One of the trends of 2022 is enterprise is getting savvier about how they’re going about skills development, moving away from passive learning or spending huge amounts on L&D training without measurable outcomes.
Last year LinkedIn’s Global Talent Trends report cited internal hiring as one of four trends that would reshape talent acquisition in the years to come. Since then, unsurprisingly, internal development and mobility have become more critical than ever. Key to this is mapping skills and competencies to identify and standardize who you need in your workforce, and where.
The advantage of doing this is that you can act to train your teams, upskilling and reskilling staff, rather than hiring externally. As a result, you save time and money in the long run and can build and streamline a process to ensure that employees with the most important skills are always readily available.
Here are the top six reasons why companies would do well to ‘build’ rather than ‘buy’ their talent, both in the current and future labour market.
The Top 6 Reasons Why You Should Invest In Upskilling Your Employees
1. Save On Hiring Costs
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! This comes to a lot of money 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 also become much higher for roles requiring rarer, more specialized skills, particularly familiarity with new technologies—or for situations requiring external headhunters’ expertise.
Companies need a robust recruitment budget to obtain one desirable candidate, let alone repeat the process regularly or semi-regularly. And of course, there are many other costs incurred in hiring, such as flying candidates out to interview, hiring talent scouts, time and money spent posting on public job boards like Indeed.com, and reviewing applications.
2. Prevent Expensive 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. Reduce The New Hire Learning Curve
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 that are familiar to people who have been with the company, including software, databases, or even email. Add to this the more intangible things—unique company culture, for instance, or core values—and it becomes clear that even a talented new hire (who has all the right credentials on paper) may find difficulty adjusting immediately to a new role.
The process of onboarding a brand new employee may further extend the amount of time before they are able to 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 own protocols and avoiding jarring existing employees out of established routines.
4. Invest in Employees For Talent Retention
LinkedIn data shows that employees stay 41% longer at companies with a lot of internal hiring versus those that don’t, validated by a 2019 survey where 94% of employees said they would stay at a company longer if their management invested in training them. In addition, the evidence suggests that staff become more motivated, focused, and committed to the job at hand after training.
Numerous studies have shown that what employees most want from their company heads 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 it from within 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 loyalty to the company and a foundation of company-specific knowledge and skills.
5. Safeguard Employee Morale
The unfortunate outcome of eager employees not feeling like 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, as highlighted by the Great Resignation.
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 motivating employees to head for the door.
6. Build Skills Pathways Over Quick Fix Approaches
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 seriously 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. Companies are better served by using data-driven approaches to forecast future trends—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.
The advantage of doing this is that you can act to train your teams, upskilling and reskilling staff, rather than hiring externally. You save time and money in the long run and can build a process to ensure that employees with the most important skills are always readily available. You have a competitive advantage over others who suddenly need a particular skill without any person on staff who possesses it and end up scrambling to find someone to plug the gap.
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.