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The Current State of Performance Management and Career Development2010

Survey Findings

Current State of.indd 3 5/24/10 3:16 PM

About Hewitt Associates

Hewitt Associates (NYSE: HEW) provides leading organizations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 30 countries and employs approximately 23,000 associates who are helping make the world a better place to work.

For more information, please visit www.hewitt.com.


About This Survey

This survey provides an overview of practices and prevalence in the blocking and tackling of performance management and career development. It provides comparative data to use when considering whether to modify a current approach.

In March/April 2010, Hewitt Associates surveyed human resources professionals to learn about their current performance management practices and career development programs. Responses from 193 employers provide a picture of what they are doing in regard to performance management and career development programs.

Note: Percentages in this report are rounded to the nearest whole number; therefore, totals may not equal exactly 100%. While the focus of the survey instrument and survey samples has changed from year to year, there are still a number of areas where useful comparisons and trends across time can be examined.

© 2010 Hewitt Associates LLC i PerfMgmtCareerDevSV10aaa.DOC/001-T6-13918 06/2010

© 2010 Hewitt Associates LLC ii PerfMgmtCareerDevSV10aaa.DOC/001-T6-13918 06/2010

Contents

Survey Highlights 1 Performance Management 3 Career Development 10 Participating Employer Information 19

Survey Highlights

Overall Findings Performance management, what it needs to be and how to “get it right,” continues to be a topic that takes a good deal of thought and effort at many leading companies. More is at stake now than ever before. Companies need to have the right approach to enlisting, aligning, and motivating their employees to be a powerful force that drives the organization forward. Today’s workforce must hit increasingly aggressive targets, outrun competitors, keep each customer, and win even more customers. Employers must drive employees to higher performance levels, while at the same time, engaging and retaining them. There is quite a bit happening in the performance management area. New ideas, new tools, and many organizations are rethinking and/or fine-tuning their performance management activities. For many, a useful first step is getting a sense of how the basics are being handled in other companies, such as the numbers of goals established and the types of rating scales which are used.

Similarly, companies are seeking ways to better leverage career development. Cited as one of the top tools for engagement and retention, career development has become increasingly more significant in the past couple of years as companies decrease their merit budgets and freeze pay to weather a tough economy. However, truly integrating career development into overall talent strategy and processes continues to elude most organizations.

Performance Management The survey describes the key attributes of the performance planning and review process, including: alignment between individual expectations and business priorities, components of the performance plan, rating approaches and number of anchors on the rating scale and how they are interpreted, and the link between performance and pay.

Key Findings: Performance Management ■ 73% of respondents align employees’

performance goals with the company’s business strategies.

■ 65% of respondents ranked “managers ability to coach” as one of the top three process improvement areas they see in their organizations.

We conclude with those areas where respondents believe they need to make process improvements in order to improve upon their existing performance management systems. Nearly one-third of respondents believe the linkage between performance management to business strategy needs improvement. Alignment is critical to make the best use of everyone’s efforts.

Career Development The survey reveals notable and increasing significance of career development in organizations. Given the state of the economy, it has critical implications for employee engagement, motivation, and retention as

companies tighten their budgets to weather the storm.

Key Findings: Career Development ■ 77% of respondents report that career

development is much more or more important than it was five years ago.

■ 89% of respondents report that career opportunities are at least one of the most important drivers of engagement and retention.

It is apparent from the survey findings that companies have more work to do in this area; however, positive progress in career development may have tangible impacts on employee engagement, productivity, and retention for organizations.

Companies also recognize the importance of career development with regard to both talent and rewards

© 2010 Hewitt Associates LLC 1 PerfMgmtCareerDevSV10aaa.DOC/001-T6-13918 06/2010

strategy. But as our study reveals, recognition does not necessarily translate into full integration with other talent management processes throughout employment lifecycle. The survey results indicate that career development has taken on an increasing significance in the past few years. Seventy-seven percent of companies report that career development is much more or more important than it was five years ago. This finding suggests that the importance of career development will not be short-lived.

Eighty-nine percent of respondents report that career development opportunities are at least one of the most important drivers of engagement and retention. This is not surprising since to be engaged, you first have to like what you do and then learn, grow, achieve, and feel valued, appreciated, recognized, and rewarded (if not promoted). These facts are consistently corroborated in many organizations’ annual engagement survey results that employees complete.

