Not a Member? Get access to HR news and resources that you can trust.
Don't leave the task of calculating total cost of workforce to the finance department.
Is your employee handbook ready for the changing world of work? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
60+ new SHRM Seminar dates in 10 U.S. cities and virtually.
Expand your influence and learn how to become an effective leader -- Join us in Phoenix, AZ, October 2-4, 2017.
Career paths and career ladders are two traditional methods by which an employee can develop and progress within an organization. Career ladders are the progression of jobs in an organization's specific occupational fields ranked from highest to lowest based on level of responsibility and pay. Career paths encompass varied forms of career progression, including the traditional vertical career ladders, dual career ladders, horizontal career lattices, career progression outside the organization and encore careers.
Employees usually feel more engaged when they believe that their employer is concerned about their growth and provides avenues to reach individual career goals while fulfilling the company's mission. A career development path provides employees with an ongoing mechanism to enhance their skills and knowledge that can lead to mastery of their current jobs, promotions and transfers to new or different positions. Implementing career paths may also have a direct impact on the entire organization by improving morale, career satisfaction, motivation, productivity, and responsiveness in meeting departmental and organizational objectives.
This article addresses the following topics related to employee career paths and ladders:
Other methods of employee development are highlighted in this article but only as they relate to the topic of career paths and ladders. This article does not address the related, but distinct, topics of developing an organization's leaders and managers.
Introduction to the Human Resources Discipline of Organizational and Employee Development
Developing Organizational Leaders
In the early part of the 20th century, career choice and career progression were dictated by tradition, socio-economic status, family and gender. For most men, career choice—and status within those careers—was determined by what their fathers and other male family members had done before them. For women, the career choice options were even more limited by convention and social mores. Career progression and career ladders were almost nonexistent.
In the immediate post-WWII world, the corporate organization became the driving force in U.S. business. Both employers and employees operated under an implied contract: Employees would be loyal, and in turn, employers would provide employment until retirement.
In the latter part of the 20th century, however, this traditional trajectory of a person's career at one employer became a thing of the past. From the late 1970s onward, the U.S. economy experienced several boom-and-bust cycles, causing many organizations to undergo massive layoffs and restructuring, and to be reticent to re-staff at pre-bust levels even when times were good. Also during this period, the shift away from a manufacturing to a knowledge economy caused a decline in union membership, further diminishing the once-implied contract of employee loyalty for lifetime employment. The organizational structure became much flatter, reducing or eliminating middle management layers. To get ahead or to make more money, employees often had to look elsewhere.
Thus, a new paradigm emerged in which individuals are in charge of their ladder, where they place it, how long they leave it in place and how high they want to go on it. Traditional career ladders still exist in the 21st century, but they operate in an environment where:
See At Work in 2020 and Career Goals for Many Executives Appear to Be Shifting.
Many factors influence the need for an organization to embrace formal career paths and career ladders, including:
Perhaps the biggest selling point to executives for creating formal career paths and ladders is the talent crunch. According to the 2015 SHRM/Boston Consulting Group Creating People Advantage global survey report, respondents identified leadership, talent management and strategic workforce planning as three of the top six topics most urgently in need of action by their organizations. Proactively creating career paths and ladders to retain and develop talent can help confront these challenges.
Making employee development a priority
Although most CEOs understand the importance of employee development, most admit that they do not devote the necessary time and resources to this activity. In a study by global staffing firm Randstad, 73 percent of employers said fostering employee development is important, but only 49 percent of employees said leadership is adhering to this practice.
Similarly, another study revealed that 85 percent of CEOs said that talent management is as important as or more important than other business priorities. But only two in 10 leaders surveyed said they often spend time managing talent, and only one in 10 often review talent management with the company's board of directors.
Most organizations could benefit by increasing efforts to establish clear strategies for how talent will be grown from within. Career paths and ladders can be effective strategic tools for achieving positive organizational outcomes. They can be a means to ensure an organization's continuing growth and productivity.
