Is it better to hire from outside or upskill current employees?

By Wendy Gittleson for Galvanize

For most companies undergoing digital transformations, staying ahead of the competition means either:

•  recruiting new tech talent,
•  upskilling existing talent,
• or discovering a hybrid sweet spot.

In an ideal world, a recruiter waves his or her fairy wand and conjures the perfect new hire for your business, but there is no fairy wand, and there is no perfect candidate. 

While there are direct costs to recruiting from outside, there are also some advantages, just as there are pros and cons to training current employees new tech skills.

“It’s not upskilling vs. hiring,” according to Bill Cummings, Galvanize Executive Vice President, Enterprise, “it’s both. Every organization that is undertaking a digital transformation hits a point where they can go no farther because they have a skills gap. They cannot go out into the lateral market alone and hire the skills they need and they cannot simply just train their people since people can’t just leave their day jobs for 10-12 weeks at a time.”

Across all professions, the average cost per new hire is over $5,000, which does not include the hours dedicated to the hiring process and onboarding. Technical talent is always going to cost more. 

It’s not uncommon to pay a recruiter 25% of the employee’s salary, which could mean more than $30,000 on top of their regular salary for well-paid tech professionals. 

Some estimates for recruiting and hiring software engineers reach up to $50k per hire, while the costs for recruiting and hiring data analysts and data scientists aren’t much lower. 

Upskilling presents its own challenges. For example, when a company has thousands of people in its IT department, measuring skill level presents a problem. 

“How can you set a benchmark for where all those people sit in terms of skills?” asked Rob Ernstsen, Director of Enterprise Sales Strategy at Galvanize. “They’re going to vary widely, especially when you’ve grown that operation through acquisition over time. IT executives need to take inventory of their current skill sets and ask themselves how they can come up with a plan for upskilling when they don’t know where the department’s talents lie, and when they have varying needs for the company’s growth over time.” 

Another challenge to upskilling is that companies have immediate needs. It’s difficult to send away an entire team for immersive training “and keep the lights on,” said Ernstsen.

What that leaves for companies undergoing a digital transformation is a hybrid approach. 

Cummings suggests hiring and upskilling to “hit the velocity” of talent you need. “Many enterprises hire and then upskill,” Cummings said, “or treat upskilling as ongoing training.” 

For example, companies both hire Galvanize to come in and do an onboarding bootcamp and to stay indefinitely to train existing employees. With constantly evolving technology comes constantly evolving training. It’s important to make training a part of the job.

More importantly, employees need the tools to learn new disciplines, including platforms that update them on new technology and that offer expert-level coaching. 

One company that uses the hybrid approach is Capital One (another Galvanize client). The financial company was an early adopter in digital. It is a critical part of its enterprise business strategy. 

“For that talent to thrive and innovate, you also need to have a culture where continuous learning and innovation are championed at all levels of the organization.”

As Rob Alexander, CIO at Capital One wrote in Medium, “For us, technology is a competitive advantage and central to our business strategy. Early in our digital transformation, we made a commitment to invest and invent like the very best technology companies do — which meant developing our own software, attracting and growing a diverse, engaged and innovative team of software engineering talent, and reimagining traditional IT operating models.”

Alexander describes the need to hire new talent while continually upskilling existing employees. “For that talent to thrive and innovate, you also need to have a culture where continuous learning and innovation are championed at all levels of the organization. For us, that means having a nimble learning organization where the talent you bring onboard is empowered to quickly take advantage of the latest technologies and given opportunities to experiment, learn, and drive continuous improvement in our methodology and practices.”

Perhaps asking if you should hire or upskill is the wrong way to look at digital transformations. If a company falls behind in technology, trying to catch up can feel like running on a treadmill. You keep going faster, but you aren’t getting anywhere. All employees, whether seasoned or new, need their skills updated and fine-tuned on a continual basis.

It’s critical to a company’s survival. Hiring new, in some circumstances, might be less of a shock to the system than sending a large group of IT personnel to a multi-week bootcamp. 

However, if ongoing training is built into an employee’s job description, upskilling becomes an integral part of the company’s growth strategy instead of a shock to the system.