Conclusion This survey shows that companies are on the right track with regard to performance management programs. However, companies still need to work on linking career development opportunities with performance management.



Performance Management

This section of the report describes the key attributes of the performance planning and review process, including: alignment between individual expectations and business priorities, components of the performance plan, rating approaches and number of anchors on the rating scale and how they are interpreted, and the link between performance and pay. We conclude with those areas where respondents believe they need to make process improvements in order to improve upon their existing performance management systems.

Business Alignment When asked to rank which parts of the company’s performance management process needs the most improvement, nearly one-third of respondents believe the linkage between performance management to business strategy needs improvement. Alignment is critical to make the best use of everyone’s efforts.

The fact that only 15% of surveyed organizations said employees’ goals are “very aligned” with organizational priorities suggests real room for improvement in clarifying this important connection. This is unchanged from results we obtained five years ago, with 16% claiming goals are “very aligned” and 74% believing they were somewhat aligned.

Alignment of Employees’ Performance Goals With Company’s Business Strategies 15% Very aligned, with clear line of sight

73% Somewhat aligned, corporate goals are communicated and left to local managers to translate

10% Not aligned, little or no line of sight

2% We do not set performance goals

(n=193)

The Components of the Performance Plan: Goals and Competencies Managers often struggle with the “right level” for defining goals. If goals are too few in number, they are very high level and not useful in providing specificity. However, if there are too many goals, they are often so specific that they provide little latitude for the employee and often need to change frequently given changing business conditions. As a rule of thumb, we recommend that four to six goals is usually an adequate number to describe in sufficient detail the key elements in one’s performance plan. Seventy percent of the respondents are in alignment with this recommendation.

(n=130)

Three Goals20%

Four Goals25%

Five Goals38%

Seven Goals2%

One Goal1%

More ThanSeven Goals

5%Six Goals

7%

Two Goals2%

In addition to specifying what will be accomplished through goals, it is important to establish expectations around how this work will be accomplished vis-à-vis competencies or behavioral standards. Sixty-two percent of employers use enterprise-wide behaviors/competencies in their performance management system, meaning that there are consistent competencies which apply to everyone across the enterprise. In addition, nearly one-half (48%) use leadership behaviors/ competencies while 37% and 36% use job-specific behavior and corporate “values,” respectively.

Type of Behaviors/Competencies 62% Enterprise-wide

48% Leadership

37% Job-specific

36% Corporate “values” evaluated separately from other behaviors or competencies

30% Functional

7% Other

(n=193; multiple responses)

Just as the right number of goals needs to be decided, the right number of competencies also needs to be addressed. As shown in the above table, nearly all organizations use some form of competencies, with 62% using enterprise-wide or “core” competencies. Seventy-eight percent of respondents use 10 or fewer competencies, with 44% having six or less. Fewer competencies is pragmatic and makes sense, provided that they are defined in terms that are not generic and help employees see their relevance to their own jobs.

11–145%

15+9%

Other8%

1–644%

7–1034%

(n=186)

Most respondents say that their organization measures both “what” someone accomplishes and “how” they do it. However, the survey results pertaining to relative weighting between results and behaviors show that the acquisition of results may be somewhat more important than the demonstration of competencies, although there are some distinctions based on level in the organization. Greater weight is often placed on executives to deliver results, with 30% of companies reporting that 100% of their executive evaluations are based only on the attainment of results. This is an increase from our 2005 survey when 22% of companies reported 100% of their executives were based only on the attainment of results.


Performance Ratings On the one hand, it makes good business sense for more emphasis to be placed on results versus competencies. This helps ensure that the performance management process is designed to influence business impact and drive towards high performance. However, we need to caution against the danger of placing too much emphasis on results at the expense of competencies.

For instance, it may be a little troubling that almost one-third of executives are only measured on the results they attain. In an age when “doing whatever it takes at all costs” has gotten more than one executive leader in hot water, it may be time for leaders to make a conscious effort to show that what is really important are sustainable results obtained through the demonstration of organizational values and behavioral expectations. They, like all others, need to hold themselves accountable to these standards.

