time is requested, approved, and tracked.
- Unclear expectations for employees. In some cases, employees are unsure what amount of vacation time their manager finds acceptable under an unlimited PTO policy. In highly competitive organizations, employees might fear taking any time off. This creates a stressful, highly toxic work environment.
How to Decide if Unlimited PTO is Right for Your Business
Several small-to-mid-sized businesses have tested unlimited PTO policies at their organization to see how it would impact employee engagement and retention. Most organizations that implement an unlimited PTO policy find their employees take off roughly the same amount of PTO as the year prior. Studies have found employees at organizations with unlimited PTO are taking off between two and three weeks of vacation annually, on average. This figure includes time-off for vacation, personal reasons, and sick days.
When employers are considering implementing unlimited PTO they often fear employees will take off for extended vacations. However, organizations with unlimited PTO have not found this to be the case. More common is that employees are taking one or two day tips, long weekends, or extending holidays rather than leaving for long periods of time.
Surveys ranked unlimited PTO as the third most popular employee benefit at organizations that offered it. Unlimited PTO came in just behind health insurance and 401k plans. This means unlimited PTO beat out vision insurance, dental insurance, and professional development as the more desired benefit.
Whenever you’re thinking about offering an additional employee benefit or perk, you should consider if it’s inline with your company’s values. Offering unlimited PTO might be right for your organization if you believe strongly in the following values:
- Autonomy
- Trust
- Freedom
- Mutual Respect
- Accountability
- Work-life balance
Beyond core values, you’ll also have to consider industry limitations. For example, businesses in the retail and manufacturing industries have a difficult time implementing unstructured PTO policies.
Also, when you’re considering changing your benefits program, it’s important to consider the make-up of your workforce. Would your employees find an unlimited PTO program valuable? In organizations with a younger workforce, unlimited vacation plans may provide a huge value. However, in organizations within more structured industries (such as finance or healthcare), employees might prefer the traditional PTO plan they’re used to.
Building Your Unlimited PTO Policy
If you’ve decided you’d like to roll out an unlimited PTO policy to your employees, you’ll need to make some decisions about the structure of your policy. As you go about creating a formal written policy, here are some questions you can answer to begin formulating an outline for your new policy:
- What will you call the policy? “Unlimited PTO” or “Unlimited Vacation” might be too ‘startupy’ for an established business. Some alternatives might include “Flexible PTO” or “Self-Managed PTO.” What you the call the program will greatly impact how employees and job candidates perceive it.
- Will you offer a required minimum amount of PTO per year?
- Will you provide guidelines as to what amount of annual PTO is recommended or acceptable?
- Will you require employees to submit time-off requests or let them entirely self-manage their PTO?
- If time-off requests are required, what process should employees follow?
- Will you require employees to submit a work completion plan for longer time-off requests?
- How will employees be held accountable for project deadlines and general job performance?
- What system will you use to track PTO usage so you can evaluate your new unlimited PTO policy’s effects?
- Will you require employees to designate someone to take over their responsibilities in their absence?
Considering and answering these questions is a great first step in building a formal unlimited PTO policy.
How to Implement an Unlimited PTO Plan at Your Company
Once you’ve make decisions about the structure of your new PTO plan and created a formal written policy, there are several key things you should consider before implementing the new plan.
- When switching from a traditional PTO plan to unlimited, long-term employees may see it as a loss of deferred compensation from accrued time-off. To combat this, institute a process to offer payouts for accrued time-off when the new PTO plan is rolled out. Certain states have strict regulations over pay-outs regarding PTO, so make sure you’re being compliant.
- Give advanced notice to employees that a new benefit type will be rolled out soon. Explain the impact of the new PTO policy and how it will become part of the company’s culture.
- Create, document, and distribute a written policy that outlines the structure of your unlimited vacation policy. Make sure to include details on eligibility, the proper procedure to request time off, and any rules on how this benefit will be managed. Make sure to put this new policy in your employee handbook.
- Educate management staff about the new policy and how to administer it in accordance with your new documented policy.
- Put systems in place to track the new PTO policy usage. Even if employees are not held accountable to a specific number of vacation days per year, it’s still important to have a system in place to track vacation time. This will allow your team to monitor trends over time and watch out for over or under-usage.
- Remember that unlimited PTO does not have to mean “unmanaged PTO.” You can offer your employees unlimited PTO but still hold them accountable for appropriate request-off procedures and accountability protocols.
Key Takeaways
In today’s post, I explored the pros and cons of unlimited PTO plans and offered some guidance in selecting if this policy is right for your organization. Here are some key take-aways from today’s post:
- Unlimited PTO can reduce your financial liabilities, empower your team, and help you attract top talent.
- An unlimited PTO plan presents several potential challenges including unmanaged processes, policy abuse, and unclear expectations.
- When deciding if unlimited PTO is right for your company make sure to consider your company values, industry limitations, and workforce demographics.
- When implementing a new PTO policy, it’s crucial to formulate and document a formal, written policy.
What do you think: is unlimited PTO a good or bad idea? Does it work for specific companies but not others? Drop your thoughts in the comments box below!
