Learning Services and Outsourcing

Leadership Development: Buy or Build?

2 min read

The decision to “build or buy” should be made within the context of a broader organizational strategy for leader development, including a discussion of business requirements and desired outcomes. We discuss this context in greater depth in our Training Industry Magazine article, “Growing the Internal Leadership Pipeline.”

Begin By Understanding Your Needs and Objectives

When developing the scope and focus of your leader development program, it’s important to understand the need for the work: Are you bridging a gap between the leader capabilities you have today and what is anticipated for future business growth, or do you anticipate staff turnover that will create a need for future leaders? Are there specific abilities and knowledge necessary for your business or industry that a future leader must possess?

Once you’ve answered those questions, develop a set of program objectives that can be mapped against the pros and cons of an internal leader development program versus working with an external vendor.

An example of this is explored in the following table:

Pros Cons
Vendor-provided (depending on the vendor capability, i.e., one-person boutique or access to teams of experts).
  • Expertise in leadership development.
  • Knowledge and experience of current trends.
  • Materials are already developed and can be customized.
  • Hire to build from scratch or tap existing materials.
  • A good vendor partnership is an asset.
  • Costs and quality can vary.
  • Design and content might be proprietary.
  • Time needed to get up to speed on the organizational idiosyncrasies.

 
Build In-house
  • Knowing the internal challenges and participants can be an asset.
  • Could be cost-effective if you have the monetary, people, space and other resources.
  • The necessary resources to assess, design, develop, facilitate and evaluate a comprehensive leader program can be significant.

There are similar tradeoffs when considering leader development on an individual level: That is, whether to develop leaders from your existing staff versus hiring leaders with external experience. Many organizations look to external candidates for the fresh perspective they can bring. Indeed, bringing in a leader from another company (or even industry) can provide your organization with new ideas and perspectives.

However, and especially as organizations manage staff retention and the cost of backfilling vacancies, the cost of the outside leader can be resentment and performance issues created among staff who feel passed over, or that the organization is not presenting them with equal advancement opportunities.

Here are additional factors to consider when determining whether to hire externally or develop leadership talent internally:

Build Buy
Pros
  1. Retention trends are higher for organizations that promote internally.
  2. Demonstrates an organizational priority for leadership skills.
  3. Staff better understand the organizational culture, vision and mission.
  4. Greater return on investment (less expensive recruitment or onboarding).
  1. Fresh perspectives or ideas.
  2. Senior leadership experience and skills on day one.
Cons
  1. Leadership development program administration expenses.
  2. Internal candidates who don’t get the role may feel resentment toward the one(s) who did.
  1. Internal candidates may feel resentment toward the external leaders brought into the organization.

 

 

As you navigate the “build versus buy” question, remember that the right answer for your organization may be one or the other, or a blend of both. The answer will be based on the strategy, desired impact and measurement processes you create, as you act in your role as an expert in learning and development and as an advocate for the development of your organization and your people.

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