When to Develop Talent vs. Acquire It: A Guide for Businesses
HR and business leaders have to evaluate whether or not to hire external talent or invest in the professional development of their current workforce.
One critical decision every organization will face as it grows is whether to develop talent within the organization or acquire new talent externally. Both strategies have their advantages and disadvantages, and the best approach often aligns with business and HR goals, timelines, and the skill set of your current workforce. Here’s a guide to help you navigate this important decision:
Understanding the Difference
Developing Talent: This involves investing in the growth and development of your current employees through formal learning and development programs, mentorship programs, and skills development programs.
Acquiring Talent: This refers to recruiting new employees who already have the required skills and experience needed to excel in the position and for the business to achieve its goals.
When to Develop Talent
Our organization has a Cost Leadership strategy.
Lower Recruitment Costs: Developing the skills of your current workforce can be more cost-effective than the expenses associated with recruiting, hiring, and onboarding new staff. Costs associated with continuing education and certification programs could cost less than $3,000 per employee, compared to recruitment fees which typically run between 20-35% of the candidate's first-year salary.
Retention and Loyalty: Investing in your employees’ growth can increase their loyalty and reduce turnover rates. This would minimize the need to find talent externally and would decrease your talent acquisition expenses.
Company Culture is critical to the success of our organization.
Cultural Fit: Current employees are already familiar with and integrated into the company culture. Developing them ensures continuity and alignment with organizational beliefs and values.
Morale and Motivation: Providing development opportunities can boost employee morale and motivation, leading to a more engaged and productive workforce. Many employees want to feel challenged and want to learn new skills.
Our industry requires very specific skills.
Niche Skills: If the skills needed are highly specific to your industry or business, it may be more effective to develop these internally. Executive and niche recruitment agencies tend to charge 30-50% for a highly skilled position. Typically these searches could take anywhere between 90-180 days to fill and often there is no perfect candidate. It may be worth exploring if the best way to find talent is to develop it yourself.
Long-Term Roles: For roles that require a deep understanding of the company’s processes, products, and services to be effective, it may be best to build a career progression plan for internal employees. Senior roles in IT, Accounting, or Operations typically require at least 90-120 days of ramp-up time to get acclimated to the new job functions. A new employee in an organization typically needs at least 90 days to just familiarize themselves with internal processes and systems. Those two timelines combined equate to 6-9 months of onboarding, in which case the person may not be able to make any impact on the current fiscal year objectives. Grooming the next generation of talent also aligns with succession planning.
We are a small business, risk-averse, or prefer business continuity.
Succession Planning: Developing internal talent ensures that there are capable leaders ready to step up when current leaders move on or retire. Many small to mid-size organizations are more focused on profits and losses compared to human capital development, however, there are significant advantages to grooming successors and having career development plans for all employees. 75% of businesses fail after the first generation of owners.
Knowledge Retention: Internal development helps retain some of the informal processes and standards of the organization. To become an expert in something, it takes 10,000 hours of practice. With 2080 working hours over a calendar year, this would be close to five years before a new employee could be considered an expert in their field.
When to Acquire Talent
We have an urgent requirement, and this role is critical to the success of our business.
Quick Turnaround: Urgency is often defined by an ROI equation. If quicker timelines increase profitability, then urgency increases. Sometimes urgent requirements arise from business opportunities and growth, while other times urgency stems from an employee leaving the business. When there’s an urgent need to fill a position and the required skills are not present internally, acquiring talent is the fastest solution. In these situations, it is recommended to partner with talent agencies that can multiply your outreach efforts and get candidates interviewing as soon as possible.
Critical Projects: For high-stakes projects that demand specific expertise, hiring externally can bring in the necessary skills and experience immediately. Many business-critical IT projects like implementing a new CRM, ERP, or HCM system involved years of careful planning and execution. Mistakes in these projects due to lack of experience or expertise could cost hundreds of thousands if not millions of dollars. MLTG recommends contracting a subject-matter-expert (SME) who is dedicated to representing the business and can be the liaison with the technology vendor or implementation partner.
We want to diversify our talent and acquire new skill sets.
Innovation and Fresh Perspectives:
Introduction of New Ideas: Acquiring new talent can lead to the infusion of fresh ideas and innovative approaches that might not be present within the current team. This can spur creativity and help the organization stay ahead of the curve.
