Career development is top priority for employers seeking to retain talent

As competition for talent heats up, companies are prioritizing employees' career development as a low-cost way to keep them around.

By paying for classes, mapping paths to target positions and even hiring internal career coaches to sharpen resumes, employers are grooming workers to be better job candidates for more positions at a time when the vertical career ladder has been knocked away.

That can sound like priming employees to be poached by a competitor, but some research suggests the opposite is true.

"They actually become more loyal," said Brian Kropp, human resources practice leader at business advisory firm CEB.

Lack of career opportunities is the No. 1 reason employees say they leave an organization, a change from five years ago, when pay was the leading reason people quit, Kropp said.

Career development tops the list of perks employers say they plan to increase this year, according to a new survey from Korn Ferry Hay Group that examined forms of compensation beyond base salary, benefits and bonuses.

Asked which alternative rewards they planned to increase in the next 12 months, two-thirds of the 242 employers polled named career development or training programs for managers and professionals or clerical, technical and skilled trades.

"I think there's a healthy dose of security concerns for folks," McMullen said. "If I feel that I'm not being competitive with peers, if I'm stagnating, I'm at risk."

Alternative forms of compensation grew during the recession when money was tight, raises faltered and some companies froze or cut pay.

As the economy improves and pay raises, now tracking about 3 percent, stage a comeback, many companies, still reluctant to raise fixed costs, are continuing to invest in alternative rewards that don't cost much relative to their perceived value.

Career development is particularly relevant for retention, as about 70 percent of employees say they are dissatisfied with growth opportunities at their companies, according to CEB.

But the chance for promotion has also declined as companies cut layers of middle management to save costs. The average tenure in a position in 2014 was 30 percent longer than it was in 2010, according to CEB.

When Trading Technologies underwent a reorganization a few years ago, it did away with many title hierarchies and several layers of middle management for the sake of efficiency and flexibility, said Katie Burgoon, executive vice president of human resources at the Chicago-based company, which makes electronic trading platforms.

To keep employees motivated, the company increased its budget for employee requests to attend professional conferences or take career-related classes. It offers full tuition reimbursement to employees who wish to pursue higher degrees. Several employees already have transferred to different departments in diagonal moves.