Benefits to the organization
Aligning the employee's career goals with the strategic goals of the organization not only helps the organization achieve its goals but also helps the organization in the following ways:
Differentiate itself from labor market competitors. Research by WorldatWork shows that organizations that do not invest in training and development of their human capital lose valuable employees to their competition. Employers can easily differentiate themselves from competitors by investing in their employees' career development. Even a relatively small employer investment has a positive impact on loyalty. See Rewards Professionals Link Loyalty (Their Own) to Career Development and How to Create a Learning Culture.
Retain key workers. Managing employee perceptions of career development opportunities is a key to enhancing engagement and loyalty among employees. Organizations should identify workers who are central to the execution of business strategy and then develop or update retention plans to meet the needs and expectations of these employees. Critical workers include those who drive a disproportionate share of key business outcomes, significantly influence an organization's value chain or are in short supply in the labor market. Providing identifiable career paths is an important aspect of retention plans, along with coaching and mentoring employees with high potential and moving proven performers into new roles that fit skills developed over time. See As Economy Recovers, Career Paths Aid Retention.
Keep younger workers. Employees' views of work and growth opportunities vary by generation. For example, Generation Y workers (those born between 1980 and 1987) are the least likely to be interested in pay increases and most likely to be interested in learning new skills. They are also more likely to value a career path than any other generation. Randstad also found that high percentages of Generations Y and X (those born between 1965 and 1979) want pathways to personal growth. See Capturing the Wisdom of Four Generations
Decrease turnover after an economic downturn. Employers in the United States are facing a "talent paradox." Despite relatively high national unemployment since 2008, many organizations confront shortages in areas where they most need to attract and retain experienced workers. As the economy recovers from a downturn, employers should be concerned about losing critical and high-potential talent. A spike in voluntary turnover typically occurs after a recession. The cost of voluntary turnover can be significant, and it includes loss of productivity, lost institutional knowledge and relationships, and added burdens on employees who must pick up the slack.
A 2012 Deloitte survey, Talent 2020, found that when employees were asked to indicate the top factors that would cause them to look for new employment over the next 12 months, lack of career progress topped the list, whereas lack of challenge in the job came in at No. 5, suggesting the need for career development plans. According to these survey results, pay is significant; however, the importance of promotion and job advancement, especially among Generation Y and Generation X workers, is underestimated by executives. Experts say that employees who believe their employers make effective use of their talents and abilities are overwhelmingly more committed to staying on the job. See Diversity and Careers: An Examination of the Career Experiences, Processes and Outcomes of a Multicultural Workforce.
HR professionals have new and varied roles to play in developing and implementing career paths.
HR professionals no longer have a captive base of employees with control over their climb up the ladder. Additionally, HR is no longer able to promise a position on the ladder, or a climb to the top. Recognizing that there is a new paradigm for career progression in the 21st century, HR should encourage employees to take control of their own ladders. Though an organization can provide resources and tools to assist employees in developing their skills and abilities, the organization is no longer the sole option that employees have.
The challenge to HR is not only to continue to provide career opportunities to employees but also to provide job enhancement and job enlargement opportunities. Training and development should be focused on preparing the employee for a lifetime of employability versus a lifetime of company employment. See Be a Steppingstone.
The ambition and drive to follow that path belongs to each individual, but the guidance and support needed to navigate the way comes from managers. Managers are responsible for incorporating the organization's definition of success into employee feedback, evaluations and development plans. Helping managers develop career paths for their employees is another area in which HR professionals can take the lead. HR professionals should help managers view employees not as their exclusive resources but as organizational resources. When managers think this way, they are more apt to encourage employees to develop themselves in areas outside their existing departments to the benefit of the entire organization. When employees move up internal career ladders through internal promotions, HR can contribute to the process of moving an employee up the career ladder by:
Although HR professionals have many responsibilities related to designing and implementing career paths and methods for employees to grow and advance, they must also receive guidance themselves in navigating and advancing their own careers.
2008 Managing Your HR Career (PDF)
Career Development for HR Professionals
Developing as an HR Professional
Paths to the Top
Developing Traditional Career Paths and Ladders
Corporate-wide initiatives around career planning can be as simple as role-playing with managers on how to discuss career interests or use career mapping with their employees. More complex initiatives involve developing formal career paths for all positions within the organization. Traditional career ladders are based on the assumption that the individual wishes to continue to climb the ladder as long as he or she is able to and that the employer continues to provide opportunities.