Relative Weighting Used Between Results and Behaviors

100%

Results 60% Results/

40% Behaviors

50% Results/50%

Behaviors

40% Results/ 60%

Behaviors 100%

Behaviors

Executives (n=153) 30% 32% 33% 3% 1%

Managers (n=151) 10% 40% 46% 3% 1%

Individual contributors (n=152) 11% 32% 48% 9% 1%


Rating Approaches and Scales In most instances, each goal and competency is rated separately and an overall rating is assigned. This approach has been consistent over time through previous research studies.

Rating Approaches for Exempt Employees Goals/Objectives

72% Each performance goal/objective is individually rated

53% An aggregate rating for the set of goals is determined


Competencies/Behaviors

77% Each competency/behavior is individually rated

44% An aggregate rating for the set of competencies is determined


Development Goals

50% Development goal achievement is not rated and does not count toward an overall rating

21% Development goal achievement is rated

21% Development goal achievement is not rated, but progress on development goals counts toward an overall rating

8% There are no development goals

(n=188)

Overall Ratings (per individual)

93% The employee receives an overall rating, through either a number, letter, or rating label

3% Ratings and/or labels are not used

4% Other

(n=192)

While 5-point rating scales have consistently been most prevalent, they have become even more popular over the last few years. In this study, 63% of respondents use a 5-point scale, compared with 45% five years ago.

Type of Performance Rating Scale Used 14% 3-Point Scale

19% 4-Point Scale

63% 5-Point Scale

4% 6-Point or more Scale

(n=187)


The effectiveness of this rating should be debated, since the survey shows that 84% assign a ‘good’ rating as two below the top rating. In many organizations, solid performers tell us they’re deflated at assessment time because they get what feels like a “C” rating—the rating two below the top rating in a 5-point scale. These survey results provide an objective snapshot of how prevalent this de-motivating effect may be. Managers must be equipped to send the right messages to employees about the ratings they receive.

The “Good” Rating Is:

Companies With 3-Pt.

Scales


Scales


Scales

Companies With 6-Pt. or More Scales

The top rating 0% 3% 2% 0%

The rating directly below the top rating 85% 46% 0% 0%

The rating two below the top rating 4% 37% 84% 25%

The rating three below the top rating — 11% 13% 50%

The rating four below the top rating — — 1% 13%

Other 11% 3% 0% 12%

(n=27) (n=35) (n=117) (n=8)

Calibration meetings are more common today than they were five years ago, with 61% of respondents conducting some form of meeting to either provide guidance for managers or to literally compare, discuss, and reach consensus on employees’ ratings. This is great news, as it tends to produce more equitable results. Only 2% conduct upfront goal calibration. Since this is a valuable process to help build alignment between performance management and the business strategy (noted earlier as an important improvement opportunity), it is suggested that more organizations adopt this practice. Calibration Meetings

43% Yes, in meetings, managers compare, discuss, and reach consensus on employees’ goals, ratings, and/or pay actions and commit to decisions as a group

18% Yes, but meetings are to provide guidance only for managers to make better individual decisions

39% No, do not conduct calibration meetings

(n=187)


Types of Activities Included in Calibration Meetings Eighty-two percent of companies report that performance ratings are included in these calibration meetings. ration meetings.

Other6%

Upfront Goal Calibration

2%

Performance Rating Calibration

82%

Pay Action Calibration

10%

(n=117)

Many respondents say that the performance rating strongly drives pay, with 63% saying it influences merit increases and 45% saying it influences variable pay (bonuses and incentives). It would appear from these results that striving for a “pay-for-performance” culture is alive and well across many of these respondents.

Many respondents say that the performance rating strongly drives pay, with 63% saying it influences merit increases and 45% saying it influences variable pay (bonuses and incentives). It would appear from these results that striving for a “pay-for-performance” culture is alive and well across many of these respondents. The performance rating also appears to influence the kinds of opportunities available to employees as well as their prospects for advancement. This is described in more detail in the next section where we discuss these organizations’ approach to career development.

