Investing in Your People: What’s More Effective — Employee Training or External Recruitment?

• Economic Efficiency: Training vs. Recruitment
  • Cost Comparison
• Common Pitfalls in Training Programs
• When Is External Recruitment the Better Option?
• Corporate Culture: How Training Builds Stronger Teams
• Training as a Long-Term Strategy
  • Why Training Is More Than a Project
  • Key Takeaway
• Real-World Examples
  • Microsoft
  • Motivational Platforms
• Practical Steps for Implementing Training
• Conclusion

Every business leader has faced this question at some point: should we invest in training our employees, or is it more efficient to hire someone new with the skills we need? On the surface, recruitment might seem like the faster solution, but is it really the better choice in the long run? Let’s explore this dilemma in detail.

In this article, we’ll look at:

• The cost-effectiveness of both approaches.
• Common pitfalls in implementing training programs.
• Why training is a long-term strategy, not a one-time project.
• Practical steps for building impactful training initiatives.

Economic Efficiency: Training vs. Recruitment

Cost Comparison

The Cost of Hiring: If you’ve ever been involved in recruitment, you know how quickly the expenses add up. According to SHRM, filling a vacancy can cost 20–40% of the new hire’s annual salary. Why? Because you’re paying for job ads, recruiters’ time, interviews, onboarding, and more.

And let’s not forget the hidden cost: time. A new employee typically takes 3–6 months to get fully up to speed. During this period, they’re not delivering the same results as a seasoned worker.

The Cost of Training: On the other hand, training an existing employee costs significantly less. Deloitte estimates it at $1,200 per employee per year. That includes training courses, access to online platforms, and support from mentors. Plus, the benefits last longer—training can boost productivity by 20–25% and reduce turnover by 40% (McKinsey).

So, Which Is Cheaper? While hiring can solve immediate needs, training is often the better investment in the long run. You’re not just building skills—you’re building loyalty and engagement.

Common Pitfalls in Training Programs

Now, let’s address the elephant in the room: not all training programs succeed. In fact, some can feel like a waste of time and money. Why? Because companies often fall into these common traps:

1. Not Addressing Real Needs: Have you ever sat through a workshop and thought, “How is this relevant to my job?” That’s what happens when companies don’t assess their employees’ actual skill gaps. Training becomes generic and ineffective.
   • Solution: Start with a skill audit. What do your employees actually need to improve on?
2. No Clear Goals or Metrics: Imagine investing thousands in training but having no idea whether it worked. That’s what happens when you skip setting KPIs.
   • Solution: Measure success with metrics like improved productivity, lower turnover, or higher engagement.
3. Employee Resistance: Let’s face it: not everyone loves the idea of training. Some employees might see it as extra work or irrelevant to their goals.
   • Solution: Link training to tangible benefits, like career advancement or recognition.

When Is External Recruitment the Better Option?

Sometimes, training just isn’t practical. Here are two scenarios where hiring externally makes more sense:

1. Urgent Needs: When you need someone to hit the ground running, training may not be fast enough.
2. Highly Specialized Skills: For niche roles, like blockchain engineers or data scientists, it’s often easier to hire an expert than to upskill your team.

Example: A tech company implementing a new CRM system might hire an experienced consultant to ensure a smooth rollout. Training their existing team for months wouldn’t meet tight deadlines.

Corporate Culture: How Training Builds Stronger Teams

Training isn’t just about skills—it’s about building a stronger, more cohesive team. Here’s how it helps:

1. Boosting Engagement: Employees who see that their company invests in their growth are more likely to stay. According to LinkedIn Learning, 94% of employees would stick around longer if offered development opportunities.
2. Reinforcing Values: Training is a chance to communicate what your company stands for—collaboration, innovation, and trust.

The Risk of Skipping Training: Without investment in growth, companies often face higher turnover, slower innovation, and difficulty attracting top talent.

Training as a Long-Term Strategy

Why Training Is More Than a Project

Think of training as planting seeds. You may not see results immediately, but over time, the benefits multiply. Companies that embrace training as a core strategy adapt faster to change, retain top talent, and reduce risks associated with constant recruitment.

Key Takeaway

To succeed, training must be part of your company’s long-term vision. It requires regular evaluation, integration with business goals, and support from leadership.

Real-World Examples

Microsoft

• Challenge: Helping employees adapt to new technologies.
• Solution: Microsoft launched an internal training platform with courses on digital skills.
• Result: A 30% increase in productivity and a 15% reduction in recruitment costs.

Motivational Platforms

Let’s talk about tools that can make training more engaging. Platforms like AlbiCoins Study Boost help tie training to career growth through rewards systems. Employees earn recognition for completing courses, which keeps them motivated and invested in their development.

Practical Steps for Implementing Training

1. Assess Current Skills:
   • Use a skills audit to identify gaps and set priorities.
2. Design Flexible Programs:
   • Offer a mix of formats—online courses, workshops, and mentoring.
3. Set Clear Metrics:
   • Track results with KPIs like productivity, engagement, and turnover.
4. Make Training Part of Your Culture:
   • Integrate it into long-term planning and ensure leadership supports it.

Conclusion

Deciding between training and recruitment isn’t an either/or question—it’s about finding the right balance. While training offers long-term benefits like loyalty and improved performance, recruitment is essential for addressing immediate or highly specialized needs.

For companies looking to enhance their training efforts, tools like AlbiCoins Study Boost can simplify program management and boost engagement. Remember, success lies in combining both strategies to build a resilient, future-ready workforce.

References:

1. DeVaro, J., & Morita, H. (2013) “Internal Promotion and External Recruitment: A Theoretical and Empirical Analysis.” Journal of Labor Economics, 31(2), 227-269
2. Bellmann, L., Grunau, P., Troltsch, K., & Walden, G. (2014). “Make or Buy: Train In-Company or Recruit from the Labour Market?” Empirical Research in Vocational Education and Training, 6(1), 9.
3. Kisang Asongwe, J. (2023). “The Effects of Employee Recruitment and Selection Process on Organisational Performance: A Systematic Literature Review and Meta-Analysis.”
4. DeVaro, J. (2016). “Internal Hiring or External Recruitment?” IZA World of Labor.”