How can you retain employees if your company offers no room for advancement?

Why do you want to retain them? If their jobs are unfulfilling then surely, a reasonable amount of turnover will keep at least some enthusiasm within a team?

If however it's not that the job is uninteresting but only has limited/no promotion prospects, then people will elect to stay on that basis.

Working in McDonald's flipping burgers is not a career, and it's a job with a thankfully limited shelf-life for most. Working in McDonald's in International Finance on the other hand is a career.

If it's a McJob (see Douglas Coupland's - Generation X) then turnover is natural and often positive. If it's not, then people will stay anyway.

Job enrichment can be very effective, i.e. special assignments to mentor junior employees, participate on cross-functional teams or tasked to find ways to improve processes or efficiency. Engagement models tell us that employees leave companies because of their relationship with their immediate manager, and communication/feedback and recognition are key. HR must make sure that leaders understand their role as it relates to employee retention. Additionally, HR should partner with the business units to look at the job families for opportunities to expand them. With job banding, that doesn't have to mean increased comp expense.

I think most employee engagement efforts merely scratch the surface and are quite paternalistic. Instead of merely "giving them more interesting work to do" employees should be taught to engage themselves by teaching them to think like self-employed business people with managers as customers. They can then be proactive in building their businesses by looking for extra responsibilities to take on shedding others as they go. Everyone has had some exposure to jobs that evolve into something else, so this is not unusual.

Secondly, managers need to invest more time in asking employees for input on their own (the manager's) issues. What is more engaging than being asked for your opinion?

If an employee desires advancement above all other "rewards" and a company can't offer it there is not much an employer can do to keep the employee, at least not in the long run.

If however the employee desires something other than advancement more than advancement they can offer more of what that employee wants most. Offering whatever this reward is in greater quantities than any other employment option available to the employee will ensure you retain the vast majority of employees.

The key is to understand what an employee wants most, and the issues present themselves because most organizations look at employee retention in the aggregate. I recently posted an article related to this on my Blog; see it at http://wp.me/pCoJJ-1a. In this post I discuss the results of a survey I did in Nov 2009 on what reward employees desire most. One of the key insights was that no one reward was desired most by more than ~33% of the survey population. A key take away, at least in my opinion, was that employee rewards programs need to be tailored to the individual. Think of your rewards program as a "portfolio" of offerings that the employee can choose from and I'm sure you will find an improvement in retention. That said, I think to successfully deliver individualized rewards programs HR can only develop the portfolio. The direct manager must execute its delivery in order for the company to see the greatest return (i.e. the direct manager must be the one to align the rewards to what they want their direct report to achieve), and all employees of similar classes must be offered the same access to "the portfolio of rewards" for maximum motivation and minimal legal risk.

CorDell, I really enjoyed reading your post as it related to a program I developed last year at a large non-profit hospital I was employed at.
For the past several years we decided taking a more proactive approach to employee retention is the easiest way to reduce turnover. I took the lead to chair a committee to develop an incentive based recognition program that direct managers could use to motivate and retain their employees. The program was financed out of each departments operating budget based on their headcount. Based upon the level of desired performance the manager was able to offer a $10, $20, or $30 dollar gift card redeemable at the hospital gift shop or cafe. (I really tried to get our finance division to agree to using retail gift cards but due to the IRS regulations on gifts, the CFO was not supportive.) However, our gift shop was quite impressive and employees could also look through the merchandise catalogs and order something if they were not satisfied with the selection at hand.
When I pitched the idea to the Dept managers I urged them to use this not only as a way to give an employee a thank you gift for going "above and beyond" but also as a way to personally thank them, and to let them know their dedication was acknowledged, as well as, appreciated. The program worked very well and most employees saw it as a nice gesture and candidly several people commented that it was nice that their managers took notice of a job well done rather than the opposite.
We also put a strong emphasis on career advancement and offered not only generous tuition reimbursement to full and part time employees but also healthcare scholarship program based upon the employees socioeconomic conditions. The program would cover tuition and book costs at 100% and was immediately forgiven upon completion of the program if the employee remained with the organization. Over the years I watched many employees advance in the organization through these programs.