The performance rating also appears to influence the kinds of opportunities available to employees as well as their prospects for advancement. This is described in more detail in the next section where we discuss these organizations’ approach to career development. Linkage to Pay Linkage to Pay

Performance Rating

Strongly Drives Performance Rating

Strongly Drives Performance

Rating Influences Performance

Rating Influences No Direct Link to Performance No Direct Link to Performance

Merit increase (n=191) 63% 36% 1%

Variable pay (bonuses/incentives) (n=181) 45% 44% 11%

Flexible work arrangements (n=180) 2% 21% 77%

Prospects for advancement (n=186) 28% 61% 11%

Recognition from one’s company boss (n=182) 17% 53% 30%

Access to new experiences and challenges (n=182) 20% 63% 17%

Greater autonomy (n=179) 6% 47% 47%

Other (n=12) 25% 8% 67%


Top Performance Management Process Improvements The responses below show that 65% of respondents ranked “managers ability to coach” as one of the top three process improvement areas they see in their organizations. Interestingly, the dial has barely moved. Five years ago in a similar survey, 73% of respondents described this as needing the most improvement.

While many organizations have placed more emphasis on how to review/appraise performance, the “day-to-day” coaching has been short-changed. This result is not surprising since just over one-third of respondents (35%) said their managers are not held accountable. More needs to be done to ensure that managers have the skill and the support to coach effectively; by the time the performance review rolls around, it is too late for adjustments to be made.

Top Process Improvements

Ranked 1, 2, or 3 Rank 1 Rank 2 Rank 3

n= Total n= Percent n= Percent n= Percent Performance coaching by managers 126 65% 66 34% 35 17% 25 13% Managers not held accountable 68 35% 11 6% 27 13% 30 16% Linkage of performance management to business strategy 61 31% 21 11% 26 13% 14 7% Review/appraisal process (including ratings) 45 23% 12 6% 15 7% 18 9% Differentiating performance pay 45 23% 11 6% 17 8% 17 9% Linkage to identifying potential 44 22% 9 5% 17 8% 18 9% Capability of HR to equip managers to be effective 35 18% 4 2% 18 9% 13 7% Senior management sponsorship and advocacy 29 15% 11 6% 3 1% 15 8% Tools, job aids and resources to equip employees and managers 28 14% 8 4% 10 5% 10 5% Linkage to pay 23 12% 7 4% 6 3% 10 5% Other 8 4% 4 2% 2 1% 2 1% (n=192)



Career Development

The following section provides an overview of the current state of career development in organizations. We examine the importance, perception, integration, and relationship of this area to employee engagement and the talent strategy as a whole. We conclude with a look at how career development is defined within organizations today.

Career Development and Overall Talent Strategy The survey results indicate that career development has taken on an increasing significance in the past few years. Seventy-seven percent of companies report that career development is much more or more important than it was five years ago. This finding suggests the importance of career development will not be short-lived.

Importance of Career Development to Talent Strategy 26% Much more important than it was five years ago

51% More important than it was five years ago

17% No more or less important than it was five years ago

4% Less important than it was five years ago

2% Much less important than it was five years ago

(n=191)

Career Development and Employee Engagement An overwhelming majority, 89% of respondents report that career opportunities are at least one of the most important drivers of engagement and retention (83%), with 6% saying that it is the top driver. This result is supported by Hewitt engagement survey data conducted globally.1 Organizations were asked to designate their top three engagement drivers, and among the top three, career development was consistently ranked first. This is not surprising since to be engaged, you first have to like what you do and then learn, grow, achieve, and feel valued, appreciated, recognized, and rewarded (if not promoted). These facts are consistently corroborated in many organizations’ annual engagement survey results that employees complete.

Relationship Between Career Development and Employees’ Engagement 6% The top driver of engagement and retention

83% One of the most important drivers of engagement and retention

11% Not one of the most important drivers

0% Not at all important to engagement and retention

(n=189)

1Hewitt Engagement Survey Data, 2005–09.

Importance of Career Development Versus Pay As A Reward Strategy Career development has a very important role in both talent strategy and employee engagement. The survey results indicate this to be the case for reward strategy as well. More than half of respondents (55%), report that career development and pay as a reward strategy are equally important to employees in today’s challenging economic environment.

Less Important15%

Of Equal Importance

55%

More Important30%

(n=192)

At first guess, pay, rewards, and recognition are commonly perceived as the top drivers of engagement and retention—more so or at least equivalent to that of career development. The response from respondents about the importance of career development versus pay as a reward strategy suggests a different mind-set among respondents—especially in today’s economy, with 73% indicating that career development is equal to (55%) or more important (30%) than pay as a reward strategy. As companies tighten their belts, they’re seeking out other creative ways to meet the career needs of their employees to engage and retain them—while investing in the growth of talent at their organization.

