This is a routine question companies ask when evaluating a new tech or service designed to take your company to the next level. Well what if you asked the same question, but applied it to your human capital. Do your answers change? Here are 4 reason why I prefer to Build rather than Buy.
Cheaper: Buying is expensive. Buying a new employee through a recruiting service typically comes with 25-40% finder’s fee based on that new employee’s annual salary. For example, if I were to hire a new manager at $90,000 a year, I would need to pay the recruiting service and additional ~$30,000, up front, before that employee did a single ounce of work for me. 30K vanished.
As an alternative, invest in your existing employees. Give them the tools they need to grow to the next level. The math is often in your favor when training and promoting from within. However today, companies in the US spend less than $2k per year to train their employees.
Employee Loyalty: Employee loyalty is at an all time low. According to LinkedIn 85% of your workforce is either actively looking or passively open to different opportunities. 85%!! And according to hr.com; the #1 reason people leave is that they felt like they stopped growing and learning. It is more vital then ever to know how to create, nurture, and retain your talent.
As alternative, run cross-fit programs that keep employees stimulated and productive. Also, promoting from within promotes a good work culture. It sends the message that hard work gets rewarded.
Faster Onboarding: Even if you buy a new employee, you still have to train them and get used to the people and culture of the company. No one is ever ready to work day one. In fact it typically takes new hires around 2 months before they are productive. That’s at least 2 months being wasted trying to find the copier, get their passwords from IT, and learn the names of their new co-workers instead of moving the company forward.
As an alternative, your current team already knows and has created the company norms. Build a stronger workforce through training and skill building so those new tasks can be achieved.
Lower Risk: Past results do not guarantee future performance. Purchased employees do not come with guarantees. The reality is that some people work well, and some don’t. No matter the due diligence and track record, new hires are ultimately an unknown quantity. It forces you to make an expensive high risk bet.
As an alternative, reduce the risk by taking a known quantity and building them stronger. Simple role playing, and managerial duties may be all that they need.
Just as a final thought:
CFO asks his CEO, “What happens if we invest in developing our people and then they leave the company?” CEO answers, ‘What happens if we don’t, and they stay?”
Check out LearnCore to help with your team knowledge and skill improvement needs.