"Make or buy" dilemma haunts bosses amid skills scramble

17 June 2015 -

Talent shortage hampers employers as they strive to find managers with skills to help them take advantage of recovery, finds CIPD

Matt Packer

Bosses are facing increasingly tough HR issues in their quest to hire specialist managers and take full advantage of economic growth. A report published today by CIPD has shown that more than three out of four (78%) organisations have faced recruitment difficulties in the past year, with many of them turning to the external market amid a scramble for valuable skills.

Produced in partnership with Hays Resourcing, CIPD’s Talent Planning Survey 2015 polled 520 UK-based HR professionals across the private, public and third sector. It found that…

Around half of organisations are working to develop talent in house

However, 74% are continuing to recruit externally to fill specialist, technical niches

As such, 44% anticipate larger headcounts in the remainder of 2015

According to the poll, managers, senior managers and directors have proven to be the hardest professionals to find, and HR chiefs are in a constant “make or buy” dilemma: do they focus on making the talent they need by boosting skills among existing staff, or do they buy in from elsewhere to close talent gaps?

CIPD research adviser Jessica Cooper said: “Organisations are increasingly feeling the pinch when it comes to sourcing key, but scarce, skills. In the ‘make or buy’ debate, the ‘buy’ decision still seems to predominate investment in talent – but hiring new talent is just part of the solution for addressing skills shortages.”

Cooper stressed: “Once people are in a role, they still require ongoing development to achieve their full potential and meet ever-changing and critical skills needs. Organisations also need to consider how they can align recruitment activity with an increased focus on internal talent development, to build skilled workforces that can easily flex to fulfil future needs.”

CIPD’s report chimes with findings unearthed in CMI’s recent National Management Salary Survey, which found that the number of employers who have had hit problems with recruiting the staff they need rose from 79% in 2014 to 89% this year. The main HR issues that organisations cited were difficulties in recruiting people with specific skills (75%), and a poor quality of applicants (37%), indicating a skills shortage among UK managers. Amid these hurdles, almost one third (30%) of managers who were ranked as “underperforming” in 2014 received bonuses.

CMI chief executive Ann Francke said: “A toxic recruitment environment has been created by employers failing to invest in management training and addressing poor performance … If employers are to regain the loyalty of their staff and create a working environment that attracts the very best talent in the UK, training and development programmes are critical. By helping staff to achieve their full potential and only rewarding good performance, companies will be reaping the rewards of their investment for many years to come.”

To encourage employers to think creatively about talent development, CIPD’s report highlighted two exemplars in the field:

1. L’Oreal

The world-famous beauty products firm offers staff tailor-made career paths across not just 28 different brands, but every country in which it operates. Its diversity-based programme ensures that staff have mobility within country as well as between brand divisions, and aims to develop competencies to support aspirations. As L’Oreal UK and Ireland HR director Catrin Roberts explained: “People have different needs and wants at different points in their career and as a company we [must] be flexible and agile to meet the individuals’ needs.”

2. Timpson Group

Doing away entirely with a traditional HR policy, Timpson measures performance through customer feedback and branch figures, with “colleague support teams” helping staff to understand their influence on turnover. High-performing colleagues are rewarded accordingly. Manchester support advisor Louise Plevin told the report: “It’s about finding the right colleagues that are going to operate in a branch comfortably. The right person could be anybody from any walk of life and with any sort of background.” As if to underline that message, Timpson has an ex-offenders scheme, and a segment of around 10% of staff who have criminal records.

Find out more about CMI’s National Management Salary Survey.

Fancy testing your skills in a new role? Then check out CMI’s Jobs Board.

Read the full CIPD report.