Of those reporting career development as more important, a predominance of respondents, roughly half, indicate a decrease or contraction (in some cases, no merit budget at all) of the merit budget plays a role in the increased emphasis on career development. Also important to note, several respondents indicate that career development takes on varying degrees of importance depending on the employee group. For example, Gen X and Y employees tend to be motivated and engaged by other factors like career development and not just solely on financial factors such as pay/compensation.

On the other hand, of those reporting career development as less important, current economic conditions and income security is the primary driver for placing greater importance on pay. While development is regarded as important, with concerns over potential layoffs and downsizing, employees have adopted a short-term focus on employment which emphasize obtaining more tangible aspects (like pay) now. Others indicate that the lack of salary and/or merit increases over the past 2–3 years is driving the current emphasis of pay over career development. Again, given the state (and still uncertainty) of the economy, it comes as no shock employees have expressed more concern for maintaining or increasing their financial security—especially in the absence of opportunities for career growth and advancement.



Integration of Career Development and Talent Management While few companies dispute the value of a strategic (and integrated) workforce planning process, for many it’s still in nascent stage—a work in progress. Seventy-two percent of companies in the survey do not have a defined and integrated workforce planning process to help steer the development of talent toward critically needed capabilities.

Hewitt’s 2009 research on strategic workforce planning suggests that, at best, workforce planning efforts tend to be “isolated, one-off events” to identify headcount and hiring requirements for a business unit over the next year or two, but provide little to no insight for comprehensive talent planning.2 Integrated workforce planning processes typically incorporate talent planning to address talent gaps considering the full scope of the employment life cycle—including development—to gain more intelligence to design appropriate strategies.

Career development may not be fully integrated into the organization’s workforce planning process or throughout the employment life cycle as a whole; however, it tends to be most often integrated with areas such as performance management (85%) followed by recruiting (47%), according to the survey. It’s very reasonable to expect career development to be integrated with the performance management process since these conversations typically involve discussions around individual development plans, capabilities, and career goals/options.

Nearly half of respondents (47%) indicate career development is fully integrated with recruiting. This result exceeds what is typically found as organizations rarely integrate development with the recruiting process. Hewitt findings indicate that just 12% of organizations consistently link candidate screening criteria to other talent management processes, such as development, performance management, and succession planning.

Career Development Integration 85% Performance Management (e.g., we help employees understand the link between their capabilities,

development plans, and future career options)

47% Recruiting (e.g., we show candidates the kinds of career opportunities available to them)

32% Reward Strategies (e.g., we help employees understand the value of career development as much as the value of base and variable pay rewards)


2Hewitt Associates, Spotlight on Workforce Planning, 2009.

Yes29%

No72%

(n=192)


Overall Satisfaction With Career Development Sixty-four percent of companies surveyed either disagree or strongly disagree that they have career development “figured out” and are satisfied at this point, and that there’s a general understanding and appreciation for the available career options. Given the high level of importance employees place on career development and opportunities, based on respondents’ organization engagement data, these results may present serious challenges and concerns for ensuring engagement, motivation, and retention among the organization’s current talent.

Furthermore, even though 85% of respondents say that career development is fully integrated into performance management where employees are assisted in understanding the link between their capabilities, development plans, and future career options, the results here appear to be somewhat contradictory. This suggests that while career development and options are discussed during the performance management process, such discussions may not be effective or followed through to achieve the desired effect. The survey results show that there is a lot of work to be done on career development programs.

Satisfaction With Career Development Programs 2% Strongly agree

8% Agree

26% Neither agree nor disagree

52% Disagree

12% Strongly disagree

(n=190)

Integration of Career Development and Business Measurement, Philosophy, and Tools Measurement of the impact of career development on key business metrics has not been undertaken by 72% of companies in the survey. This response is not surprising as many companies struggle to identify and measure various talent management metrics that are aligned to key business metrics. And even fewer companies formally track these metrics using tools such as HR/organization scorecards.

According to a Hewitt 2008 report, metrics help to weave a “talent mind-set” into the operating fabric of the business, clarifying expectations and creating a framework for tracking and reporting talent-related results in a language that business leaders understand.3

3Hewitt Associates, The State of Talent Management: Today’s Challenges, Tomorrow’s Opportunities, October 2008.

