Hire With Purpose

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Beware of that “star struck” feeling!

Don’t buy a Porsche when you only need a Camry, and don’t buy a Camry when you need a minivan. Just as it is easy to get enamored with a high-performance automobile, it is easy to get enamored with a superstar because of his reputation or employment history. The bottom line is that you need to understand your current and future needs first, and then fill those roles with the right people at the right pay levels.

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Don’t Forget Basic Supply and Demand

Start by assessing the types of talent that drive business value today and those that will drive it three years from now, as well as those talent segments that are currently available and those that will be available in the future. Keep in mind, for example, that groups such as new MBAs will be just as available in two years as they are now. Also consider the type of talent that takes years to either replace or develop. This might include, for instance, skilled electric utility engineers in an environment in which retirements are dramatically reducing supply.

Performance management that is informed by answers to key strategic questions can minimize the negative cultural impact of downsizing, improve the bottom line, and help identify talented people whom the company should try to retain. It also allows the company to determine which positions should be filled with outside superstars.

Promote From Within

Promoting from within is usually less expensive and less risky than hiring from the outside. According to University of Michigan Professor Dave Ulrich, external hires cost about 20% to 30% more than internal hires. External hires for management positions also present a greater risk of failure in the new role than internal promotions. The higher the organizational level of the positions that are filled from the outside, the greater the risk of failure.

There are three reasons for this:

They don’t fit the culture of their new organization
They lack the relationships and internal networks to get things done
They don’t fit the job they’ve been hired to do

Internal hiring reduces these risks and enables promotions from within to have greater chances of success than external hires. So, before committing to hiring outside superstars, organizations should use their performance-management processes to identify strong employees. Future potential is based on accumulated skills and experience as evidenced by past achievement, ability to learn new skills, and willingness to tackle larger and more complex assignments.

Know Your People — Make Informed Decisions

Companies that conduct disciplined, meritocratic assessments of performance and potential are better prepared to make good personnel decisions. Selectively promoting from within sends a motivating message to others in the company that by doing the right things and getting the right results, they can build a prosperous career in the organization.