Chief Executive Officer, Professional Search & Interim
Talent Recruitment
Recruit or Retrain—Closing the Skills Gap
Should you hire new people with the skills you need or upskill and reskill your existing workforce? We explore the pros and cons.
Strategies for Bridging the Skills Gap
Navigating how much to “buy” versus “build” when it comes to your talent strategy is a fine line.
Almost two-thirds of the World’s Most Admired Companies (WMAC) cite “hiring talent to staff new capabilities” or “reskilling and upskilling current employees” as their biggest workforce challenges, Korn Ferry data reveals.
While there are benefits to both buying and building the skills you need, such as bringing in fresh ideas and boosting engagement, there are also drawbacks. It costs more to hire new people, and it takes time to upskill and reskill—often time when you need them for other work.
CHROs looking to address the talent gap should consider a “dynamic approach,” our experts advise. You need a strategy that utilizes both external recruitment and internal development to build a workforce fit for the future.
We explore the pros and cons of each type of recruitment approach below.
Understanding the Skills Gap
A skills gap refers to the discrepancy between the skills an employer needs and those that job seekers or employees possess.
As technology evolves and business demands shift, this gap is widening, posing significant challenges for organizations looking to grow and remain competitive.
To address this, companies have two main options:
- “Buying” requires you to recruit new talent who already have the necessary skills.
- You can do this by hiring permanent or interim (a.k.a. contingent) employees.
- “Building” requires you to develop, upskill, or reskill existing employees.
Before deciding which approach is best, you need to first identify the skills your organization needs. This involves analyzing current and future business objectives, assessing the existing workforce’s capabilities, and determining the missing skills needed to achieve these goals.
1 Recruit Permanently: Buy Skills with Permanent Hires
Recruiting for skills allows you to tap into a wider talent pool and access the most up-to-date expertise.
Skills-based hiring was cited as one of Korn Ferry’s top Talent Acquisition Trends for 2024. It’s a forward-looking recruiting strategy that selects candidates for their potential future performance, with much less emphasis on their educational background, previous employers, and job titles.
By prioritizing a candidate’s practical abilities over traditional qualifications, companies can expand their talent pool and tap into a more diverse range of candidates, including those with non-traditional backgrounds.
However, Korn Ferry’s Senior Vice President for Global Talent Acquisition Transformation, David Ellis, warns against just hiring for skills without also integrating skills-focused practices into the company’s broader talent strategy.
“If you hire for skills, but don't wire skills-centric approaches into your other talent practices—such as rewards, performance management, learning and development (L&D)—then skills-based hiring alone will not give optimal results.”
To connect these practices, he says leaders should:
- Define precise skill requirements for current and future roles, based on a three-to-five-year workforce plan.
- Leverage data-driven assessment tools to evaluate candidates' skills and learning agility.
- Create onboarding programs—focused on continued skills development—that allow new hires to hit the ground running.
2 Recruit Temporarily: Rent Skills with Interims
A faster way to close a skills gap is to hire interim employees on short-term or rolling contracts. These highly skilled individuals can often start at very short notice and hit the ground running.
They can be the ideal solution for project work, to cover a vacant role while you’re undergoing a longer-term recruitment process, or if you need someone with the right skills to help develop your existing staff.
Interims allow companies to flex to changing market demands, scaling the workforce up or down as needed.
“Multinational organizations are thinking through a workforce of 70% permanent hires and 30% flexible hires,” says Michael Distefano, CEO of Korn Ferry’s Professional Search and Interim businesses. “This figure could top 40% for flexible hires in the next decade.”
But interims also have drawbacks. While they might come pre-loaded with the skills you’re lacking, they still need to be onboarded in order to understand your business and familiarize themselves with your internal processes, team players, and systems. And when they leave, their insights and expertise often walk out the door.
3 Retrain: The Benefits of Upskilling and Reskilling
It can sometimes take longer to teach your existing staff new skills than to hire for skills, but there are distinct advantages. They already know your company inside and out, so you’ll save time with onboarding, and retraining can be cheaper than recruiting.
“Retraining can offer businesses long-term cost-savings,” says Scott DeKoster, a Leadership and Development Outsourcing Principal at Korn Ferry. “We estimate that organizations could save around $20,000 per employee by building skills internally instead of hiring for them.”
“The organizations that have the most people with learning agility win,” says Distefano. “Those people are exponentially more productive and impactful than the average person.”
But upskilling and reskilling doesn’t just offer cost and productivity benefits. Investing in your employees’ L&D can also result in greater loyalty. Korn Ferry’s new Workforce 2024 report reveals that 67% of global respondents would stay in a job if it enabled them to progress and upskill quickly—even if they hated the current role.
Retraining can take longer, though. This is particularly true if you’re reskilling, which involves training employees to take on completely different roles in a company. Upskilling, which enhances an employee’s existing skill sets, can be faster, but if you’re developing into new areas or making a significant shift in your offering, this might not be an option.
Winning Talent Strategies Have a Dynamic Approach
There is no right or wrong answer for when and how to build versus buy skills. It depends on many factors, such as the availability of skills in the market and how quickly the company needs to grow.
Are you rethinking your workforce strategy? Read our guide to understand how you can apply a skills-based approach to your talent hiring and management strategy—today.
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