If you don’t give your employees a chance, they will go look for it elsewhereon 31 March 2020 for Clients
It’s an age-old question that keeps CIOs and team managers up at night: “How can I stop my team members looking elsewhere?” Yet despite the reasons for staff turnover being well known, research shows that few employers are willing to give their staff a fair chance. According to a recent survey, 44 percent of respondents said that their current position doesn’t offer sufficient opportunities for professional growth, making them likely to look elsewhere.
Even if you don’t see them immediately, there are several valid reasons why it’s often better to promote from within, instead of relying on external hires. We listed five reasons why you should give your employees a chance and stop them from looking elsewhere.
#1 Replacing staff is expensive
One of the best reasons for promoting staff is that it is a proven way of boosting staff retention. Estimates suggest that replacing an employee costs roughly 21 percent of their annual salary, making a strong case for retaining quality employees by promoting internally rather than losing valued workers to other organizations or (even worse) competitors.
#2 Promoting from within costs less
Numerous studies have shown that organizations spend much more when they hire employees from the outside, versus promoting from within. For example, according to this study by Matthew Bidwell, an assistant professor at Wharton, external hires are paid 18 percent more on average than internal promotes doing the same jobs, yet they score noticeably worse on their performance reviews. This finding underlines the main advantage of promoting from within: you can hire more capable staff for less and have them deliver better results. And we didn’t even take hiring costs into account.
#3 Internal promotion is more efficient
One of the most fascinating findings of Bidwell’s study was that external hires can actually cause the performance of a unit to decline. This is because existing staff have to spend time bringing the new hire up to speed, causing a significant hit in productivity. This can be avoided by hiring from within and promoting existing staff into management jobs where they already know the lay of the land and can hit the ground running from day one.
#4 Internal hires can adapt more rapidly to change
Hiring a seasoned superstar can prove an irresistible draw for CIOs and team managers alike; external hires with impressive resumes often bring a wealth of experience, stability, and knowledge into an organization and completely revolutionize a workplace. However, some experienced external hires have the drawback of becoming stuck in their comfort zones and can find it challenging to adapt to rapid change. This is one of the main reasons why, according to Bidwell’s study, external hires are over 60 percent more likely to be fired compared with internal promotes.
Hiring from within often proves to be the smarter move. Younger employees may lack experience, but they can grow, adapt and develop more rapidly than their older, more established peers. As they already know the ropes of the company, they can get started right away with minimal training. Even basic things like knowing who to contact to get a project up and running can make all the difference.
#5 Internal promotions improve staff motivation and productivity
When young employees see externals being hired to take interesting management positions, it’s hard for them not to feel demotivated. That’s why CIOs and team managers who care about employee retention take the smarter approach of preparing their young potentials and giving them a long-term career perspective. Promoting from within shows your employees that you are serious about staff development and this helps improve staff motivation and productivity.
To see this in action, look no further than Netflix – the disruption behemoth that has rewritten the rules in the video rental, VOD and cable spaces over the past decade. The company’s first Chief Talent Officer, Patty McCord, sent shockwaves through Silicon Valley when she developed the Netflix ‘culture deck’ alongside Netflix CEO Reed Hastings.
McCord’s book, Powerful: Building a Culture of Freedom and Responsibility, gives an insight into her belief that developing great managers should be at the heart of every organization’s employee retention strategy. When she arrived at Netflix, instead of taking a business-as-usual approach, McCord embraced the concept that managers are leaders first, and doers second. Their most important task? Building a great team.
McCord recognized that leadership needs to be nurtured and developed. Instead of judging managers on whether they got their paperwork done on time or how good their mentorship skills were, McCord assessed their teambuilding ability. She helped develop promising employees into future leaders who excelled at building great teams.
Obviously, hiring externally can have tremendous benefits as well, but with today’s crop of young professionals expected to have over 20 jobs during their lifetime, retaining quality staff is set to become increasingly challenging. That’s why promoting from within is often the smartest approach. It can help you retain great talent, boost productivity and nurture new leaders who can power your organization on towards greatness!Tags: career , hiring , talent retention