Is Employee Upskilling The Missing Piece Of Your Talent Strategy?

The Top 6 Reasons to "Build" Rather than "Buy" Talent

December 3, 2021

In a previous post, we discussed the need for businesses to create "codified skills"—i.e. identify and standardize key competencies that are essential to performing the roles key to the company's success. Businesses that are proactive in codifying these skills can obtain a competitive advantage over other companies that may find themselves suddenly in need of a particular skill, without any person on staff who possesses it. These companies are then in the unenviable position of scrambling to find someone who fits the bill, all in one of the most challenging labour markets for hiring.

However, the advantage conferred by having created a list of codified skills is maximized by companies that—upon identifying what skills they need—decide to train their people, upskilling and reskilling staff, rather than hiring externally. Those companies will save time and money and can build and streamline a process for ensuring that employees with the most important skills are always readily available. 

Here are the top six reasons companies would do well to "build" rather than "buy" their talent, both in the current and future labour market:

1. The Cost of Doing Business

A recent study by the Society of Human Resource Management (SHRM) found that the average cost to a company trying to fill a vacancy is $4000 which comes to a lot when you multiply by however many hires are needed for a given role, and repeat as many times as a company realizes it needs some new talent.

This cost can become much higher for roles requiring rarer, more specialized skills, particularly familiarity with new technologies—or for situations requiring external headhunters' expertise.

Add to this other costs incurred in hiring, such as the expense of flying candidates out to interview, performing any necessary assessments or challenges for which companies may incur fees and the smaller costs of posting on public job boards like Indeed.com or constantly rewriting a company's career page. Companies will need a robust recruitment budget to obtain one desirable candidate, let alone repeat the process on a regular or semi-regular basis.

2. The Opportunity Cost of Long-Term Vacancies

Another finding by SHRM was that between 2010 to 2015, the time it took to fill a white-collar vacancy (from posting the job to hiring the candidate) had increased to a whopping 68 days - an increase of 26 days from 2010. This trend has only been exacerbated by the challenges of a workforce in flux due to the pandemic and the rapid acceleration of digital technologies in the past five years. The result is that certain skill sets are more and more sought after. 

Companies need to be realistic about the chances that, when they opt to go through the process of recruiting brand new talent (rather than building from within), they stand to have vacancies that may last 20% of the year. This can leave companies underperforming over that period and being outpaced by competitors due to insufficient manning of critical positions.

3) A New Kid on the Block

One of the less tangible but still important downsides of recruiting new talent is that it may take a while for the new hire to come up to speed on systems or processes familiar to people already with the company, including software, databases, or even email. Other downsides include intangible things—unique company culture, for instance, or core values. It becomes clear that even a talented new hire (who has all the right credentials on paper) may find it challenging to adjust immediately to a new role. 

The process of onboarding a brand new employee may further extend the amount of time before they can smoothly function within the company. That learning curve may be especially steep if a new hire is in a leadership position, requiring them to fine-tune a balance between establishing their protocols and working with the established routines of existing staff. 

4) The Importance of Investing in Employees

LinkedIn data shows that employees stay 41% longer at companies that have a lot of internal hiring versus those that don’t, which is validated by  a 2019 survey, where 94% of employees said would stay at a company longer if their management invested in training them. The evidence suggests that staff become more motivated, focused, and committed to the job at hand after training. 

What employees most want from their company heads, numerous studies have shown, is for leadership to invest in them through upskilling and reskilling. This lets them keep up with the latest technological innovations and empowers them to complete more challenging, complicated projects.

Companies that "buy" new talent instead of "building" forgo the chance to invest in their employees. However, those who do take the time to upskill and reskill their workers will find a confident, engaged, and energized workforce replete with people who possess not only loyalty to the company but also a foundation of company-specific knowledge and skills.

5) Safeguarding Employee Morale

The unfortunate outcome that appears when eager employees do not feel management is investing in them is that they are likely to search for greener pastures. Numerous surveys have shown that a lack of opportunity for growth or advancement is a significant contributing factor to employees' decisions to take their talents elsewhere, particularly during the "Greafactor in.

Existing employees may also be discouraged by a sense that their loyalty and hard work are undervalued (or not valued) when companies look to recruit new employees instead of cultivating up-and-coming leaders internally. The sense that there is no path for career growth or progress and the feeling of being overlooked by management hungry to hire are significant factors in motivating employees to head for the door.

6) Avoiding the Allure of the "Quick Fix"

The fact is, companies that wish to remain competitive need to lay the groundwork to ensure a steady, available supply of people possessing the key competencies vital for business resilience. Hiring new talent does nothing to address this need. It's a missed opportunity.

Rather than starting from zero and recruiting new candidates to address skills gaps (especially those created by the accelerated adoption of digital technologies), companies need to streamline approaches to upskilling and reskilling workers so that the skills they need are never in short supply. They must start by looking critically at the most in-demand roles and then map out the critical skills that support them—what they are and how they are measured. Armed with this knowledge, they can institute protocols to train their employees to the needed competency levels in these skills, thus gaining a serious competitive edge against companies bogged down by one headhunt after another.

A Future-Proofed Workforce

Recruiting a bespoke candidate may seem like an efficient solution to a skill gap—and in some cases, bringing in fresh ideas and new ways of thinking can be beneficial to a stagnating company. But ultimately, doing so is a one-time fix to an ongoing problem. Instead, companies are better served by using data-driven approaches to forecast future trends—that is, to predict what skills their employees will likely need in a more digitally-driven future workplace—and then working on fostering those skills in-house. 

Companies can take advantage of the increased availability of e-learning pathways, hire in bespoke training and mentoring programs to deliver in-house, or provide funding and guidance for employees to engage in learning programs independently. As household-name companies start to embrace this approach to staff management, and employees increasingly want and expect companies that invest in their continued improvement, it seems likely that a dynamic approach to solving the skill gaps will become the norm over the exception.

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