A tool that managers and HR professionals can use during career planning discussions with employees is career mapping. Career maps help employees think strategically about their career paths and how to meet their career goals within the organization rather than leave it to move ahead.
Career mapping involves three steps:
For managers and employees to successfully practice career mapping, HR must develop the necessary resources to facilitate the process.
Traditional career ladders and career advancement strategies
In a traditional career ladder system, the person is hired and, through a combination of experience, education and opportunity, is promoted to levels that encompass additional responsibility and concomitant compensation. This progression within an organization continues until the individual leaves the employer for another opportunity, retires, reaches a level at which no further promotional opportunities exist, chooses to decline subsequent promotional opportunities or is terminated.
Reaching the next level in an organization that has a traditional career ladder often means having the right experiences. Yet many workers do not know what experiences will work best to prepare them for upward mobility. People who have experiences that are "accelerators" of potential will be more likely to succeed. See SHRM Foundation: Predicting Ten Years of Worker Career Success from Employee Development Behavior.
The 2012 Pulse on Leaders study by Personnel Decisions International (PDI) consulting firm outlined the types of experiences that are most valuable in predicting success at various levels of leadership. Necessary experiences for promotions vary by leadership level because business challenges vary at each level. According to PDI's data, first-level leaders are more likely to achieve success if they have had cross-functional experiences; midlevel leaders are more likely to succeed if they have had experiences handling tough challenges, such as a difficult employee situation; and new executive leaders are more likely to succeed if they have had high-risk and high-visibility experiences. See Success Factors.
A 2011 report, The Bottom Line, by Catalyst also sheds light on the effectiveness of various career strategies. The report suggested that career advancement requires that individuals do "all the right things" to get ahead. "Ideal workers" are those who:
Problems for HR may arise, however, because those traits tend to be male-dominated. Making sure upper echelons are attainable by approaches used by both men and women benefits the organization from a legal and business perspective. Catalyst identified four career advancement strategy profiles based on the methods that individuals use to get ahead. These profiles include:
Catalyst found that men were more likely to reach senior executive and CEO positions than women and concluded that women must use different strategies to achieve career goals. Of all the strategies used by women, making their achievements known was the only strategy associated with compensation growth. Men were more likely to benefit financially from gaining access to influential persons or from working long hours. See Study: Gender Influences Effect of Career Strategies.
Common challenges with traditional ladders and paths
Within a traditional career ladder, several issues are likely to arise, including the following.
To manage or not to manage. In many organizations, the first of several steps on an individual's career ladder is that of an individual contributor. An inherent difficulty in many organizations, however, is that once a person reaches the level of the most experienced individual contributor, he or she must move into first-line supervision to "get ahead." If the individual is interested in making this next step and is capable of gaining supervisory and management competencies, this progression is fine. If, however, the person does not want to move into management but still wants to receive additional compensation, then there is a problem. When this situation occurs, a typical reaction is for the individual to seek employment outside the company to earn more money. Obviously, if the person is a strong performer, this move is not to the organization's advantage. In response to this scenario, some employers have developed dual career tracks, which are discussed in the next section of this article.
In the traditional career ladder organization, individuals may be pushed into management without the desire or the skill to do the job. Not only does the individual become frustrated with new challenges for which he or she is ill-equipped, but the organization is frustrated because it has someone in a position who is not working to potential.
No desire to climb. For some individuals, the rung at which they enter an organization is the rung at which they desire to stay. Someone who is happy at his or her current level does not aspire to advance and is a solid performer should not be pressured to climb the ladder. Encouraging supervisors to have periodic career discussions with employees is important to evaluate the current and future aspirations of all employees and will help identify those who would like to remain in their positions and those who are looking for the next step on their career ladders.
Obstacles. Career plateaus and career stagnation can also occur in the traditional career ladder and can block a person's ability to climb the ladder. A career plateau occurs when employees reach a level in an organization in which they are either perceived to have reached their limit of progression or the organization does not provide for opportunities for future advancement. This situation may cause the employee to look outside the company for other, higher-level opportunities. Career stagnation occurs when a person is no longer psychologically engaged in his or her or job and, consequently, becomes less effective. A person who has experienced a career plateau may encounter stagnation if he or she does not actively do something to move off the plateau.
