The rapid shift to a globalized knowledge economy has made it easy for companies to outsource talent-based functions once tied to geographical or corporate locations. This global talent supermarket, however, is also a battlefield. Although jobs can be outsourced to vendors or contractors almost anywhere on the planet, there’s a growing global demand for these tasks and the workers who can perform them.

What will it take to win on this global talent battlefield? The simplistic view is that this is a zero-sum game—that there is only a fixed number of talented workers out there, the goal being just to find and keep them. Some job descriptions may be like that (seven-foot-tall basketball players come to mind), but for virtually all others the important competencies are not innate. The challenge is to find the optimal way for employers, employees, and governments to share the cost of providing workers with the knowledge and skills needed to compete in the 21st century.

Currently, different countries place very different bets across three options of who should pay: the government, the employer, and the employee. While it may be fair to say that all countries use aspects of all three approaches, the emphasis they place on them is quite different.

• China reflects its central-planning roots with a system that places the primary responsibility for the development of work-based skills with the government.
• In India, employers have been forced by a lack of government spending on higher education to take the lead in financing worker development.
• The United States increasingly relies on individuals to take responsibility for acquiring their job-related skills, now that employers have abandoned once-common workplace education programs.

The rest of the world demonstrates a mix of all three, but most developed countries are making individuals more responsible for acquiring job-related skills. All three variants have their drawbacks. Governments do a poor job of providing real-world skills in a rapidly changing global economy. Employers are the most effective trainers, but open labor markets mean workers can easily switch jobs, exposing companies to the risk of lost investments in human capital. And many individuals lack both the capital to invest in their own development and the foresight to know which skills will have the highest payoff.

Practically from time immemorial, real-world skills have best been imparted through employer-directed training, but given today’s globally mobile labor force, front-loaded training investments by employers invite competitors to hire employees away. The challenge is to make human-development investments that pay off. Cheaper approaches to training—more work-based and less classroom-based—may be part of the answer; but the most fundamental change is to get employees to share the costs of those investments. After all, they will benefit the most from training through the ability to demand higher wages.

Apprenticeship programs are historically the best example of such cost-sharing arrangements—employees do productive work at lower wages while they master their craft. Though not common in the United States today, variants still exist. Major consulting and accounting firms have long operated with this model—associates are paid less than the value they create while they pick up skills that will be valuable even if they leave the firm (as virtually all do). P&G is able to pay less to new hires for its famous brand management jobs because the experience is so valuable to the employee.

For other companies, tuition-reimbursement programs are perhaps the easiest way to share the costs of development. The employer pays for the tuition, but employees make the bigger investment with their time, attending classes and doing homework after work hours. Another promising approach involves cutting costs through work-based internal development programs. Employees add value along the way, relying more on coaches and other interventions to help them learn from their experiences. One of the most interesting innovations lets employees volunteer for development assignments, taking them on in addition to their current jobs. The workers get experience that increases their value in the labor market but in effect bear the cost by working longer hours.

Thus, winning the global war for talent begins at home. Developing the skills of employees internally can be the most effective way to equitably share the costs of worker development. It avoids the transaction costs of outside hiring and makes it easier for employers to predict which employees will be the best fit. Plus, it generates loyalty and improves retention among all employees.

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