Different Problem-Solving Approaches: New team members often bring different methodologies and perspectives to problem-solving, which can enhance the team's ability to tackle complex challenges.
Cross-industry insights: Hiring from diverse industries can introduce best practices and new technologies that your current team may not have considered, fostering a culture of continuous improvement.
Technological Advances:
Adoption of Cutting-Edge Technologies: Bringing in external hires with the latest knowledge and experience in emerging technologies ensures that your organization remains technologically advanced and competitive.
Up-to-Date Methodologies: Experienced professionals from outside can introduce new methodologies and processes that can streamline operations and increase efficiency.
Bridging Knowledge Gaps: External talent can fill in gaps in your team's knowledge base, ensuring that all aspects of new technologies are understood and properly implemented.
Our business plan involves scaling our operations.
Expansion:
New Markets: When expanding into new markets, it is crucial to hire talent with specific experience and knowledge of those markets. These individuals can provide valuable insights and help navigate local regulations and cultural nuances.
Launching New Products: Experienced professionals can lead the development and launch of new products, bringing with them the expertise needed to ensure success and minimize risks.
Operational Efficiency: Scaling operations effectively requires individuals who understand the intricacies of large-scale operations and can implement strategies to maintain efficiency and quality.
Diverse Skill Sets:
Broader Range of Skills: As your company grows, the need for a wider range of skills becomes apparent. This includes not just technical skills but also soft skills such as leadership, communication, and project management.
Specialized Expertise: Certain roles may require specialized expertise that is not available internally, necessitating the acquisition of external talent with those specific skill sets.
Team Synergy: A diverse team with a wide array of skills can work together synergistically, with each member contributing their unique strengths to achieve common goals.
We want to leverage a competitive advantage.
Industry Leaders:
Proven Expertise: Hiring top talent from the industry brings in individuals who have a proven track record of success and can immediately contribute to your company's growth and innovation.
Established Networks: These individuals often come with extensive professional networks, which can open doors to new partnerships, clients, and opportunities.
Mentorship and Training: Industry leaders can serve as mentors to your existing team, helping to elevate the overall skill level and performance of your organization.
Market Positioning:
Enhanced Reputation: Acquiring renowned experts or high performers can significantly boost your company’s reputation, making it more attractive to clients, investors, and potential hires.
Strategic Advantage: Bringing in top-tier talent can provide your company with a strategic advantage over competitors, as these individuals can offer unique insights and strategies that others may not have.
Accelerated Growth: With the right talent in place, your company can achieve its growth objectives more quickly and efficiently, solidifying its position as a market leader.
The case for a balanced, hybrid talent strategy.
Hybrid Approach
Strategic Combination: Available assets and resources will greatly dictate an organization's talent acquisition capabilities, so there is no one-size-fits-all strategy. A robust talent and career development plan can benefit talent acquisition efforts. Many job seekers want to challenge themselves and seek out organizations that support continuous learning. Organizations can combine the development and acquisition strategies to promote continuity and loyalty, while also fostering innovation and growth.
Assessment and Alignment
Regular Reviews: It is recommended to continuously assess your talent needs at least once a quarter and align them with your department and business goals. This ensures that you are leveraging the right talent strategies in the right situations and at the right time.
Tailored Development Programs: Learning and development is a significant commitment and investment for employers that can ultimately increase productivity and profitability in the long run. It is recommended to conduct a gap analysis of your current workforce compared to industry trends and customize development programs to target specific skill gaps within your organization.
Conclusion
Deciding whether to develop or acquire talent is not a one-size-fits-all decision. It requires careful consideration of your organization's needs, goals, and resources. By understanding when to execute each strategy, you can build a dynamic, capable, and engaged workforce that drives your business forward.
About Main Line Talent Group:
Main Line Talent Group is a boutique human capital optimization and talent agency located on the Main Line of the Philadelphia, PA suburbs. The agency provides talent services including direct hire and contract recruitment as well as human capital and business consulting services. Industry expertise includes manufacturing, distribution, audiovisual, and IT consulting & services. The agency services the Greater Philadelphia area for on-site requirements and across the United States for remote requirements.