No72%

Yes, We Have a Scorecard

6%

Yes, But We Have More Work

to Do22%

(n=191)


Traditional HR metrics, such as benefit and health care expenses, are typically systematically tracked by the vast majority of companies. However, far fewer organizations track metrics related to the effectiveness of talent programs. In most cases, organizations take an ad hoc approach to measurement and track a large number of low-impact metrics. Operational metrics around development such as learning and development hours and dollars per employee are most often tracked (48% according to the 2008 report).4 A focus on operational aspects, rather than outcomes and impacts, presents a challenge for organizations seeking to use metrics as a strategic decision-making tool.

Unlike the state of career development measurement, organizations’ philosophy on this area seems to be more progressive. Sixty-two percent of respondents report that career development is self-directed, with managers essentially guiding the process and employees making their aspirations known.

For many companies, career development is a shared responsibility between employees and managers. Increasingly, companies are empowering employees to take charge of their own development. And as a consequence, companies may be under-investing in manager capability and resources to develop employee capability.

Current Career Development Philosophy 62% It is self-directed, with managers guiding the process but employees making their aspirations known

46% It focuses on those employees who are either in critical roles or have been identified as ‘high potentials’

32% It is open to all employees

12% It is manager led with what is assumed to be the employees’ best intentions in mind


Forty-six percent of companies surveyed focus on employees in critical roles or identified as “high potentials” for development. While the development of these groups is nearly unanimously regarded by organizations as a high priority, consistent execution falls short. Most companies understand the need for such programs, but many organizations struggle with consistency in terms of high potential identification, communication, and development.

A Hewitt study finds that in 86% of companies, management identifies high potentials early to at least “some degree” and takes actions to proactively develop them. However, only 7% said this was being done consistently. And while 69% of companies give high-potential employees additional opportunities to interact with senior management, only 13% do so consistently across the organization.

With today’s focus on high-potential talent and leadership development, organizations have made more significant progress in building capability here and growing leaders internally. As a result, companies are leveraging tools to assess the potential of this group.

4Hewitt Associates, The State of Talent Management: Today’s Challenges, Tomorrow’s Opportunities, October 2008.

Assessment Tools Geared Toward the Following Employees 56% Director

49% Mid-level manager

25% Front-line supervisor

24% Individual contributor

33% None of the above


Fifty-six percent of respondents said that assessment tools are geared toward director-level employees to measure their future potential in the organization, followed by 49% reporting these tools are geared toward mid-level managers. It’s the ability to develop leaders who can effectively face tomorrow’s global business challenges that organizations recognize is critical to that success. Demographic shifts and changes over the next five to ten years will make competition for leaders even fiercer. Therefore, many organizations have come to realize the only way to ensure a strong pipeline of leadership talent is to develop it themselves and leverage the appropriate assessment tools to facilitate this process.

Also important to note, one-third of respondents report that they have no tools geared to any of the employee groups to facilitate measurement of their future potential. If there are no tools in place, it potentially impacts the company’s ability to identify and assess the talent pipeline and high potentials, which in turn has a larger impact on overall succession planning within the organization.

Career Development: Perceptions and Access To an overwhelming degree, 85% of respondents report that employees’ perceptions of available career opportunities are primarily regarded as “some” to “limited.”

Employees’ Perceptions of Opportunities Available 30% Limited opportunities; largely do the same type of work and slowly progress within one’s business unit

55% Some opportunities; chance to take on new and different challenges and make lateral moves within the same

15% Multiple opportunities; chance to rotate and take on opportunities in other lines of business is encouraged

(n=191)

Again, with most respondents reporting career opportunities as the top driver of engagement and retention at their organization, a perceived lack of career opportunities available to facilitate their development presents challenges to ensuring employees remain engaged, motivated, and retained.


Approximately four out of ten companies measure and track employees’ perceptions of career development opportunities over time.

Yes37%

No63%

(n=190)

This data is surprising given the results showing career development as the top or one of the most important drivers of employee engagement suggesting a strong association between perceived importance of career opportunities and employee engagement.

Are Employees Able to Easily Access Career Development Tools? Having career development tools that are easily accessible to employees appears to be a challenge for companies in the survey. Fifty-six percent of respondents report that tools are not easily accessible to help guide future growth of employees.

