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Mentorship programs are often viewed as a win-win for mentees and mentors. 

It’s easy to see what a person can gain from having a mentor: Expert advice, insider knowledge, skills development, and a larger network are but a few possible upsides. Mentors, too, can benefit from a mentorship relationship, gaining leadership experience, improved communication skills, and the satisfaction of helping someone advance in their career. 

But creating an effective mentorship program isn’t simply an act of doing employees a favor. 

Research shows that organizations that create formal mentorship programs come out ahead of organizations that don’t in all sorts of ways. They’re more productive, they have better employee engagement, and they may even make more money. If your organization is thinking about starting a mentorship program, here’s what it can help you achieve:

1. You can develop a more skilled workforce

An organization’s biggest lever is its workforce. If two organizations sell the same service but one has more employees who are highly skilled, which one is likely to enjoy the most success? Mentorship programs provide an opportunity for more senior employees to share knowledge and best practices with those who have less experience. As a result, those junior employees may become more efficient at their jobs. 

And the skills transfer can go both ways. In many cases, mentees are younger than mentors, having been in the workforce for a shorter period of time. One strength among Gen Z is a proficiency with technology. “Putting the older and younger generations together gives them all the opportunity to learn from each other,” says Matthew Starr, a leadership development coach in the Denver area. “You meld the tech expertise of the young and the institutional knowledge of the elders.” And you get an outcome that is two for the price of one.

Through a formal mentorship program, organizations can improve the chances that younger — and older — workers will be better equipped with the skills needed to compete. 

2. You can improve retention

It’s a drag to lose a key employee. Even if you find a replacement who can do the work, will that person have the same institutional knowledge that made the former employee so effective on the job? 

While you can’t prevent employees from leaving, you can give them more reasons to stay. 

One reason that compels many employees to stay with a company: They actually like their colleagues. One Gallup study found that employees who had a best friend at work were twice as likely to say their organization was a great place to work as those who didn’t. 

Another study found that nearly half (46%) of workers say that their unfulfilled desire to work on a team that trusts and cares for one another was worth quitting for. 

While mentors and mentees won’t necessarily become BFFs, their deliberate interactions can help to create a connection, giving both parties someone who is potentially in their corner. That could be enough to convince key talent to stick around. 

Employees also are more likely to stay at their companies if they believe there are opportunities for growth. Employees with formal mentors are 75% more likely to agree that their organization offers a clear plan for their career development than those without mentors. 

3. You can improve your bottom line

Helping employees improve their skills and encouraging them to stay on board rather than seek out greener pastures can also have a positive effect on your company’s bottom line. In fact, Fortune 500 companies with mentorship programs enjoyed double the median profits of those without, according to a report by software provider MentorcliQ.

If you’re skeptical about the value of a mentorship program, consider that the cost of replacing an employee can range from one half to twice that employee’s annual salary. By that estimate, a key employee making $150,000 could cost you $300,000 to replace. If close connections can prevent a fraction of employees considering leaving from doing so, imagine the impact on your bottom line. 

4. You can gain an edge in recruiting Gen Z talent

Attracting younger workers is key to any organization’s future success. For those trying to make a good impression on Gen Z, a mentorship program could be the perk that steers an applicant your way in a competitive job market. 

More than 4 out of 5 Gen Z respondents said a workplace mentor was crucial for their success, according to an Adobe survey. Yet only about half of respondents said they currently had one. That leaves plenty of room for organizations to potentially fill a need that Gen Z talent has a thirst for. 

5. You can develop your next generation of leaders

Successful companies are future-driven. They anticipate not only the challenges of today but the potential problems of tomorrow. Finding star employees a decade from now will be easier if those future A listers have already been working for you for a number of years. 

Through formal mentorship programs, less experienced employees learn skills and become privy to the institutional knowledge of their mentors. If those mentors eventually move on to other jobs or retire, mentees can potentially step into some of their roles. Even if a mentee doesn’t move into a mentor’s role, there could be an opportunity in another part of the company that the mentee is more prepared for simply because of the knowledge and skills gleaned from the mentoring relationship. 

Weichert Workforce Mobility, a relocation service provider, uses a formal mentorship program to help develop its next generation of leaders. In a company blog post introducing the organization’s NextGen Leadership Initiative, Chris Brunone, executive vice president of talent development and colleague engagement, wrote: “The NextGen Initiative is one aspect of our long-term global leadership pipeline strategy to build leadership readiness and capacity going forward, especially as the business landscape changes and we embrace our own transformation to become even more competitive in the years ahead.”

Three steps for an effective mentorship program

Of course, the value of any mentorship program will be determined by how effectively it meets the needs of both mentees and mentors. Here are three steps that can help a fledgling program flourish:

1. Get employee input. What does your talent want in a mentorship program? Do they want an opportunity to connect with senior leaders? Are they hoping to gain specific knowledge? Would they prefer to be matched with someone who has a similar role or someone in another part of the company? By incorporating targeted feedback you can make sure there are no gaps between what you envision and what your employees believe they need.

2. Create a formula for matching. It’s critical to make sure employees are matched in a way that benefits both parties in the relationship. There are software programs such as Chronus and Qooper that use an algorithm to match employees, or you might use employee feedback to inform the matching. Whatever guidelines you use make sure they are clear and used consistently.

3. Give mentors and mentees training. Since everyone benefits when a mentorship program works well, make sure mentors and mentees will be able to hit the ground running by providing some level of training. Share best practices such as how often the parties should meet and what types of activities they can do together, so each person in the mentorship will be better able to leverage the relationship.

Final thoughts: Mentorships have something for everyone

With many endeavors, there is typically one person or one side that benefits most from engaging in a particular action. Mentorship programs, however, have clear benefits for all parties involved. Even the financial costs of establishing a mentorship program can arguably be offset by the savings a company can reap through retention and better employee engagement. 

When considering the benefits to mentees, mentors, and organizations, it’s clearly a win-win-win.

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