In the movie the Wizard of Oz, Dorothy finds herself marooned far from her native Kansas. After vanquishing not one, but two witches, she watches her three companions (the Tin Man, Woodsman and Cowardly Lion) all receive their life-long wishes. Dorothy, meanwhile, finds herself stranded in the Land of Oz. Finally, the good witch Glinda informs Dorothy the ruby slippers she has been wearing since the beginning of her journey will grant her wish. It is then Dorothy realizes “there is no place like home.”
When I see companies looking outside their ranks to fill key positions, I think of Dorothy. I listen to leaders on how they need “fresh ideas,” “more experience,” or “great leaders.” I often wonder if they are ignoring their home-grown talent for “greener pastures.” Many of these narratives have the added dimension of an expectation that when this new person comes on board, everything will be better and/or fixed.
Understandably, in the beginning – new entrepreneurs may only have themselves. It only makes sense to look for reinforcements from outside to fill their team. However, once the company has developed some stability and growth, it becomes possible to have long-term employees move into leadership positions.
Properly developed and matched to the needs of their position, the internal COO/Second-in-Command has the best chance for achievement and longevity – both key attributes to the overall success of company leadership. And for the company that is looking to further its current prosperity, who better to help than someone who is highly vested in the company culture and has a strong understanding of the customers and the industry you are serving?
The importance of leveraging internal growth and development as a key leadership strategy is nowhere more critical than at the privately held or family businesses. Talent, loyalty and culture all play a significant part in the long-term viability of these firms and this framework can be applied across all levels of the firm.
Compare two employees with approximately the same experience for the same position – the outside hire will typically take longer to reach the same proficiency as the inside hire. They will receive poorer reviews and you’ll pay them more according to Wharton’s Matthew Bidwell. Unless we are consistently coaching and growing our teams, we take for granted what they know and what they can do.
External hires – if they are successful after two years – have an equally strong chance for success as an inside hire. However, in today’s environment – especially in small companies – I see very few CEOs willing to wait that long for their hiring decisions to come to fruition. And often someone with two years tenure is often no longer considered an outsider.
Let’s face it, the past few years have been rough on business owners and their teams. Business journals and mainstream media report daily on “The Great Resignation” and what it means for a changing workforce. I don’t believe most people want to really leave their jobs – it’s just the easiest way to feel in control in a time where most people felt like they had none. Add with the wage stagnation of the previous ten years, it’s understandable to see why employees would feel like this is their time to take advantage of signing bonuses and more perks. (Plus, if there are personal challenges going on as well, it may be much easier to make a job change than divorce a spouse or leave your family to feel in control.)
While it may feel counterintuitive, there is probably not a better time to invest in your team and have conversations about where their future aspirations lie. They may choose to leave anyway but not having those conversations may give the impression that the company doesn’t care about them. In the end, you can’t control whether or not someone decides to pursue other positions, but you can make them think twice about leaving. And for those who stay, you are reinforcing a culture of growth and support.
When you successfully grow your talent from within, you will come to reap the benefits of what Dorothy knew – there’s no place like home.
Daylight saving ends this weekend. Shorter days. Time (and usually the lack of) comes up a lot with my clients. If you’re looking to squeeze more time (and value) into podcast listening, you may like this recent one by John Warrillow (Built to Sell, The Automatic Customer).
In this episode John takes the lessons of his past four episodes and provides a masterclass from his guest interviews. This edition is filled with helpful tips and negotiation strategies, including:
- How you can legally protect the value of your brand
- Avoiding the biggest mistake co-founders make when starting a business
- How to leverage industry conferences when planning your exit
You can listen to that episode here.