In our last post we discussed the ROI of an internal upskilling investment versus externally-focused hiring. Before we shift back toward outlining the nuts and bolts of internal training, and how your tech tools can help you or hurt you in this effort, we want to offer one more insight that may help you cinch your case to upper management.
The title of this post is a paraphrase of the quote alleged to be from Peter Drucker: “Culture eats strategy for breakfast.” Of course strategy is important. What Drucker meant to convey is that without a supportive workforce culture, no strategy will succeed.
And stated more positively, when a workforce culture is committed to, and engaged with, corporate strategy, it makes for a very powerful combination. This is what is referred to as a performance-enhancing culture.
In 1992, John Kotter and Harvard professor James Heskett studied the cultures of 200 companies. They found that performance-enhancing cultures are associated with strong financial results. Companies with these cultures delivered 682% revenue growth versus 166% growth from companies without such cultures.
My point is that a comprehensive upskilling program has the potential to outperform external hiring since comprehensive programs for career development are directly linked to the development of a high-performance culture. Both external and internal approaches have a cultural impact.
External hiring culture impact:
- Pro: Potential to bring in fresh energy and perspectives.
- Cons: Conveys to existing employees that no one on the team is good enough. Potential to bring in perspectives that reduce workforce energy.
Upskilling culture impact:
- Pro: Conveys company commitment to workforce career growth, supporting cohesiveness and commitment to employee welfare.
- Con: Over-reliance could lead to force-fitting people with jobs.
Only about 5% of hiring is for newly created jobs. Therefore, most hiring is for existing jobs which means that most vacancies are due to someone leaving for an opportunity they found more attractive. “The root cause of most hiring, therefore, is drastically poor retention,” says Peter Cappelli in the Harvard Business Review.
If people leave primarily because they are drawn to more compelling options, then most companies are filling roles that their lack of career development caused.