The constant pressure that HR faces to find and retain the best possible talent is greater than ever as the economy continues to struggle with the ‘double whammy’ of widespread skills shortages and a cautious post-recession approach to recruitment. But if HR sees little or no evidence of suitable internal candidates, looking externally seems to be the logical solution, right?
Working hard to negotiate an increased recruitment budget may be the place for HR to devote its efforts. The problem is that hiring can be very costly and it is by no means guaranteed to deliver an effective solution.
Take the 2012 study by Wharton Management Professor Matthew Bidwell which looked at the effects of external hiring versus internal promotion. In his paper Paying More to Get Less, The Effects of External Hiring versus Internal Mobility, Bidwell concluded that internal development was favourable. He found that while external hires often came with more experience and education, they were paid 18 – 20 percent more for the role than a person who was promoted internally. This is not only difficult to stomach financially, but also unlikely to win employers any friends among existing staff should this situation become apparent.
Furthermore, due to a higher risk of not developing the required skills and internal knowledge, new hires were 61 percent more likely to be fired or laid off for poor performance, and 21 percent more likely to voluntarily resign. New hires very often received lower performance scores in their first two years of the job as they often required about two years to “get up to speed.” Bidwell suggests it is because new hires need time to discover how to work within their organisation – and more specifically – build the relationships that allow them to be effective.
Any HR manager who has seen the real-life evidence of Bidwell’s conclusions will seek to avoid looking externally and instead look within their organisations for talent. After all, it is considered HR’s role to spot and develop talent and nurture via in-depth development centres, high potential programmes and more.
However, it is all very well and good to talk about HR spearheading talent development – but without being in each department every day and individually interviewing employees it’s difficult to see what talent you have. And it is not always clear through traditional PDP channels – while development goals can be highlighted, real ambitions are often hidden.
So HR can only deliver on its remit if line managers bring these ambitions to attention – yes through normal PDP route, but also everyday observation and through dedicated conversations to find out what their employee’s ambitions are and how they would like to develop. Bidwell agrees in his study, stating that promoting internally “requires managers to ensure that internal people are aware of the opportunities open to them.”
Overcoming the conversational barriers
It begs the question, why don’t line managers know what their employee’s ambitions are? Having spoken to numerous leaders on this very point, it is probably because they are not having the right conversations about development. There are three main reasons that could explain this.
Firstly, for many line managers the place for a conversation about career aspirations with their direct reports will usually be as part of a performance management or appraisal process. Unfortunately, this is a place in which numerous other issues also need to be addressed meaning the topic of future aspirations fails to get the attention it deserves.
Secondly, organisations who are involved in the process of succession planning may be wrongly assuming that this will consider the future aspirations of employees. It won’t. Succession planning is undertaken exclusively for the benefit of the organisation and in nearly all cases takes no account of the career aspirations of the employee.
Finally, the most profound reason that these conversations don’t take place is due to fear. Leaders are frightened about what they might learn (for example, the employee intends to leave) and that they could uncover aspirations that they feel they simply can’t satisfy.
From an employee’s perspective, most will want to have a conversation about their career aspirations with someone – and if this need isn’t being fulfilled by their line manager, chances are they will turn to a head-hunter or recruitment agent. That explains why they often know more about the ambitions of your employees than you do.
Failure to have a future aspirations conversation may also signal to an employee that there are no opportunities for internal promotion or development. This could result in them leaving to find opportunities elsewhere through dissatisfaction with the situation. Can we blame them – if an employee doesn’t have the opportunity to ask, how would they know?
The scale of this dissatisfaction is bigger than you might think. Our own research shows that 21 percent of UK workers do not feel that there are any opportunities for career development at their organisation, and 16 percent are unclear about any career pathways.
Line managers are also making their own jobs more difficult by not discussing employee aspirations. It is hard for managers to help employees with areas to develop, and then correlate these to possible areas for growth further within the organisation, unless they know which direction the employee wants to go in. Remarkably, according to our research, 27 percent of UK employees have never had a discussion with their manager about their future within the company, and only 10 percent feel that management have been proactive in supporting them with everything they need to ensure a promotional pathway.
Without open communication about goals and ambitions, a manager or HR manager with talent development responsibility could even point an individual down the wrong talent development pathway.
Getting the right conversations started
People will usually only reveal personal information – such as what their true career aspirations are – with people with whom they have a trusting relationship. One of the most effective ways for a manager to establish trust with their direct report is to have a conversation which takes conscious steps to build a deeper and more trusting relationship.
The aim of this conversation is to create a space to better understand and know each other in terms of who you are, what you do, how you do it and why you do it. It is also about understanding each other’s drivers, values, how you see the world around you.
The trust pyramid (below) illustrates how, as levels of trust increase, we are able to discuss deeper and more personal areas. This trust comes from moving ‘get to know you’ conversations (where you live, what sports team you like, etc.) to more intimate subjects such as values and personal motivations. Having this conversation also helps a manager identify later when an opportunity might be relevant for that person.
