Lexonis

Using the Talent Grid to Move Beyond ‘Buy or Build’

Donald H Taylor

Summary

The skills gap is real and growing but there’s a new perspective on how to tackle it beyond the simple buy/build binary. Considering the problem in two dimensions rather than one offers a more nuanced approach to filling skills gaps. Using the Talent Grid, organisations can choose from four steps towards a more strategic approach to skills. Here, I outline the problem, the solution and the next steps. For more detail, read the white paper here: The Skills Gap: Time to Take Action

 

The skills gap problem

The nature of work is changing, rapidly. Globalisation and the shift to a service-based economy are making work increasingly boundary-less. Global demographic and workforce trends, such as the growth of the task-based economy, have shifted the way many people work. The rise in disruptive technologies such as artificial intelligence and robotics are transforming some roles completely.

Almost half of businesses are recruiting for roles that require hard data skills but 46% have struggled to recruit for these roles over the last two years. In cyber security, 50% of UK businesses in 2021 have a basic technical skills gap and 33% have an advanced skills gap.

While IT skills often receive the most attention, the premium skills gap is not limited to the fields of data and cyber. For example, the energy sector is facing a critical skills gap due to an aging workforce and insufficient training in the surging green energy market, especially for increasingly complex renewable energy sources such as green hydrogen and offshore wind.

What’s the answer?

Conventionally, the answer to an organisation skills gap is a choice between ‘buying or building’ – hiring new talent or developing those skills within the organisation.

Generally, recruiting costs more than developing the same talent. According to Josh Bersin the cost of recruiting a mid-career software engineer earning $150,000–200,000 per year can be $30,000 or more including recruitment fees and advertising. This new hire also requires onboarding and has a potential turnover two to three times higher than an internal recruit. By contrast, the cost to train and reskill an internal employee may be $20,000 or less.

The impact of getting the buy/build decision wrong can be high. Around 20% of all new hires leave their job in the first two months, while internal candidates passed over for a role may also be more likely to leave. If the new hire stays, it could take them up to two years to fully integrate with their new company culture and get up to speed in their role.

However, not all skills gaps are the same. With new technologies, it may be that an organisation does not have the time to develop the skills needed, and that they are in short supply. New technologies in particular will always create a gap in skills, with some able to use them well, and exploit that ability for premium payment until more people catch up.

A fresh perspective

Rather than think of skills gaps challenge in terms of a simple buy/build (or grow/recruit) dichotomy, there is a benefit to considering it in two dimensions, to accommodate the idea of the transient premium attached to emergent technical skills.

On one dimension is the choice of how to source talent – by growing or recruiting for it. On the other is the type of skills needed. These may be existing skills, so widely established that they are effectively commodities, or they may be rare new skills which command a financial premium.

This perspective recognises that either building or buying talent can be the right approach, depending on circumstances. It also illustrates when either approach may be misguided.

There will always be times in the emergence of a new technology or methodology when skills are rare and at a premium commercially. There may also be other reasons for a genuine deficit of skilled people. In these exceptional cases, external recruitment may be the most sensible move, especially if speed is important, as the quickest way to fill the gap.

However, there is a risk in confusing a general rarity of skills with a more specific, apparent rarity of skills in an organisation. The person with the skills you need may already work for you, you just don’t know where they are in your organisation. The danger lies in organisational structures making it procedurally easier to put a hire request into HR than to find someone internally.

Four steps

To move from the more expensive and less efficient buy-in response to the more effective, longer-term upskilling and reskilling tactics, organisations need to take a more strategic approach to skills. There are four key steps to take, which I explore in more depth in the white paper:

  1. Build a common language of skills
  2. Identify the skills gaps in your organisation
  3. Define your organisation’s highest priority learning and development needs
  4. Plan and deliver

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