Replacing Talent or Growing Talent?

Great question.

We are facing a technological and social revolution again. And to make things even more interesting this time, there’s a new player in town:

AI—Artificial Intelligence.

Accelerating evolution and blowing—even the best—predictions up.

To get a sense of how fast AI’s advance rate is: technological changes that typically took one or two years now happen in just one or two months!

That means an incremental ratio of between 1,150 % and 2,300 %. Mind-blowing, in any case.

The entertainment industry, where I come from, has been impacted by significant tech leaps before—such as social media and streaming platforms— also disrupting the whole ecosystem of corresponding service industries.

When these quantum leaps happen, organizations—especially legacy ones—tend to arrive too late to the party. That’s when change is not a purposeful, thoughtful choice but merely a “adapt-or-perish” scramble.

Of course, companies—especially tech ones—invest in and rely on state-of-the-art technology (or at least they should) to stay on top of their game.

But let’s not forget that it’s their PEOPLE who use that tech—and tools like AI—with talent and creativity to make those companies, their products, and their brands great.

A company has a name, a stock-market value, liabilities, assets—but a company isn’t those things.

A company is its people, its talent, and its mission. It’s only as good—or as bad—as its talent.

When companies arrive at these disruptive crossroads, they also reach a swift conclusion: they need talent that masters these new technologies and skills to rise to the challenge.

Natural.

But how do they usually solve this issue? I think we all know the answer…

In most cases, by diving into the market and recruiting talent that—apparently—possesses these emerging skills their resident talent seems to lack.

Easy, quick, and efficient. 

Right?

Well… let’s take a closer look at the entire process and cycle. There could be more than meets the eye here…

The choice of models is: BUY vs. BUILD.

So, let’s see some data gathered about applying each model:

The Buy Model

• External recruiting increases your headcount costs by 30 % (and creates inconsistencies in your compensation tiers).

• Replacing people is not seamless, despite what many HR leaders and consultants would like to believe.

• Exiting a top performer to be replaced by newly hired talent sometimes results in an investment of 1.3 × their annual salary in recruitment and onboarding training (yes, those other little things called: organizational culture and culture fit—remember?).

• Not only that, but top performers sometimes exceed average productivity by 400 %.

• They can also be agents of cultural transmission and internal training (another hidden value)—and you might be losing that too.

• 70 % of organizations don’t quantify the loss of productivity caused by letting go of talent with tacit knowledge and informal networks that make projects succeed.

• That loss can be equivalent to three months—or up to a year—of revenue on a key project.

• After a round of exits, productivity among remaining staff can drop as much as 40 %.

• All that is some data collected over the past two decades.

Remember this phrase: “Firing one scares 100.” —Peter Cappelli.

Now let’s see the full glass of water…

The Build Model

• Companies with robust talent-pool programs retain 85 % of talent (versus the industry average of 60 %).

• Internal re-skilling & up-skilling programs reduce the need for external hiring by a whopping 45 %.

• Each dollar spent on internal training saves up to ten dollars in external turnover.

• The ROI of well-designed internal programs can reach up to 350 %.

• Companies that link training and re-skilling to strategy achieve 15 % more of their key goals.

• When companies poll employees about re-skilling & up-skilling, 65 % of talent is willing to be relocated and repurposed within the organization if provided with proper training.

“Your next leader is already in your house. You just need to find him/her.” —Peter Cappelli

I’ve seen these “fire & buy” loosing-value cycle many times in my career: organizations up-scaling, downsizing, firing people—sometimes without really knowing they could re-skill internally—then hiring at excessive cost and causing further critical internal issues.

Losing talent, top performers, knowledge, reputation, credibility; morale and productivity decay.

And at the end of the day, when they take a hard look at their P&L, they find they’ve lost more money—operating income, EBITDA, and market value—rather than gaining all the benefits the restructuring gurus promised to the leadership team.

Why?

“Re-training is not spending, is investing.” - Josh Bersin

Because they didn’t invest in designing an organic system comprising of:

• Organic onboarding system aligned with the company's vision & mission.

• Clear processes by team and by LOB, aligned with the above.

• Talent advancement plans.

• An up-to-date database of talent pools and skills.

• Identify key talent to watch their development.

• Internal mobility programs.

• Scorecards.

• Skills-mapping platforms.

• Strategic foresight to identify what will be needed in 2, 5, or 10 years.

• Strategic alignment with core vision and mission.

If your company is growing, don’t hire indiscriminately and upscale the organization to the point of inefficiency.

You and your leadership team don't need to tick boxes with positions and as the worn out manuals of good old fashioned corporations and what the market dictates.

Think and design what really feels best for your company's vision & mission.

Build a core system to ensure you grow with purpose, and cultivate your talent pool to make that growth, organic, sustainable and scalable over time.

Train your talent. 

The best investment. 💪💵📈

Let’s be GREAT and GOOD!