The Talent Shortage Is a Development Shortage

A company that says it cannot find talent often means it cannot find a person who can already do the job well on the first day. The people it needs are frequently on the payroll already. They have the natural ability for the role and are missing the knowledge and skill it requires. Because knowledge and skill can be taught, a large share of what gets called a talent shortage is a shortage of development, and the employer is the one with the power to fix it.

Employers Say They Cannot Fill the Jobs

ManpowerGroup surveyed 39,063 employers in 41 countries in October 2025, and 72 percent said they were having trouble filling roles, down from 74 percent the year before. When the survey asked how employers were responding to that difficulty, the most common answer was training the people they already had, which the survey calls upskilling and reskilling, and about one employer in four chose it.

Workers have described the same habit from their side. When Accenture surveyed 1,088 American workers in 2011, 21 percent said they had gained new skills through formal training from their employer in the previous five years. A company that stops teaching its people the next set of skills will eventually have to buy those skills from someone else's workforce, and if its competitors made the same choice, it will find few people for sale and will describe the problem to anyone who asks as a talent shortage.

Talent Is the Part an Employer Cannot Teach

Our terminology separates two things the phrase "talent shortage" lumps together. We define talent as a pattern of thoughts, feelings, and behaviors (TFBs) that can be productively applied toward an activity. A strength is a level of performance, ranging from oblivious to mastery, and we describe how one grows with a formula: Talent × (Knowledge + Skill) = Strength. Knowledge is the technical or experiential insight an activity requires. Skill is the ability to perform the steps of that activity.

A job posting that asks for five years of experience is asking for the finished product of that formula, because the employer wants someone whose talent has already been multiplied by years of learning and practice, preferably at another organization's expense. Of the three parts, talent is the one a person has to bring with them. Knowledge and skill are the other two, and an employer can supply both, which means the premium in that posting is usually being paid for things the employer could have taught.

Every employee brings some talent to work, so the people already in a building have far more of it than their job titles suggest. CliftonStrengths measures 34 themes, and each person has them in a different order. A billing specialist high in Analytical, who spends her days catching coding errors before claims go out, could have the thinking patterns a data analyst role draws on. She would be missing knowledge of the reporting software and skill at writing queries. An employer could teach her both in a few months. The same employer might spend those months advertising the analyst job to strangers.

The Premium for Outside Hires

Matthew Bidwell, a professor at the Wharton School, studied this choice. Using records from 2003 through 2009 in the investment banking division of a large American financial services firm, he compared people hired from other companies with people promoted into similar jobs from within. The external hires were paid about 18 to 20 percent more, and they also received significantly lower performance evaluations than the internal people for their first two years on the job. During that stretch they were more likely to leave or be let go. Bidwell found that they needed about two years to get up to speed. An internal candidate is already familiar with the company's systems and its people, so a promotion asks them to learn the new job without also learning a new organization.

Bidwell's data also showed that external hires who stayed past two years were promoted faster than the people promoted internally, which makes the outside hire a slower and more expensive start that sometimes pays off later. An employer weighing the two options is choosing between paying more now for experience gained elsewhere and spending time now on someone who already understands the place.

Where People Go When Nobody Grows Them

Pew Research Center asked Americans who quit a job in 2021 why they left. Low pay and a lack of opportunities for advancement tied for first, with 63 percent citing each. A person who sees no next step where they work will look for one somewhere else, and the employer they left then goes to the market to replace their experience at a higher salary.

Companies can stay short of people for years this way. With nobody inside prepared for an open role, the company brings in an experienced newcomer at a premium. The employees who had wanted that role start looking elsewhere. When one of them leaves, their job opens too, and it gets filled from the market for the same reason the first one did.

Some Roles Need an Outside Hire

A few jobs cannot wait for anyone to grow into them. A hospital that needs a licensed pharmacist next month cannot train a pharmacy technician to fill the role in that time, because the license requires years of school. A company entering a field nobody on staff understands may need one experienced person to come in and teach the others. For roles like these, where the required knowledge takes years to acquire, paying the outside premium makes sense.

For the remaining roles, growing someone into the job asks a manager to understand what each person on the team does well, which is far easier when people know their CliftonStrengths themes and talk about them with each other. It also asks the manager to accept a period when a newly promoted person is still learning and their results are uneven, which is the same learning period Bidwell's external hires went through, except that the firm in his study was paying those hires more while they learned.

When the next role opens on a team, the manager can start by listing the people who already show talent for it, along with what each would need to learn and how many months the teaching would take, and then compare that list with the price and timeline of an outside search.