Reduced opportunity for "advancement" is a looming issue as organizations flatten and reduce layers of management. This trend has been prevalent for more than twenty years, since the dawn of the personal computer revolution and is reflected in the growth in productivity throughout the economy. It behooves human resources professionals to be aware of this and to plan for it.

So, what can we do?

First, I believe we need to understand why advancement is important. Is it to satisfy one's ego, the chance to earn more money, the chance to take on new challenges or because "promotion" is a form of recognition?

If ego, then one will simply have to move on.

All the other reasons can and should be addressed within the organization in an effort to retain its most talented performers.

First, human resources should guide a careful annual review of the organization's talent base. This review should identify those most critical to the organization's success, now and in the future, and their development needs and issues. Sharing this information with those individuals is a critical component of retention because it begins to address the issue of recognition.

Second, human resources and management need to be frank with the organization's employees - and prospective employees - regarding the kinds of rewards and recognition that are most likely going to available to them - i.e., if you want to promoted frequently, then this is not the place for you. If you want challenge, development and recognition for doing a great job, then come on in!

Third, financial rewards - either in terms of pay or bonuses - need to be tied to results - not simply to levels of "responsiblity". We need to get away from compensation systems that rest mainly on "number supervised" and get toward pay systems that are based on accomplishments. The secretary that saves an account by promptly addressing a critical customer issue, may have made a greater contribution to the enterprise than his or her "manager".

Kate,
Kindly elaborate more on the term advancement. Do you mean promotion Or vertical growth by advancement. If you say yes then kindly note promotion & job satisfaction are two different thing. Promotion or vertical growth can be a part of job satisfaction but not everything. In today's scenario where cut throat competition is there & lean & fit is the buzz word, chances of vertical growth are getting minimized day by day. Organizations doesn't like to have unnecessary layers.
So even if the company does not provide advancement, but it has to provide new challenges, good compensation package, job security as one of my friend has suggested & above all it has to create a friendly & admiring work place.Work place is like a second home for most of the employees . they spend nearly fifty percent of there life time in there working place. If they find good friends, peaceful atmosphere, encouraging & rewarding work practices , they will stay with the organization definitely not all but most of them will stay.
Again the organization must have valid reason for not advancement opportunities to the employees. If the structure of organization is flat & it has two or three layers, employee will understand that but then the plus of lean organization has to be there. Like no bureaucracy, empowerment & quick decision.

For this discussion, we will assume “advancement” is progression through a series of job titles with additional responsibilities including mastery of highly specific skills, managing others or projects or directing others who lead others. If indeed the organization structure is flat, then the organization needs to focus on others areas that impact retention outside of career progression. First and foremost, assure an accurate person/job/organization fit during talent acquisition. If there is no room for advancement, don’t sell your organization as one who does. Focus on your other retention efforts which should include the manager/employee relationship, other benefits from your total rewards package, personal development and job enrichment, organizational culture, your product and its impact.
Everyone goes through their own individual job life cycle which may transition into the need and desire to pursue career advancement or they may experience a transition that may be driven by personal or external forces for a more stable work environment regardless of advancement. Some people prefer to be the “cogs in the wheels”, the strong independent contributors that are the stabilizers of organizations. Be sure you reward and recognize them as well. Everyone cannot advance up or across in the organization, everyone cannot be stars all the time. As long as your “cogs” are not slowly down your organization, be sure your total rewards packages and your culture meets their individual needs and wants.

By "advancement," I am referring to what Lisa describes very articulately. I'm referring to employees who enjoy what they do and are valuable contributors but feel they they need room for growth, need a tangible career path, need to expand their skills and so on. They may feel the need to stretch their wings, and it's probably in your best interest to keep them around as long as possible.

Conversely, there will always be employees with a healthy dose of entitlement who feel they should get raises and promotions because they've been at a company for a certain amount of time. There will always be employees who are disenchanted, no matter where they are employed. And there will always be those who go through the motions and do the very least that's expected of them -- and equate this with job security.

The latter don't, in my mind, require any extra energy to retain when there are a host of qualified candidates in the job market (in most professions). In fact, in those cases, extra effort tracking performance and communicating expectations may force them to re-evaluate their performance and give them the kick in the ass they need.

If a employee is seaking advancement and your company can't offer it, then you must try to reward him in other ways, and try to change his focus.