Finding the right people: How do you hire yours?
Last year over 500 UK business leaders were surveyed about their attitudes towards staff development and recruitment. One of the questions asked was how they dealt with the problem of skill shortages. 55% of respondents said they handled this by recruiting externally. But what are the implications of that?
External recruitment has advantages. It’s an immediate way of dealing with a skills shortage. It may have the added benefits of bringing fresh ideas and market insights to a company. But over the longer-term, heavy reliance on external recruitment can be problematic:
- It’s expensive (research from The Saratoga Institute in California found that hiring externally costs 1.7 times more than internal promotions)
- It’s risky. Research carried out by Matthew Bidwell, Associate Professor of Management at the University of Pennsylvania, found that those hired externally are 61% more likely to be laid off or to have their contract terminated than those promoted internally
- Across the market it reduces, rather than grows, the talent pool. When businesses chase talent, rather than creating it, the price of that talent increases and its availability decreases. An example of this was the startling increase in the cost of hiring IT professionals as we approached Y2K
- Businesses that rely too heavily on external recruitment demotivate their staff:sending a clear message that their opportunities for career advancement are limited and potentially that their skills are not valued highly enough for the future
Of the 500+ business leaders surveyed by Skillsoft, 68% acknowledged that opportunities for promotion and career progression increased employee engagement. Yet only 20% of leaders said that they were using learning and development to build an effective leadership pipeline. Yet it is by investing in developing existing staff that businesses can best future-proof their companies: and create a skilled and adaptable workforce.
Why internal investment pays
When companies commit to developing and promoting their existing staff, benefits multiply. As an example, internal promotions save money over the long-term, increase employee engagement and facilitate close working relationships (as they often go hand-in-hand with mentoring and cross-departmental communication).
Developing internal talent also helps to make a company more proactive. By thinking about potential skills shortages and working to combat them, companies start to anticipate new trends, rather than simply react to them. So here’s how to invest in the people you have:
- Forecast your future skills needs
To do this effectively you need to look at the macro-trends that are occurring in your sector; the advances in new technology; what you want your company to achieve (particularly in terms of capturing market share, entering new markets, expanding your product range or services). You also need a ground-level up assessment of the skills needed to perform every role across the company: where the shortfalls are and how easy it is currently proving to recruit people with the skills you need.
- Identify cost-effective ways of providing internal staff development.
These could include low-level, short-term secondment opportunities in different departments; creating formal mentoring schemes at all levels within the organisation; work-shadowing; action learning groups and opportunities to work on discrete projects.
- Create 18-month development plans for employees.
You may have able people in your organisation who don’t know what they want to achieve. If they don’t know what they want to achieve then neither will they know how to reach their full potential. That’s a waste for them… and for you. Change that situation by requiring HR, in conjunction with line managers, to create tailored development plans for your key staff. These need to be produced by talking with each employee and finding out what they want to achieve within the organisation. This will feed into a development plan that breaks down what skills, behaviours and experience that individual will need to gain to achieve their goals: and the resources and opportunities they can access to help them. These resources and support have to be in place to make this effective.
- Provide targeted training for key skills
Offer this training to key staff – and make it their responsibility to help train others in the skills they have acquired. This will help to embed what they’ve learned, as well as roll out the skills across the company.
Internal development helps to build long-term success
There will always be a place for external appointments. But companies need to develop talent, not simply to poach it. Developing talent creates a virtuous circle for a company. Improving the people improves the business. Those people can then help to develop other people: through coaching, mentoring and modelling the skills they need to succeed. It all starts with valuing what you already have!