When it’s time to fill a key position, should you look inside or outside your company? Here’s a look at the pros and cons of both strategies.

One universal issue every business faces, regardless of the industry: When you have an opening, should you hire ready-made talent or should you work to develop your own talent?

Here’s another in my series in which I pick a topic and connect with someone a lot smarter than me. (There’s a list of previous installments at the end of the article.)

This time I talked about hiring talent versus developing talent with Sinclair Schuller, co-founder and CEO of Apprenda, a computer software company that allows organizations to bring cloud DNA to their existing applications. In effect, Apprenda creates a bridge over an existing application river that would otherwise be expensive and time-consuming to ford.

(Who says I don’t love a metaphor?)

Let’s start with the basics. Which do you prefer: hiring talent or developing talent?
Both can be great. But I prefer to look for trainable talent as opposed to talent I can hire in.

Employees with trainable talent possess three main qualities. One is intelligence (which is often separate from experience). We look for people who will do well in an environment where they are saturated with information.

Two is work ethic, and in particular the willingness to invest the time to learn whatever you want to pursue. If you’re not willing to put in the time, you’re extremely likely to fail.

And third is culture: Will the person fit our environment or poison our environment?

If you have those three qualities, we’re confident we can train you so you gain the skills you need.

If an employee is already on your payroll, it’s easy to assess cultural fit. But what if they’re not?
I like to find out what people enjoy outside of work. Take me: I enjoy hobbies like ice climbing, hunting, and fishing. I look for people who like to do things off the beaten path, because that’s an indication of their interests and how their minds work. If you’re not a little unconventional, you might be a little too stale for our company.

Hobbies are also a reflection of work ethic. If you’re a good rock climber or a hunter, that shows you’re patient, you’re persistent, and you’re goal oriented.

“Unconventional.” So if I’m not into skydiving, you won’t hire me?
Of course we might. (Well, maybe not you.)

Hobbies and interests are indications, not disqualifications. If a candidate is highly experienced, has a strong skill set, and embodies the qualities I described, we’ll hire them.

But the value of training your own talent is that you can shape and mold the employee for your unique culture and environment.

I know people who like to bring in outside talent just to send a message to existing employees.
We would never do that simply to send a message.

But I do get the thinking. When you bring someone in, you avoid that sense of entitlement some employees may have—the “I’m next in line” syndrome. Plus, it’s terrible for your organization when you place someone in a role they don’t deserve—not only does that create a performance issue, you wind up with other people who expect to be placed in roles they haven’t earned.

Though existing employees may not like it when you “promote” from outside the company, if you make the right choices, in time your employees understand.

Here’s another issue: When you grow your own talent, you foot the bill for developing their skills. Hire from outside, and you benefit from someone else’s training expense.
I don’t think about that issue from a cost-of-training perspective. I think about the cost of training from a risk perspective.

Every employee, no matter how smart or great their work ethic, will make mistakes. So for higher-level positions, where a mistake could result in serious consequences, I prefer someone with proven skills and solid experience.

If the mistakes can be contained, then the risk is lower, and you can afford the mistakes an inexperienced employee may make while they learn.

So I look at it in terms of risk. You shouldn’t hire a kid right out of college to be your CFO, not because she has so much to learn but because the consequences of her mistakes could be so huge.

But generally speaking, if we think an inexperienced employee can be at 90% in a year or so, because he or she is smart and aggressive and driven to gain the skills required, we may take that chance—as long as the consequences of the mistakes they might make in the process aren’t too severe.

Growing your own can also mean shifting people into completely different roles, like when an outstanding programmer moves into a leadership role. Like you: You once did a lot of coding, but I imagine you rarely get to do that now.
Yeah, and sometimes I get really jealous of our employees that do. So I still write code and test applications. I once heard that Bill Gates didn’t write his last line of code until Microsoft had about 2,000 employees, so if it was OK for Bill, it’s certainly OK for me.

But we do think about it. Say an employee is a great coder. We look at their management skills and traits, and their first internal promotion might be into a team leader role.

We then see if that person can get other people to follow them. Not if they can lead people, but if they can get people to follow, because there’s a difference.

Contrary to what many people think, amazing software engineers can also have the potential to be amazing managers. Some people have the desire to see their roles mature as the company matures. When they have the skills, that’s the perfect way to grow your own.

Flesh out your “lead” versus “get people to follow” point.
The most effective leaders have the ability to get people to want to follow them.

Leading can sometimes be through force or through fear or simply through hierarchy. But when you get people excited about what they do, both from a work perspective and culture perspective, then they want to go where you’re going—and the quality of their work is much better.

You now have about 40 employees; has your approach to hiring changed?
Early on, we were more relaxed about our hiring criteria; we put more emphasis on candidates’ résumés. But a résumé is not the best gauge of who should be on your team.

Now we’re comfortable bringing in, say, people who don’t have degrees. We currently have an 18-year-old intern who is extremely smart and works extremely hard; in the right circumstances, why wouldn’t you hire someone like that?

There’s no group or range of people we consider off limits. If you can pick things up quickly, if you get it, then your résumé or your degrees are at least somewhat irrelevant.