Further, Cappelli believes that cultivating talent in-house can be more economical than hiring it from outside. He cites a study by Matthew Bidwell, a colleague at Wharton, that found that when managers are hired from the outside, it takes three years for them to catch up to the level of insiders’ performance. But it takes the insiders seven years to catch up to the pay levels of the outside hires. The logical conclusion is that even if they offered somewhat better benefits and pay, companies would still save money and enhance performance by investing in their own people.
A decade ago, in the Harvard Business Review, Peter F. Drucker warned that the “attenuation of the relationship between people and the organizations they work for represents a grave danger to business.… Developing talent is business’s most important task—the sine qua non of competition in a knowledge economy.” In a concise polemical fashion, Cappelli makes a strong case that those chickens have come home to roost in the U.S.—and that managers everywhere can learn to see training as a form of leverage.
- Andrea Gabor is the Bloomberg Professor of Business Journalism at Baruch College at the City University of New York and the author of several books, including The Capitalist Philosophers: The Geniuses of Modern Business—Their Lives, Times, and Ideas (Three Rivers Press, 2002).