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Avoid disaster: Hire from within

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in Best-Practices Leadership,Leaders & Managers,Management Training

A new book on executive search argues that recruiters—aka headhunters—influence everything in the corporate suite from compensation, diversity, succession and management to “the very definition of leadership itself.”

If the author is correct, then organizations that think they’re choosing their next leaders are fooling themselves: It’s really the consultants who are driving this train.

Headhunting expert Joseph McCool describes the global executive talent war, looking mostly at enormous firms. He includes the “true cost” of a bad hire, in which direct costs can run two or three times the executive’s salary and, even at that, cover only 20% of the tab in lost performance.

“Senior management talent is the new oil: hard to find, difficult to extract and difficult to deliver,” McCool writes, quoting an oil exec who became a headhunter.

Our take: Any organization, regardless of size, will do better in most instances by cultivating leaders from within. Employees who are properly engaged, developed, promoted and compensated will be poached less often, and if they’re well trained, they will have knowledge and instincts no one from the outside can match.

What’s more, you won’t place your organization at the mercy of consultants; you won’t need to worry about culture shock; and you’ll reduce your risk of costly bad hires.

Occasions will arise when you should reach beyond your ranks for leaders, but you may want to keep those exceedingly rare.

— Adapted from Deciding Who Leads: Advancing Executive Search and Management Succession Best Practices Worldwide, Joseph Daniel McCool, Davies-Black Publishing.

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