Nontraditional Methods of Career Progression
In today's business environment, many organizations are unable to advance all employees up traditional career ladders due to low turnover, limited growth or financial constraints. In such situations, other kinds of development opportunities offer ways to retain and engage employees, including job redesign, job rotation, dual career ladders, horizontal career paths, accelerated and "dialed down" career paths, and encore career paths.
As organizations have experienced downsizing, new technologies and demographic changes, the result has been flatter organizations that provide less opportunity for career advancement via promotions. Job redesign is an important ingredient in continuing to challenge employees to do their best work.
Job redesign can provide increased challenges and opportunities for employees to get more out of their jobs while staying on the same rung of their ladders. Commonly used job redesign strategies are job enlargement and job enrichment.
Job enlargement involves broadening the scope of a job by varying the number of different tasks to be performed. Job enrichment involves increasing the depth of the role by adding employee responsibility for planning, organizing and controlling tasks of the job.
These strategies can be used to add variety and challenge to a job while also allowing the individual to learn new skills and to further refine and develop existing skills to better prepare for advancement opportunities when they do occur. However, when jobs are enlarged but not enriched, motivational benefits are unlikely. Although the distinction between job enlargement and enrichment is fairly straightforward, employees may not correctly perceive the changes as enrichment or as enlargement. See Employee Job Satisfaction and Engagement.
Job rotation is an effective method to provide job enrichment from an employee's perspective. It involves the systematic movement of employees from job to job within an organization. Typically, formal job rotation programs offer customized assignments to promising employees in an effort to give them a view of the entire business. Assignments usually run for a year or more. Rotation programs can vary in size and formality, depending on the organization.
Job rotations are not new, but they can be highly effective. Low-level workers in job rotations can gain variety and perspective, so they do not get bored. For managers, rotations are typically designed to broaden their expertise and make them better prepared to move to the next level. As middle management jobs have disappeared in recent years, rotations for managers have become more important.
But there is a downside to job rotation programs. Such programs may increase the workload and decrease productivity for the rotating employee and for other employees who must take up the slack. In addition, line managers may be resistant to high-performing employees participating in job rotation programs. Finally, costs are associated with the learning curve on new jobs.
Preparation is a key to the success of any job rotation program. By carefully analyzing feasibility, anticipating implementation issues, communicating with and ensuring the support of senior and line managers, and setting up realistic schedules for each position, both large and small organizations can derive value from a job rotation program. See How do I implement a job rotation program in my company? and L'Oreal Job Rotations Are More than Skin-Deep.
Dual career ladders
A dual career ladder is a career development plan that allows upward mobility for employees without requiring that they be placed into supervisory or managerial positions. This type of program has typically served as a way to advance employees who may have particular technical skills or education but who are not interested or suited to management.
Advantages of dual career ladders are the following:
Dual career ladder programs are more common in scientific, medical, information technology and engineering fields, or in fields that typically exhibit one or more of the following characteristics:
To be effective, a dual career ladder program must be well managed, as the program can become a "dumping ground" for lower-performing managers. Additionally, there may be resentment from employees not chosen for the program or from managers who feel the dual career employees are receiving similar pay as managers without the added burdens of supervising staff. See Career Development: What is a "dual career ladder"?
Horizontal career paths
The concept of horizontal career paths (also called "career lattices") was introduced in many large organizations in the mid-to-late 1990s. In organizations with limited number of management and leadership positions, employees are encouraged to think of career paths both horizontally and vertically.
The potential benefits of formal horizontal career paths include the following:
A career lattice strategy has to be understood by both managers and employees, and appropriate incentives need to be in place to reinforce the desired behavior. Organizations with successful lateral career programs share several common characteristics, including:
See Horizontal Paths Keep Employees Engaged.
Accelerated and "dialed down" career paths
A few organizations have recognized that employees want a voice in tailoring their career paths to their life stages and as to whether they want to be on an accelerated path or a "dialed-down" path at a particular stage.
