Better Buy

From my previous blog (Promote or Hire) you know by now that I have a bias towards promoting talent from within. In my experience, which is also backed by research, employees that have been promoted within the company are most likely more successful and cost you less.

So why would you go outside and ‘buy’ talent from the market? Apart from obvious reasons, such as individuals in the company don’t have the specific skill set you are looking for or that nobody can be released (which in my view is always debatable), there are a couple of reasons that justify buying from the market rather than looking for a candidate within the team.

The most important are:

• Expansion 
• Capability
• Outside – In
• Diversity
• Culture

Let’s start with the easiest one; If your organization is likely to expand in the future, then of course the decision to look outside and buy talent from the market is pretty straightforward. As the company grows, you don’t have to worry too much about the impact on current employees as they will get enough opportunity to grow in an expanding organization. Engro Foods has been a great example of this approach. They continued to recruit people from the market, whilst at the same time they accelerated the career growth of their existing team members over the past 5 years.

A shift in strategy could be another reason to buy talent in the market. If you have concluded that your past strategy will not get you to your future goals, you most likely have to invest in building new organizational capabilities. These capabilities could be anything from specific functional skills or the ‘secret sauce’ that defines your competitive advantage. It is very likely that your current team does not have these capabilities and therefor you will have to look for talent outside. Obvious example are diversified business groups like Nishat and JS that have limited food / agriculture / retail experience are now moving into the food industry.

An external recruit is often brought in to provide an ‘outside-in’ perspective. If your company is like Unilever, then your management positions are mostly filled through talent that has come through the ‘system’. While that has a significant advantage it also implies a number of dangers. Most importantly, that people will think and act alike and not be able to see things from a different perspective. A new recruit will then allow you to bring new ideas to the table.

Related to this is, of course, the business rationale behind increasing the diversity of your talent pool. The biggest stick in the mud is the absence of senior female leaders in our part of the world. We have to make a significant commitment and a huge effort to find and hire (female) talent to increase diversity in the team, helping to ensure we bring more points of view to the organization and with that improve the quality of decision making.

Finally, you can use external recruits in an effort to impact and change the culture of an organization. Of course no ‘one-man’ can change a culture, but as long as the person is appointed in a position of influence and is supported by the power structure in the organization, there is opportunity for change. This will only work if your external hiring is one of the elements of an overall cultural change program, in which current employees are also guided in what is expected of them and what is in it for them (but that brings up the topic of change management and that will require a few future blogs!)

So keep on hiring but make sure it is for the right reasons!

– Paul Keijzer

Promote or Hire?

I understand your dilemma. You have this vacancy and the internal candidate just doesn’t have it, he (or she of course) doesn’t have the education, hasn’t done the job before and you are just not that confident that he/she can do the job. On the other hand you have this person that fits the role perfectly, has worked with the competitor and has a solid resume.

What should you do; promote or Hire?

I have always been fascinated with this dilemma; do we go outside or do we hire internally. Now external research from Wharton management professor Matthew Bidwell found that:

“external hires get significantly lower performance evaluations for their first two years on the job than do internal workers who are promoted into similar jobs. They also have higher exit rates, and they are paid a substantial premium to attract them from their previous jobs. On the plus side for these external hires, if they stay beyond two years, they get promoted faster than do those who are promoted internally”.

My whole corporate life I have worked with a company that breathed and lived the ‘promote from within’ culture and my Unilever career has been a fantastic example of its success. Of course even that philosophy can have its downside and Unilever had to recruit a CEO from outside its own ranks a couple of years ago (I will touch upon when to and what to look for in a recruit from outside in my next post).

Companies in Asia are evenly split, some are fans of the ‘recruit the best in the market’ philosophy and others are the ‘promote from within’ supporters. In the Middle East however, often due to the lack of home grown talent, companies focus on hiring the best and when their shelf life is over, hire the next person. With South Asia as a large professional talent market at their doorstep, they have been very successful in doing so and have built huge businesses as a result of it.

The biggest problem of course is that this approach works well when the going is good (and the global talent market is down) however is very difficult to sustain over generations. If you want to grow a sustainable business that to quote Jim Collins want to be “Great by Choice” then you have to make sure you grow your own talent pipeline.

So when you are facing this dilemma, try your internal candidate. You know what you get, other employees in your team will get a motivational boost as they see that career growth in your organization is possible, you get better performance for less costs and you build at the future of your company.

Not a difficult choice is it?

– Paul Keijzer

The Power of Calibration

How many of you recently concluded an annual performance review for your team members? How did it go? Don’t ask yourself, ask the employees. A performance appraisal is supposed to help them get an accurate picture of their performance. The right feedback can help employees give insight in to their possible career progress.

One of the complaints I often hear about performance appraisals is that employees find the assessment subjective and they can’t relate their appraisal with that of their colleagues in other parts of the organization. First of all let me refute one common misconception: assessments are by definition; subjective. They can’t and never should be objective, as the element that you are measuring is not the same for each and every individual or organization. However in order to ensure equity and fairness, it is necessary that the same level of subjectivity is applied across organizations and not have one boss be more generous (or more stingy) than others.

You can, within an organization, department or team, create consistency of criteria, so the assessment of an employee in one department is relatively comparable with the assessment of another employee in another department.

How you might ask? The answer is relatively simple; by calibrating the assessments of employees across the organization before you have your performance conversations.

I have recently helped a number of companies in doing just that and the results have been pretty amazing. According to Sadia Junaid, Organization Development Manager for Engro Foods: “Calibration is a powerful tool that enables managers to connect the dots and complete the picture before you step into a performance appraisal discussion with your team members. It’s the perfect way to enhance the quality of feedback for your employees”.

So what is a calibration exercise? It is a discussion between line managers in which they compare, agree and cluster the performance and potential of all their direct reports across their teams. In doing so they:
– Assess their direct reports equitably and across organization / department
– Get input for the performance review from peers on their direct reports
– Agree collectively on development needs and career actions
– Speak with ‘one voice’ as a leadership team to individual managers

Not only do you help create more equity, you can also identify and agree who your ‘Top Talent’ is, making it easier for you to focus your development resources on the talent you want to spend it on.

Asking Shan UL Haq, People Excellence Director at Telenor Pakistan, about their experience with calibrating their talent, he said: “It clearly singled out our top talent – and also those resources whom we need to invest time in terms of performance management. The most important consequence of the exercise was a much clearer understanding of the development needs of our talent”.

The talent calibration exercise does require time investment. Is it worth it? …Yes! I guarantee you that your performance discussion and the satisfaction for both employee and line manager will significantly increase and as with every process, you get more out of it the more and longer you practice it!

If you have any performance discussion experience you want to share, send it to paul@engageconsulting.biz or leave a comment on this blog. Looking forward to hear your stories.

– Paul Keijzer