businessman with a golden cupWe reported on some interesting research earlier this year from Wharton Business  school which looked at the effectiveness of internal hires versus external hires. The report came out in favor of employers placing a greater emphasis on internal hiring versus external.

For example, the research found that “external hires” receive much lower performance evaluations for the first two years of employment than internal workers who are promoted into similar jobs. As well as this, external workers have higher “exit rates” and they are paid “substantially” more, that is 18- to-20 percent more. There was a plus side for new hires, which was that if they stay for more than two years, they will experience faster promotions than those internal hires. Although this benefit is to some degree mitigated by the fact that research compiled by Jobvite shows that average tenures are in decline. The typical worker expects to change jobs between 11 and 14 times in a lifetime, which puts average tenures anywhere between two and four years. So, external hires may not stick around long enough to deliver the return on investment.

Even so, external hires are clearly crucial to: replenishing talent pools, fueling growth, introducing change and bringing forth new ideas and innovative ways of thinking, so their value is unquestionable.

But, the research does suggest that there is great value to organizations in developing talent and promoting from within and below, I have outlined three tips on how to do this:

1. Learning Agility

One of the key criteria that is used to assess whether an employee is a high-potential future leader is an individual’s level of learning agility. Yes, research from Teacher’s College and the Center for Creative Leadership (CCL®) has identified five criteria that learning agile and, therefore, high-potential future leaders exhibit, and these are as follows.

  • Innovating: Not afraid to challenge the status quo
  • Performing: Can remain calm in a storm
  • Reflecting: Take the necessary time to reflect and learn from experiences
  • Risking: They actively place themselves in challenging situations
  • Defending: Open to learning and and avoid becoming defensive in the face of adversity.

They also found that high-potential, learning-agile future leaders are more extroverted, focused, resilient and original, but actually less accommodating.

2. Identifying these qualities in your staff

While smaller or medium-sized companies may not be able to engage in such formal pipeline and succession planning that we see in larger companies, they can at least ensure that these learning agile qualities are screened for and assessed as part of of the annual appraisal process. This means you will get a good level of understanding of who your high-potential future leaders are. If you don’t have a formalized and frequent appraisal process, now’s the time to develop one.

3. Stretch Assignments

Having identified your high potentials, what many larger organizations do is give these workers  “test missions,” known as stretch assignments, which means giving someone a higher level assignment that challenges the person and forces him/her to acquire new skills. This will help the high potential to further develop the skills that he or she needs to be a successful leader or maybe this person won’t succeed and his or her limitations will be exposed. Therefore, stretch assignments are great tool to identify high potential employees.

In a small company, these stretch assignments might not be an entire job; it may simply be a challenging project the company needs completed. When using stretch assignments, do try and give employees equal opportunity to apply (advertise the job internally) so there is a sense of career opportunity, but clearly focus your selection choices on those employees who have the highest levels of learning agility as shown from their appraisals.



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