Some organizational projects require high intensity and others do not, but all are important to the organization. An employee who is in a stage of acceleration may have a better success rate on high-intensity projects, such as a mergers-and-acquisition project that requires a lot of hours and travel. On the other hand, if someone is in dial-down mode for personal reasons, then a lower intensity project would be a better fit.
In the accelerated or dialed-down career path model, the workload dimension should be indexed to compensation. Thus, if an employee has dialed down to 80 percent of the normal work time, the compensation should be lowered to 80 percent.
Implementing accelerated and dialed down career paths may result in:
See Customer Career Choices.
Encore career paths
The concept of purpose-driven work in the second half of life has only recently become an issue. An encore career is the opportunity for an individual to do work that has a social impact after midlife work. Experts suggest that the impact of encore careers may be similar to that of women moving into the workforce in the 1960s and 1970s.
Results from the 2008 Encore Career Survey by MetLife Foundation and Civic Ventures found that unexpectedly large numbers of Baby Boomers are looking for jobs that can provide them with "means and meaning." These individuals primarily have held professional and white-collar jobs, have at least a college education, often work 40 or more hours a week, and usually live in or near cities. This survey's findings provide evidence of a growing social phenomenon that poses opportunities for nonprofits.
Many nonprofit organizations have traditionally relied on Baby Boomers to perform volunteer or part-time work that came with only modest stipends. These opportunities will be less appealing as people live longer and traditional retirement plans disappear. HR functions in the nonprofit sector should consider adapting hiring policies to employees interested in encore careers. Moreover, nonprofit employers may want to reshape job descriptions to offer part-time and flexible work options, use online resources to make finding encore jobs easier, and provide education and training to meet new job requirements.
Interest in 'Encore Careers' Is Growing
Encore Careers Marry Money and Meaning
Career Paths Outside the Organization
In the last few decades, corporate restructuring and the recession have periodically resulted in the loss of hundreds of thousands of jobs in some industries, flatter organizations with less promotional potential and the creation of new types of jobs in other industries. These changes have led to the increase in the number of consultants and significant expansion of the "contingent workforce."
Large consulting organizations have been around for many years, and they have provided career ladders and promotional opportunities much the same as any other company. A new type of consultant has emerged, however, who has previously worked within the corporation. This exit from the organization can occur for a variety of reasons, including lifestyle and family considerations, lack of challenge and internal career progression, early retirement, corporate downsizing or personal choice.
Regardless of the reason, the independent consultant is someone who has expertise in a defined area and who markets that expertise to potential clients, primarily the previous employer. Generally, this type of consultant operates using a business model based on a limited size organization and in a limited geographic area. Although the consultant role itself may not provide a career ladder, the move from an organizational to a consultant role is a move on a career ladder that many people find both personally and financially satisfying.
The "contingent workforce" includes individuals who work as temporary workers, contract workers or project workers. All these roles are designed to provide needed work to an organization for a limited time. The reasons people elect to pursue contingent work are as varied as the work settings in which the work is performed. Some people see it as a route to permanent full-time employment. For others, it is a lifestyle decision that allows them to work when they want for as long as they want. For still others, contract work provides variety and challenge as they move from worksite to worksite.
For the contingent worker, the traditional employer-employee relationship no longer exists, and people are self-employed in the sense that they control when, where and how they will work. This change in work patterns requires skills portability and lifelong learning as individuals are challenged to maintain their marketability in the business marketplace. From a career ladder perspective, individuals in the contingent workforce choose where they place their ladder. Although they have restricted ability to climb their ladder, they have made the choice that they would prefer to move their ladder from time to time rather than keep their ladder in one place and climb it.
Managers and HR professionals must be effective in their communications to employees about the organization's career paths and career opportunities. Employers must handle conversations about the following potentially "tricky" topics carefully and honestly and without creating expectations or making commitments that the organization may not be able to fulfill:
Employees should know how they are regarded so they can decide whether to go for a promotion when a job opens up. An individual should be given accurate and constructive information about the perception of his or her performance or readiness for particular roles.
