How to Build an Employee Development Plan on a Small Business Budget


Posted In: Workforce Insight, Workforce Research

Jun • 14 • 2017


Small businesses can improve employee engagement and job satisfaction by laying out a clear path for those employees to develop their skills and advance their careers. A well-constructed employee development plan benefits both sides: employees feel valued and engaged, while employers realize increased productivity and employee retention.


A Society for Human Resource Management survey of 600 employees found that 86 percent rated their organization’s overall commitment to professional development as an important or very important contributor to their job satisfaction.


And employers are listening. According to a report from the Georgetown University Center on Education and the Workforce, employers spend $177 billion annually on formal training for employees and $413 billion for informal on-the-job training.


Small business owners may think they can’t compete on the employee development front since they have budgets that are comparatively smaller than major employers. But cost-effective options exist to develop the skills of your small business workforce. It all starts with a solid plan.


Step One: Assess your needs and identify goals


Take a look at your overall business goals. A 2010 survey of small business owners with ten or fewer employees found that more than 80 percent did not monitor their goal-setting. Yet, setting business goals is a key to business success. Knowing your short-term and long-term objectives will help you build an employee development plan that works toward those goals. Do you want to increase revenue, reach a new market, improve customer satisfaction, or boost productivity?


Once you know what your overall goals are, you can look at employee performance and identify areas of need. Are your sales lower than what you expect? Are you getting a lot of customer service complaints? Are employees avoiding a particular task or software because they don’t understand how it works?


You can observe or test your employees to make sure they have the skills you need them to have, but the best way to know where employees are struggling is to ask them. If you already have a great relationship with your employees, this should be a fruitful discussion for both of you. If not, now is the time to start building one.


Testing may reveal that employees lack conflict resolution skills or aren’t sure how to best present information to stakeholders. Employees may even voice concerns about their ability to communicate effectively or collaborate with others inside the organization. This input gives you a baseline for setting goals and identifying solutions.


Step Two: Establish objective metrics


With goals in place, it’s time to decide how you’re going to monitor progress toward those goals. Start by clearly defining employee roles. Make sure both management and employees know how their performance will be measured. They can include productivity metrics, efficiency metrics, or training metrics.


For example, productivity metrics might look at how much an employee accomplishes in a day, and efficiency metrics might look at effort or expenses required for a given task, while training metrics will most likely take the form of written tests or surveys.


Step Three: Cultivate partnerships


You know what you’re trying to accomplish, so look at other businesses in your area. Are there ways you can help each other? Maybe other local small business owners already have a solid employee development program in place that you can emulate. If not, perhaps you can form a mentoring group to help each other brainstorm and develop ideas.


Don’t forget to look online; there are many organizations aimed at helping small businesses that offer free or low-cost memberships. Think about your local chamber of commerce, the Small Business Administration, or nonprofit organizations.



Step Four: Implement a three-pronged solution


With goals and resources lined up, consider implementing one or all of these proven employee development techniques:


  • Mentoring. A 2010 case study from Forrester Research Inc. reported that about 70 percent of Fortune 500 companies had mentoring programs. These are some of the most successful companies in the country, so emulating them just makes sense.


Mentoring improves retention and productivity while preparing employees to advance in the organization. The good news for small business owners is that mentoring can be a cost-effective way to share knowledge within your organization and develop junior talent.


You may even want to explore reverse mentoring where junior employees and supervisors enter a mentoring relationship that works both ways.



  • On-the-job training. Even if you can’t afford to bring in high-paid outside consultants to train your employees, you can use in-house resources to get the job done. The managers and employees you already have on staff are a wealth of talent that you can call on to improve skills across the company.



This can boost employee satisfaction as well because employees see that their skills and those of their peers are valued by the business.


  • Continuing education. Cultivate partnerships with a college to take on the training that you may not have the resources to handle. Look for a competency-based learning model that monitors student progress based on skills learned rather than on the number of hours spent in the classroom. A flexible schedule is also important to ensure employees can keep working their full-time jobs while they advance their education.


If possible, pay tuition for employees or offer a tuition reimbursement benefit. Affordable programs exist specifically to help employees of small businesses.


Step Five: Assess progress


Once employees have begun their development programs, you need to track their progress. Remember those metrics you developed in step two? Now is the time to use them. Measure employee skills against those metrics.


Talk to employees and ask them if they feel more prepared to tackle their daily job tasks. Test or observe them to be sure. If you don’t get the results you want, adjust your program to move closer to your goals.

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Emma Gallimore is a freelance writer with a degree in journalism from the University of Maine. She reports on trends affecting the education, business, health and technology sectors.