Hire New Employees or Develop the Ones You Have?

The Arguments for Make Vs. Buy

Back when I started in the corporate world, employee development was thriving.

Several firms were (and still are to some degree) renowned for their investments in internal employee development.  IBM is one that always comes to mind. They were an early proponent of employee development and internal mobility, leading to highly engaged employees and very low turnover, high loyalty, and productivity.  It has helped IBM remain at the forefront of technological innovation and adapt to changing market conditions.

A more recent example is Google (Alphabet). Google is famous for its culture of innovation and belief in investing in employee development. The company offers various learning resources, from coding classes and leadership training to personal development workshops, encouraging employees to pursue their interests and career goals. This approach has fostered a culture of creativity and innovation, helping Google to attract and retain top talent, drive employee satisfaction, and maintain its position as a leader in technology.

Other firms, including Deloitte, Marriott International, and SAS Institute, are well known for investing heavily in employee development.

Since the 1980s, there has been a de-emphasis on development, and firms have placed more emphasis and spent more money on external hiring, believing that external hires are more capable and ready to be productive quickly. Those of us in recruiting spend our time seeking external talent, often knowing that someone inside our firm might be capable of performing the same role.  We also often know that external candidates may be overrated or that, even though the hiring manager likes them, they may not be a good long-term fit for the firm.

But times are slowly changing, and there is more focus on internal mobility and development. This is a positive change that will help transform recruiting into a more comprehensive function capable of anticipating and having talent ready to meet any skill need the firm has.

I have tried for years to encourage recruiters to focus more on finding internal candidates and partnering with L&D to help develop the skills you know hiring managers are seeking.

Here are some of the benefits of investing in employee development and some downsides.

Pros:

1. Cost Efficiency: Internal training and development often require less financial investment compared to the costs associated with external hiring processes, such as advertising, recruiting agency fees, the costs of recruiting technology, and higher salary demands from external candidates.

2. Cultural Continuity: Current employees are already acclimated to the company culture and understand the internal processes, which can lead to smoother transitions into new roles and more effective team dynamics.