03/01/2025

The Business Case for Employee Career Development Programs

By Don Schutt

Labor market trends profoundly impact recruitment and retention. Factors such as labor shortages, demographic shifts, and technological advancements are reshaping how organizations attract and retain talent. Employee career development programs are structured initiatives implemented by employers to help employees acquire new skills, expand their knowledge, and advance their careers. A deliberate focus on these programs is essential for enhancing both individual and organizational performance, ultimately driving overall success for employers. Career Service Providers play a crucial role in advocating for the creation and initiation of new employee career development programs or the expansion of existing ones, benefiting both employees and employers. The business case for these programs is supported by an analysis of current market trends, driven by three key forces: labor shortages and workforce competition, an aging workforce coupled with declining birth rates, and skill mismatches. 

Labor Shortages and Workforce Competition 

Recruiting in the current labor market has never been more challenging, with historically low unemployment rates since 2019, reflecting a tight labor market (Edwards & Smith, 2020). Despite the disruptions of COVID-19 in 2020, unemployment rates recovered and remained in the range of 3.4% to 3.8% from February 2022 through March 2024 (U.S. Bureau of Labor Statistics, n.d.), with job openings still exceeding the number of available workers.  

This imbalance between unemployed workers and job openings forces employers to compete for a smaller pool of qualified candidates, particularly in sectors like healthcare, technology, and skilled trades. 

  

Of note, immigration has historically been a key driver of US labor force growth, particularly as the native-born workforce ages and birth rates decline. “In 2023, foreign-born accounted for 18.6% of the U.S. workforce… with a labor force participation rate of 66.6%” (U.S. Bureau of Labor Statistics, 2024, May 21, para. 12). Policy changes in immigration could significantly impact labor supply and employment trends. 

Gallup (2019) estimated that the “cost of replacing an individual employee can range from one-half to two times the employee's annual salary,” and continued with this example: “So, a 100-person organization that provides an average salary of $50,000 could have turnover and replacement costs of approximately $660,000 to $2.6 million per year” (para. 3-4), thus underscoring the importance of effective retention strategies.  

The current labor market presents unprecedented recruitment challenges, driven by historically low unemployment rates, a limited pool of qualified candidates, and an imbalance between job openings and available workers. As the US workforce continues to age and birth rates decline, immigration remains a vital contributor to labor force growth, making policy decisions in this area critical to sustaining economic stability. 

Addressing these hurdles will require innovative workforce development strategies, targeted upskilling initiatives, and strategic policies that align with the realities of today’s labor market. Employers must prioritize employee career development programs to meet these demands effectively. 

Aging Workforce and Declining Birth Rates 

The workforce is significantly influenced by demographic trends, including an aging population and declining birth rates, with older workers representing a growing share of the labor force (Fry & Braga, 2023). The World Economic Forum (2025) reported that these demographic shifts are transforming global economies and labor markets, directly impacting labor force expansion and increasing pressure on employers to fill positions.  

Aging and declining population growth poses a significant challenge to labor force expansion, intensifying the pressure on employers to fill critical roles. As workforce shortages persist, organizations must proactively adapt by implementing innovative strategies to attract, develop, and retain talent.  

Employers can leverage employee career development programs to address these challenges and cultivate a workforce that is both adaptable and poised to lead in an increasingly competitive and dynamic future. 

Skill Mismatches: Bridging the Skills Gap 

A significant skills gap has emerged as many workers lack the advanced technical or digital skills required for in-demand roles. McRae (2025) identifies an intensifying expertise gap driven by retirements and rapid technological disruption, with organizations facing a critical expertise shortage. The World Economic Forum’s (2025) latest Insights Report highlights skill gaps as the greatest barrier to business transformation, with 63% of employers citing them as a major challenge for the 2025-2030 period. 

Investing in employee career development programs to reskill and upskill workers addresses these mismatches while helping organizations retain talent by preparing employees for evolving roles shaped by automation and technology. 

Employee Career Development: A Strategic Solution 

Employee career development programs are crucial for enhancing both individual and organizational performance. According to Bussell (2021), organizations that actively support employees’ career growth benefit from higher engagement and increased commitment. Conversely, a lack of intentional career development efforts can lead to lower retention, skill shortages, and reduced productivity, ultimately threatening an organization’s long-term sustainability. Career development programs are strategic imperatives that drive retention, enhance productivity, and ensure adaptability in a competitive market. By prioritizing these programs, organizations can build a resilient, skilled, and motivated workforce, positioning themselves to sustain success in an ever-changing business environment. 

Conclusion 

Labor market trends—including workforce shortages, demographic shifts, and skills mismatches—demand innovative strategies for recruitment and retention. Organizations that address these challenges through targeted skills development and robust career development programs will be better positioned to thrive in an increasingly competitive labor environment. As Career Service Providers, engaging clients and students in discussions about the importance of choosing employers who prioritize career growth and development adds a valuable dimension to their career decision-making process. 

 

References 

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Don Schutt, Ph.D., NCC, LPC, BCC, CCSP, SHRM-SCP, is an Ombud at the University of Wisconsin-Madison with deep expertise in human resources, employee engagement, and talent management. He has served in leadership roles, including Senior Director of Talent Management and Director of Human Resource Development, where he managed learning, recruitment, employee engagement and inclusion initiatives for over 20,000 employees. A noted speaker and author, Dr. Schutt has delivered over 1,000 presentations on topics such as leadership, career development, and workforce engagement. He wrote “A Strengths-Based Approach to Career Development Using Appreciative Inquiry” 2nd ed. (2018). His certifications include Certified Career Services Provider, SHRM-SCP, National Certified Counselor, and Licensed Professional Counselor, alongside credentials as a Lean/Six Sigma Green Belt and Certified ScrumMaster. Dr. Schutt was honored as an NCDA Fellow in 2018 for his contributions to career development systems. He earned his Ph.D. and M.A. in Counselor Education and Sports Psychology from the University of Iowa and holds a B.A. in Journalism and Economics from UW-Madison.  He can be reached at daschutt@icloud.com