How to Build a Better Workforce, From the Inside

By Matt Alderton

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Employers often struggle with the question: How do I find the right employees, with the right skills, at the right time? Unfortunately, that's the wrong question to ask, according to Peter Capelli, author of Talent on Demand.

"It's a 'plug 'n play' approach to the workforce, and it's not working that well," he writes on the Harvard Business Review's Blog Network. "Employers are finding it difficult to hire the skills they need. The supply of skills in specific areas is uncertain, so the quality and price jumps around a lot. Some jobs require skills or at least sets of skills that are unusual, and finding a good fit outside is very difficult. Skills that one learns through training become scarce because few employers train."

Once upon a time, companies filled 90 percent of vacancies from within, according to Capelli. Today, however, they fill 66 percent of vacancies from the outside. If you want to build a better workforce, therefore, do what companies used to do: train it rather than hire it.

"Is it time to bring back the Organization Man?" Capelli asks. "In that model, which drove the U.S. economy for most of the last century, employers made longer-term commitments to employees, where they invested in development to fill jobs, and where employees responded with commitments of their own in terms of performance. Jobs were filled internally with people prepared to do them, skill shortages were unknown and employees were engaged with the needs of their employer.

"A critic would say that if employers did that, employees would simply take those investments and leave. The only reason they leave, though, is because they can get a better job elsewhere than their current employer will give them. To keep good people, employers need to take a bit of a risk on them by giving them jobs that they haven't already done. The employer should be able to take that risk; first, because they should have inside knowledge about who is promising and, second, because if they are right, the bet pays off by filling jobs more cheaply than outside hiring. The end result is that companies would be able to retain talented employees who are more committed to the organization. And employees would win, too, growing in jobs and companies that they are loyal to."

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