Build Vs. Buy: The Days Of Hiring Scarce Technical Skills Are Over

For years leaders have grown their companies by issuing the demand “go out and hire someone who knows how to do this!” This approach leads HR departments and hiring managers to retain expensive recruiting firms, spend millions of dollars on recruitment advertising, and often hire expensive sourcers to try to “steal” great talent from competitors.

What if there was a better way?

Well, there is. We just completed a research study with three companies and found that some of the highest performing organizations are doing something different: they’re taking a “build vs. buy” approach to critical talent. And finding that “build” often outperforms “buy.”

Internal talent development is not a new idea — so why is it so important now? It’s quite simple: the economy has created a bidding war for people with critical skills, increasing the cost and risk of hiring from the outside. So the economics have now totally shifted: it’s more cost-efficient and far more effective to build critical skills from within. And there are many cultural benefits as well.

Here are the economics:

The cost of recruiting a midcareer software engineer (who earns $150,000- 200,000 per year) can be $30,000 or more including recruitment fees, advertising, and recruiting technology. This new hire also requires onboarding and has a potential turnover of two to three times higher than an internal recruit. By contrast, the cost to train…