Tuesday, October 2, 2012

Tough Choice II for the Future of Talent Management: Is it better to promote from within the company or hire from the outside?

Digital business becomes always on, "border-less," hyper-connected, and interdependent than ever.

Human capital is still the most valuable asset in any business today, especially now the rate of change is accelerated, organizations now have to make more tough choices to compete for the future, after talent debate: Do you hire for character or skills? Leaders, would you rather be liked or be respected, here comes another debate: Is it better to promote from within the company or hire from the outside?

1.    Value Matters Now

You don’t get paid for the hour. You get paid for the value you bring to the hour. --Jim Rohn

Value is multidimensional concept, from ethic value to economic value, from cultural value to aesthetic value., etc, business value may directly impact business culture, which is collective behavior of organization, therefore, either "succession planning" or talent recruiting, value need be evaluated accordingly, as it reflects person’s attitude and behavior.

The talent strategy is an integral part of business strategy, may depend on the nature of business circumstances, whether organization is at crucial path to turn around, or it's on the fast track to expand or it's in more organic growth cycle, the trick is always to find the right balance to maintain the positive value elements of the corporate culture, while still finding the "tipping point" which will accelerate the thought leadership of the business to the next level of performance and value pursuit.

On balance, if a company is successful in fulfilling its value proposition, then growing talent and promoting from within is good because it preserves and builds on what makes the company successful and what it learned when it overcame challenges. However, if a company is unsuccessful or there’s need to add the fresh ingredient of business value, which is a case for most of the businesses today after just being through the great recession, then the potential upside of hiring from outside increases. There are situations where not changing is riskier.

2.    Innovation Matters Now

Innovation is light every business is chasing now, as it becomes key for business growth.  Today’s innovation leaders are defining innovation broadly to include services, processes, business models, communication, and cost structure improvements across the enterprise. talent managers can help by aligning people-related factors, such as leadership, capabilities, processes, technology, and organizational structures around innovation to foster a more innovative organization and culture, the heterogeneous leadership or talent team well blend character, skills, cognitive wisdom may connect dots and inspire team to re-imagine growth possibilities, revitalize culture and re-invent business capabilities.

Because now the business environment becomes more dynamic, talent with a non-linear skill set or learning agility may enforce the culture of innovation many organizations need now. Still, the detailed talent practice may depend on the culture of the organization and the needs of the moment. Generally speaking, it is beneficial to bring in an outsider who can inject new ideas and see things from a different perspective. A great organization with creative working environment & culture of excellence need both fresh blood and internal talent to balance divergence of thought, creativity, and knowledge; passion and stability.

3.   Adaptability Matters Now

CHANGE is inevitable today, and the rate of change is accelerated, most of the organizations are at the journey of radical transformation, from industrial enterprises into tethered digital enterprises, thus, adaptability is crucial.

Digitalization also brings unprecedented opportunities for business today, business becomes always on, "border-less," hyper-connected, and interdependent than ever, thus, businesses with adaptability encourage open leadership, culture of innovation and dynamic learning agile talent team, promoting from outside may help enhance such strategic variety and intellectual flexibility, to bring new ideas across businesses and cross-industries. On the other side, even hiring from within, Change capability is a new key, internal staff should have an organic advantage simply because they know the company, expectations etc, but that does not always translate into the right person. Healthy competition is always good, even in the hiring process.

To look at it from the strategic perspective, companies might have a bias one way or the other, and clearly articulate that bias to employees have a better chance of keeping people engaged. Mostly, people want to know what the rules of the game are. As long as they do, they will adapt themselves to the game to give themselves the best chance to achieve their personal goals. Metaphorically, a dynamic organization is like a running river, always need more fresh streams /springs to flow/merge in, keep it grow, make water fresh and filter out dirt., etc. Adaptability will require an openness from companies and managers to allow the real understanding of outcomes. There are valid reasons why this may not be easy. It takes structural flexibility and resilience-friendly value to adapt to changes.

4.    Passion Matters Now

Passion is like the flame, sometimes, it can brighten the whole organization, passion will ignite good attitude to take extra miles. Promoting from within may keep staff loyal and rekindle the passion for their work, but needs to be done on merit and not just because the individual has the length of service,  otherwise the Peter Principle will come into play and the individual may fail at the new role. Some people will have the ability to make the leap while it will be too large a gap for others. All too often the longest-serving employee in the company is exactly that because he is decidedly mediocre and not a risk taker or a leader, talent manager may need to dig deeper about this three S questions for modern talent management.  

Furthermore, organizations like to provide a career path for employees - but how do you ensure fresh ideas are continually implemented within organizations. Many of times, external candidates may instill the enthusiasm to solve some old problems or shoot the tangle from the different angle, leapfrog the market, an infusion of new ideas will be required to challenge the status-quo.

Balance is key, organizations should always provide employees rich opportunity to grow via rotating position or more open global assignment to keep talent passionate; and external talent with diversified experience and background can help connect the innovation dots, not just paint the colors, but connect the dots and rejuvenate business culture.

Therefore, to view each hiring decision as unique with pros and cons. The pro is that you always give yourself the chance to find the ideal candidate rather than taking the easiest path to filling a vacancy. If talent managers can identify clear outcomes for the position, it is much easier to determine whether you can select internally or externally. 

5.   Ideology Matters Now

Ideology matters, as it means how to challenge the ideology of management, talent pipeline development, and methodology. Change itself is a tough choice.

Sometimes promoting from within ensures people with an axe to grind get the opportunity, with the positive effect on the crew's morale and is a supporting factor for personal development. However, the political and emotional baggage they have accumulated over their years of service may hinder their ability to successfully execute in the new role.

Worse yet is the counterproductive behaviors of nepotism, cronyism, and entitlement that can often exist in organizations with an extremely long tenured employee base. Smaller companies often suffer from the entitlement syndrome; however, it is true that the new blood leadership often suffers mediocre results as a byproduct of social acceptance. If acceptance is based on tenure vs. skills and abilities, then dissenting opinions and passive resistance to change can undermine even great leadership

From human capital management viewpoint, the process needs be optimized, not only about how to control the human capital investment risk, but also about how to manage such risk more intelligently to avoid bias and leverage balanced approach and transparent process to attract bright talent externally and internally, to help business growth and cultivate positive culture.

Ideology is change management practice: find the best and the most competent person for the position, with critical and creative thinking, particularly for a more senior position. One of leadership loophole today is, many senior people who surround themselves with 'buddies' and those that they know won't or can't challenge their position; or homogeneous leadership team with the blind spot in decision making.

Ideologically, effective organizations, no matter large or small, have the multitude of positive characteristics: the startup's business culture-- innovative and dynamic; university's learning attitude & agility as the speed of knowledge life cycle is accelerated. That said, business always need fresh eyes to see through the culture or fresh blood to flow around the corners; but the business also need loyal employees to make long-term contributions and craft business brand to attract the best and brightest.

More precisely, the question is: What’s tough choice you need make in talent strategy to compete for the future?

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