Why Growing Companies Need to Both Buy and Build Their Talent to Meet the Post-Pandemic Moment Filling skills gaps and addressing diversity requires a two-prong approach to avoid a drag on growth.

Ask CEOs what keeps them up at night and skills shortages will be at the very top of the list.

That was true even before the pandemic arrived, changing the way we work and consume almost overnight and accelerating the already rapid digitalization of society.

The past year's events have made it more important than ever for every organization to be able to identify their skill gaps and to establish pathways to acquire the diverse talent they will need to plug them. Otherwise, they will sooner or later run into potentially severe roadblocks to their growth.

A McKinsey survey last year found that 87% of executives were experiencing skills gaps in their workforce or expected them within a few years. Less than half of respondents had a clear sense of how to address them.

^{Not an either-or strategy}

This strategic challenge is often framed as one of "build" versus "buy" — do you try to groom talent within an organization or bring it in through strategic hiring? In reality, this is a false dichotomy.

The most successful organizations have some combination of both internal pathways to upskilling and reskilling and external pipelines that bring in new voices and skills as needed.

Companies can reap clear benefits by creating internal pathways for workers to develop their skills and transition to new, in-demand roles. Workers developed in this way are likely to be more loyal to their employer and stick around longer than outside hires.

Related: Attracting Top Talent For Your Company

It can also make more financial sense. Take a company that has 1,000 call center workers whose jobs are among the millions of front-line roles set to be edged out by artificial intelligence technology. That same employer may have a growing need for data analysts or software developers.

Firing all the call center workers and hiring graduates for the higher-end roles could be an unnecessarily expensive and disruptive move. A better alternative may be to invest in reskilling those existing employees who have the ability and ambition to make the transition.

^{Over-reliance on internal pipelines}

Still, building internal pipelines can become counter-productive if companies rely on the approach too much. This misstep is particularly common among young, high-growth companies where leaders tend to promote "true believers" in the mission rather than dissenting voices from outside.

That approach can work well for a while, but it inevitably hits a wall when companies find they've become an echo chamber and lack the diversity of talent needed for the next stage of their growth.

Organizations of all sizes need to be self-aware enough to know when they can meet their needs by cultivating existing talent and when they need to recruit from outside. Unless they are a big, high profile employer like Facebook or Amazon, they can't expect to just click their fingers and get hundreds of strong candidates for new roles.

Related: 'Upskilling' Must Improve to Provide the Skilled Workers Entrepreneurs Need to Succeed

Most companies will need to plan ahead by establishing clear pipelines for new talent to come in. They also need to cast a wider net than the traditional four-year college degree holder if they want to meet the rapidly shifting skill demands in today's economy.

For one thing, every employer is targeting the same graduate pool. For another, many degrees are increasingly out of step with the rapidly shifting workplace needs driven by technology. Picking a four-year degree course now is a bit like shooting an arrow and expecting it to hit its target next month.

^{Embrace different talent pathways}

Companies increasingly need workers with directly relevant skills that can be acquired through a variety of different, faster learning paths than the traditional route.

That could take the shape of "last mile" training for graduates to learn specific technical skills (such as the increasingly popular coding boot camps), or partnerships with third-party educational institutions that train non-graduates in specific, job-relevant skills.

Creating these vibrant talent pipelines isn't just good for businesses' bottom line; it's good for their long-term sustainability and reputation in society.

In the wake of last year's social upheavals, U.S. companies are increasingly under pressure to show investors they are making progress on creating workplaces that better represent the country's diversity.

By creating more pathways for workers to move into better jobs, employers can meet this moment in history while making themselves more resilient in the long run.