As the external talent market becomes more and more competitive for companies to find the right people in the current state of low unemployment, companies must find new ways to not only attract these expensive new hires, but also retain and reskill their existing talent.
It seems like companies are unknowingly choosing the path of most resistance in opting for layoffs or burnout over figuring out how to reskill their existing workforce. This is of course, followed by the very expensive and lengthy process of hiring new people. Experts say the reason for this is not that they’re voluntarily choosing to do so, but that reskilling employees is often too hard for companies. The concept of simply replacing workers will lead to costly regret for companies in the long-term.
Paul Daugherty, Chief Technology and Innovation Officer at Accenture PLC puts it nicely: “that ‘buy, not build’ talent strategy is getting more difficult—and expensive—to pull off, especially in a market where the supply of skills like cloud computing and cybersecurity can’t satisfy the immense demand for them.”
Companies must develop their current employees and arm them with the skills for the future not as a favor to them as individuals, but as a vital business need to future-proof their organizations.
However: “Over the past 5 years, Gartner’s benchmark data shows that internal hire rates — as a percentage of total hires — have trended downward from 41% in 2015 to 28% in 2017,” says Thomas Handcock, Gartner Vice President, HR practice. In other words, things are heading in the opposite direction. Here are some reasons why.
“Employers are still trying to master the challenge of mapping the skills of their current workers, identifying the skills required of their future workforce and filling the gaps between the two. By the time many companies figure out exactly who they need, it’s often too late to invest the necessary time and money into retraining,” Lauren Weber writes in the Wall Street Journal.
If companies lack clear visibility on the skills of their current employees, they are entirely in the dark when it comes to the interests and ambitions of their employees. This is significant as employees who are interested in their work and working towards a specific ambition are likely to be happier and more productive.
Many companies unconsciously twart long-term career development at their companies by propagating company cultures that discourage “poaching.” Whether it’s due to middle management’s own insecurities or rivalries, the result is bad for the overall company if it’s perceived as easier to find your next career move outside the company than inside it – and this is certainly the case for most today.
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Failing to understand the impending skills gaps and the imminent need to reskill existing workforces is literally a billion dollar mistake.
“Still, letting go of people whose skills are becoming obsolete remains a stock response to shifts in business strategy in part because shareholders can more readily understand a plan that calls for simultaneous layoffs and hiring rather than a resource-intensive training initiative, workforce planners say.”
It would be wise for companies to educate their shareholders on the tremendous benefits and strategic advantages of investing in reskilling and development programs for employees rather than continue down an expensive and disruptive path. Restructuring costs could cripple an entire organization, not to mention the hardships caused among works and their families who find themselves jobless in a rapidly changing economy.
The time it takes to truly repurpose an employee is significant and far from exact. The reskilling or talent development function is still new and not yet an exact science, which surely adds to the reasons most leaders haven’t yet put their money on this strategy over new hires. But imagine the impact if companies could rely on developing their workforces into those of the future while saving the extensive costs on external hiring. Existing employees already know the company culture, processes, and policies and the money spent on hiring and onboarding them is already a long sunken cost.
Especially in tech, new vital skills emerge quickly and it’s difficult for employees to give 100% at their job while learning a new skill if it’s not part of their work. The key is for companies to support learning and development as part of their daily roles. Employees need to perceive that the investment is indeed in themselves and their careers and not just for the sake of happy shareholders. This is precisely why taking into account employees’ interests and ambitions is crucial.
Employees who partake in part-time projects that focus specifically on developing skills that interest them or are targeted at their ambitions are more likely to give their all in their current role and find the capacity for the additional project on top of that rather than taking away from their current efforts. Companies must assess the capability of their workforce through the lens of understanding their internal drive rather than only considering current skills and past experiences. This is what increases capacity at a macro level.
Thinking cross-functionally is critical. Programs encouraging employees to take on part-time projects of interest, explore possible internal career moves, job swaps, and mentorships are gold for both developing your people and encouraging them to stick around.
In today’s millennial-dominated workforce, job-hopping is not only standard, but advised. Workers who stay at a company for more than 2 years are said to get paid 50% less. External opportunities are definitely easier for employees to advance their careers so it’s no wonder this pattern has formed. If employees do not feel invested in, in other words that they have access to meaningful learning and internal career development opportunities, they will leave. Or worse – if they do stay, that lack of perceived internal mobility will likely discourage great achievements.
Wade Burgess describes companies overlooking employees for internal growth as a classic chicken and the egg scenario. “Companies often hesitate to skill up their workforce due to concerns about employee loyalty, but has that loyalty declined because workers, in turn, feel like commodities? It would be interesting to see whether the pendulum might swing back if more companies focused on training, developing, and building career paths for the people working for them today,” he writes in Harvard Business Review.
Ultimately, Burgess asserts that the cycle of replacing employees ends up costing more than skilling up: The Center for American Progress found that it costs about 20% of an employee’s salary to replace that employee. It’s estimated that large enterprise organizations lose more than $400,000,000 (four hundred million dollars) a year from the costs involved in employees leaving and recruiting and training new hires.
Meanwhile, 94% of employees would stay at a company longer if it invested in their careers, based on LinkedIn’s Workforce Learning Report. Yet still companies are overlooking their existing talent.
Future Workplace Forecast: Navigating the Future of Work writes that, “according to HR and hiring managers, offering career mobility will increase employee engagement (49 percent), improve employee productivity (39 percent) and improve employee teamwork (39 percent). Career mobility programs allow companies to increase their engagement levels while stemming job hopping.”
It is categorically clear that employees want to learn and develop their careers. The financial and long-term strategic benefits of developing and reskilling existing employees is evident. Perhaps the last piece of the puzzle is a platform harnessing the power of Artificial Intelligence to streamline internal career development.
InnerMobility by Gloat is an AI-powered internal talent marketplace connecting employees with personalized career development opportunities. It empowers employees to take control of their own careers and find their maximum productivity bliss within their current company.