Helping Employees Step Up
Lack of Accountability, Capability Are Key Talent Management Challenges
Revealing High-Potentials Requires Communication Strategy
Employers and HR professionals should be aware of potential legal issues that can arise in the context of career paths and career ladders, including gender stereotyping, discriminatory promotions and pay discrimination.
Women sometimes face obstacles in the workplace because of gender stereotypes and a culture that rewards behavior and strategies used primarily by one gender. In addition to the risk of lawsuits or unwanted media attention, gender stereotyping may cause valuable talent to leave the organization in pursuit of other options.
Employers and HR professionals should consider questions that can shed light on women's advancement opportunities in their organizations, including:
See Study: Gender Influences Effect of Career Strategies.
If not many women or minorities fill high-level positions in an organization, HR or legal counsel should look at the corporate ladder to see when a disproportionately lower representation of one gender or ethnicity occurs. This factor can be especially important if a company promotes from within because it would suggest that the underrepresented gender or ethnicity does not understand or have access to the organization's career paths.
To avoid discrimination lawsuits in promoting employees, employers need to have a reasonable rationale for every promotion. Moreover, employers should give careful consideration to how promotion opportunities are posted—specifically, whether to do it internally and externally at the same time. As with all HR policies, promotion policies and practices should be clear and consistent.
If an employer's positions have defined pay bands, then employees who are not promoted may reach the pay maximum for the job. Usually, women and minorities are paid approximately the same as others within similar positions, but there might be few minorities and women promoted to higher paying jobs.
Indicators of pay inequities between the pay for members of the majority group and members of other protected classes go beyond pay disparities in the same positions. Other tip-offs to potential pay discrimination may include:
One step to avoiding pay discrimination is to take a critical look at promotions. This should include a review of the rate of promotion for protected classes and the organization's mechanism for providing information on promotions. EEO-1 reports can also be useful to determine underrepresentation of certain categories of employees.
HR professionals should analyze key metrics related to career progression programs to determine the return on investment (ROI) to the organization.
One way to calculate the ROI for career progression programs is to determine how these initiatives affect organizational turnover or retention rates and then to quantify their impact in financial terms. For example, an organization that has higher-than-average turnover rates for employees with three to five years of tenure with the firm may decide to develop individualized career maps as a way to boost retention. If the program reduces turnover rates, then the savings from replacement costs, such as recruiting, orientation and lost productivity, can be calculated.
The final step in calculating the ROI is to compare the cost of developing and implementing career progression initiatives in terms of staff time or consultant fees to the savings resulting from reduced turnover. To illustrate, if the cost of a career progression initiative was $45,000, but the efforts yielded a savings of $75,000 in turnover costs, then the ROI was $30,000.
FAQs on Measuring Learning Effectiveness and ROI
A Training Annual Report Communicates Your Programs' Return on Investment to Key Leaders
Global HR professionals deal with many of the same talent management challenges as do domestic HR practitioners, but generally on a larger scale. Global research shows that individuals tend to stay with organizations that are seen as "talent-friendly" and progressive—that is, organizations with leading-edge work environments and people practices. See Engaging and Integrating a Global Workforce and Global Training Sought for Leaders of Multicultural Teams
Global leveling—the process of systematically establishing the relative value of jobs and their corresponding pay ranges worldwide—is providing a framework for multinational organizations to implement talent and compensation management effectively across borders. According to Mercer's 2011 Global Leveling survey, the primary objectives for evaluating jobs and implementing a global grade structure are to support the development and career paths of employees and to facilitate the implementation of a global pay or rewards program. See Employers Pursue Global Grade Structures, Despite Challenges.
Templates and Tools
Homegrown Career Development
How to Build a Workforce, One Person at a Time
Career Planning Policy
Job Rotation Policy
Professional Development: Professional Training, Certification and Membership Policy
Professional Development: Training and Professional Development Reimbursement Policy
Employee Development: Career Development Plan #2
Skills Analysis Form
How to Create Career Paths/Career Ladders for Promotion and Progression
Agencies and organizations
U.S. Department of Labor, Employment and Training Administration
The HR Knowledge Center has gathered resources on current topics in HR management. Click here to view available topics.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies