Key Points:

It can be a mistake for organisations to go out looking for skilled workers when the best candidate might be sitting right under their noses. Brian Nobel, managing director of Achievement Discoveries, says companies are not upskilling their employees enough to hire from within.

"Often we will pour training in but we won't follow it on to make that a natural career path," Nobel says.

Few things can be as demoralising to an employee than to be skipped over for a promotion. When they miss out to someone from outside the organisation it's like pouring salt in the wound. But when that employee decides to move on, it's the employer who hurts.

"When people have a background knowledge of a company a product or an industry, that is a tremendous foundation. We shouldn't lose that."

Nobel recommends organisations upskill their workforce in three stages.

1) Train the employee to give them the knowledge they need.

2) Give them the practical tools to apply that knowledge.

3) Have them perform the task repeatedly so that it becomes a subconscious natural activity.

"If you look at most people who have been in roles for some time, there is part of the role that they do automatically. They don't even think about it. It becomes a subconscious activity," Nobel says.

Employers should identify a worker's natural gifts and plan training around those core aptitudes.

"People ... choose to work in a career path. But often they actually have skills and abilities in other areas which are not actually identified."

Without developing these other areas, Nobel says employers miss out.

"You're paying the same salary bill whether a person is working effectively or not, whether they are working in the most productive position in a company or the position which earns the least for the company," Nobel says.

A company can waste a lot of internal talent by not developing people to their full potential. Nobel says it's like constructing a building.

"Can you imagine the foundation of a building and you only actually put up a building which is half the size of the actual foundation?"

But not everyone is meant to be a manager. Just aiming for a supervisory role can be a mistake if you're not cut out for it.

"The mindset that a lot of people have is, 'If I get promoted to a manager, this is a promotion'. But if you're not naturally skilled as a manager, it's not a promotion. It's a backwards step," Nobel says.

Nobel says he has seen plenty of cases where someone who lacked natural management abilities took on the role.

"Top surgeons have been promoted to hospital administrator. [Sometimes] where that happens, it is a disaster."

Just because someone is skilled with their hands does not mean they can manage a large organisation. To avoid this scenario, Nobel suggests organisations make a separate effort to identify if someone has the ability to be a natural manager and only then give them the training to manage.

"Don't just promote someone to a management position because this person's been with the company for 10 years," Nobel says.

People who are not suited to management will have natural abilities in other areas. Nobel says organisations need to focus on each individual's career development because if workers feel they have no future, they will move on.

"You should be constantly looking at your people and saying, 'What are the natural abilities we've got?' Actually develop within the HR department what their career path is."

Nobel says that even small organisations can put processes in place to give employees a sense of direction. He recommends ongoing mentoring and coaching among staff. Some workers might not want to train up other employees out of fear of being replaced, but Nobel says people should be confident in their roles.

"If I can train somebody to take my role, then it makes me available for further promotion within the organisation," Nobel says.

Pam Martin, director of Extramile Training, says some people are not being promoted from within because they lack basic computer or language skills.

"There's not so much a skill shortage as a logjam. There are people with brilliant experience but because they don't understand computers or perhaps their English is not as good, they're not moving up through an organisation," Martin says.

Organisations should always look to their internal workforce before seeking candidates further afield.

"When you bring somebody in from outside, they've got to learn the whole thing. It takes ages and that costs money. People in the organisation feel a bit left out because they've been overlooked."

If an existing employee has the right frame of mind, they will likely be a whole lot better than the devil you don't know.

"People say, 'Oh, we can't get the right employees.' If you employ somebody for a good attitude and then train them, you end up with a really good employee," Martin says.

Martin says existing employees might not put their hand up for a promotion because of something as basic as their English language abilities or their knowledge of a specific computer programme.

"We find that people with awesome experience who just need a little bit of encouragement and a bit of training could actually be the effective manager that you're looking for."

Martin recommends that all office workers go ahead and complete their training for their International Computer Driving Licence. She says it helps to be experienced in all the main computer programmes even if you don't end up using all of them.

"When you go to university, you learn stuff that you're actually not going to use practically. But what it's doing is stretching you and making you learn things that you didn't think you could learn."

The best way to learn new skills is on the job, Martin says. She recommends giving employees just an hour or two of protected time each week to work in areas where they need to upskill and they're more likely to move up within the organisation.

Gabrielle Young is the director of Stratus Consulting and also says that upskilling employees is best done onsite.

"While formal training has its place, it's very clear - people learn on the job. Most of that development around the gaps in their competence can be done on the job," Young says.

But some training does need to be formalised. Young says that includes things which are mission-critical or are "this is the way we do things around here" type of things. When everyone needs to be doing something the exact same way then formalised training is best. But for other tasks, Young says managers need to take a coaching approach rather than a telling approach.

"One of the huge things that people need to have in their organisation is a coaching culture - managers as coaches. They see it as their role to grow and develop people's performance."

If managers can facilitate employees in solving their own problems, they can upskill themselves. But Young says many small to medium businesses are just not aware of how to manage their talent. Organisations should know what it is their people need to be good at before they can upskill them. These basic competencies might include relationship management, drive for results, customer focus or attention to detail.

"The first thing to do is understand the capabilities the business needs - therefore, what competencies do my people need?" Young says.

Young says that if small businesses think about how they need to recruit, develop and retain staff in a more integrated way, they will be a lot better off.

Managers should be comparing a person's progress against their goals on a six-month or annual basis as part of an overall talent management programme. And no, there is no guarantee that the efforts put into staff development will pay off. But with today's highly mobile workforce, Young says a personal development policy is the best retention tool you can have.

"The research is really clear. People that are bright and talented, what they're hungry for is development. It's one of the most critical things anyone can be offered in a work context."