Yes44%

No56%

(n=192)


Defining Career Development While many companies maintain a somewhat narrow view of career development, 83% of companies in this survey report that career development is based on upward progression. However, as companies report limited career opportunities for upward growth, other types of growth are increasingly considered as a basis for career development—for example, growth within an existing role and within the function are indicated at 75% and 76%, respectively.

Career Development Is Based On 83% Upward progression

76% Growth within your function

75% Growth within your existing role

65% Lateral movement

56% Growth outside your function

43% Mobility

3% Other


On the other hand, 43% of companies report that career development is based on mobility. While there may be fewer opportunities for mobility in general, this result appears to correspond to a focus of mobility in the career development of leadership and executive positions, reported by 64%. A complex global market and increased competition may require certain levels of mobility to ensure leaders are well developed and globally exposed to help the organization achieve success.

Mobility a Focus of Career Development 64% For leadership and executive jobs only

33% For most jobs

3% For all jobs

(n=125)

For the predominant basis for career development, promotions or upward growth, half of companies report these opportunities as prevalent now as they ever were. Four out of ten companies report promotions or upward growth are not as common as they were five years ago.

Promotions or Upward Growth 8% Are more prevalent now more than ever

50% Are as prevalent now as they ever were

42% Are not as available and common as they were five years ago

(n=125)

At 8%, very few respondents report promotions or upward growth to be more prevalent now more than ever. If career development is by and large based on upward growth, but there is a relative lack of these types of opportunities, this may influence employee perceptions regarding career development at their organization. Further, employee perception of career development is directly influenced by open communication and discussions during this process. Employees feel empowered to take charge of their development when they


are aware of the opportunities that exist and are able to freely express interest and discuss their capabilities.

Yet surprisingly, 58% of respondents indicate they do not currently have a systematic annual process for managers and employees to openly discuss and match an employee’s interests and capabilities with possible career options.

Yes42%

No58%

(n=191)

Eighty-five percent of companies report that in their organizations they help employees understand the link between their capabilities, development plans, and future career options during the performance management process. Typically, this process takes place on an annual basis, at a minimum.

While open discussion of career opportunities is critical to employee development, so are the approaches to learning that help to facilitate development. However, achieving the optimal mix is not always easy.

Company’s Approach to Learning for Career Development 45% We have a blended mix of learning approaches, but haven’t gotten the mix quite right yet

26% Most or all of our learning is from on-the-job experiences and challenges

25% We have a blended mix of learning approaches that is optimal

3% Most or all of our learning is classroom based

1% Most or all of our learning is from coaching and mentoring experiences with others

(n=191)

Forty-five percent of respondents report their organizations have a blended mix of learning approaches, but haven’t perfected the mix as of yet; while fewer (25%) report they’ve achieved a blended mix of learning approaches that is optimal for their organizations. Many companies find achieving the optimal mix of learning approaches challenging, especially given diverse workforce populations and variations in learning styles among different employee groups.

This survey clearly suggests companies are seeking ways to better leverage career development. Cited as one of the top tools for engagement and retention, career development has become increasingly more significant in the past couple of years as companies decrease their merit budgets and freeze pay to weather a tough economy. However, truly integrating career development into overall talent strategy and processes continues to elude most organizations.


Participating Employer Information

Number of U.S. Employees Forty-five percent of survey respondents have 10,000 or more employees. The median number of U.S. employees is 7,700, and the average is 22,720.

Under 1,00010%

1,000–4,99930%

5,000–9,99915%

10,000–14,99911%

15,000–19,9997%

20,000–24,9995%

25,000 or more22%

(n=179)

Industry Aerospace/Defense 3% Entertainment/Communication/Publishing 1% Agriculture 1% Financial Services 5% Automotive/Transport Manufacturing 1% Food 3% Banking 1% Health Care 8% Beverages 2% Industrial Manufacturing 4% Business Services 1% Insurance 8% Chemicals 1% Leisure 1% Computer Hardware 1% Media 1% Computer Services 3% Metals/Mining 2% Construction 2% Retail 10% Consumer Products Manufacturing 6% Telecom Equipment 1% Diversified Manufacturing 7% Telecom Services 1% Diversified Nonmanufacturing 1% Transportation Services 3% Electronics/Electrical 1% Other 10% Energy/Utilities 11%

(n=190)


For more information about this study, please contact:

Amy AtchisonHewitt Associates LLC100 Half Day RoadLincolnshire, IL 60069(847) [email protected]


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