It’s about listening to and sharing stories, insights and points of view. For it to work, you must come in with the intention and courage to talk about who you really are, what drives and matters to you most, and be genuinely interested in the other person. Start by defining a time and protected space to talk – then initiate with a proposition like:
“I’d like to meet up to talk about how we can build a really effective working relationship.”
Sincerity and integrity must underpin this first step so it is important to phrase questions in an appropriate way – for example:
“What would you like to know about me and how I work, to understand where I’m coming from?”
“What do I need to know about you, your motivations, style, and preferences so I can help you be your best and we can work together really effectively?”
Of course, you don’t need to agree with each other on everything discussed to build familiarity and feel valued – revealing and acknowledging differences will do the same thing. The great thing about this conversation is that it provides a platform for the relationship to continue to be developed through the insights, references points and mutual interests it reveals.
The platform of trust for future-focus
With trust underpinning the relationship, a line manager is in the ideal position to help build for the future. Sincerity and mutual understanding will enable a line manager to initiate this conversation with some very simple questions. For example:
What are your ambitions?
What is driving you to have these?
What opportunities can we create right now for you to move in this direction?
What can we both do together?
Let’s not fool ourselves that the employee will tell you everything they would say in confidence to an external person. But you will get 95 percent of the way there – and that is 95 percent more chance of retaining and developing that person.
Ultimately the conversation is about their ambitions, but the line manager will need to discuss some fundamentals to achieve that end result – that means talking about the nature of the employee’s role, the responsibilities they are seeking, and what both parties can do to get them where they want to go.
Most of us in a recruitment situation will have either asked or been the recipient of the question “where do you see yourself in two, three or five years from now?” – but why is the question asked far less between employers and employees?
With trust established and a conversation started about ambitions, now is the time for line managers to ask this very question and to do so against a set of ten dimensions:
Is the individual driven by the need to have a clear line of sight between their role and their contribution, and a meaningful end goal that is greater than themselves? People who are driven by a sense of purpose seek organisations and roles in which they feel they can make a difference to the people, wider society and world around them.
If the individual seeks autonomy and freedom, they are likely to want a high degree of freedom to act, control their own job content and working hours, and ability to shape the future of the team, function and business.
A person seeking mastery and learning is driven by the need to be developing and continuously improving in their role at work.
This dimension is about having opportunities for creativity, discovery, innovation and exploration within the role.
People for whom this dimension is important seek opportunities to work or lead in teams where working closely with other people is a key element of the role.
To what extent does the individual need to be able to win, succeed and achieve and to do so in an environment in which this success is visible, recognised and rewarded?
7) Work-life balance/wellbeing
What are the employee’s needs in terms of balancing their time and effort at work with a fulfilling and meaningful life outside work with family and friends, along with concern for their own physical, mental and emotional state?
This concerns an individual’s desire to climb up the corporate ladder, be recognised and rewarded appropriately as each higher level of seniority is achieved.
9) Financial reward/security
This dimension concerns the degree to which an individual is driven by the need to achieve financial security and the benefits that come with it.
What is the individual’s drive to be recognised for the position that they have attained, and what’s their desire for satisfaction from being able to exert influence and power over a team, function or organisation?
Sharing these insights
Importantly, what this conversation reveals is gold dust from a talent development perspective. Encouraging line managers to feed this back directly to HR closes the loop, and this is the point at which the power of mastering two types of conversation becomes apparent.
Of course, a line manager may establish that an employee’s intention is to move on to a different organisation or career, or that your organisation can’t help them the way they want. If this turns out to be the case, you have the insights to be able to best use their talent while they still with you.
Having clear visibility of talent within the organisation is key to future success. It will also help organisations avoid embarrassing situations like the one our client ended up in – a cautionary tale on which to conclude which clearly demonstrates why having these conversations is so important:
Eight years ago we needed to appoint a new group CFO based here in Dubai. We went out to our MDs and HR teams across the business to seek suitable internal candidates but after waiting for several weeks, and prompting a number of times, it was obvious that no internal candidates were forthcoming.
We decided to use an executive search firm and appointed a well-known, global firm of head-hunters to work in the project. As usual, the fees were huge – around £160,000. They took the brief, wrote up the job description and created with us a person specification that exactly matched our requirements, and then set to work. As the weeks passed we received regular progress report as they interviewed and shortlisted likely candidates.
Finally, eight weeks into the search process, the lead consultant scheduled to meet me. I was surprised when he entered my office to present his shortlist and declared that they had a bit of a problem and were concerned about how I was going to react. I was puzzled but said, “go ahead and tell me what the issue is”. This is what he said:
“We’ve completed our search for your new CFO. Looking at candidates across the world with the industry experience that you are seeking and we have a shortlist of three people, and one candidate who is our strongest recommendation. There is only one problem. She’s already employed by you.”
They explained what had happened. Because our group is so diverse, some consultants on the search team in Europe did not realise that the companies they were searching in were part of our group. One of them found this strong candidate, but of course did not reveal to her who their search was on behalf of until after the second interview, by which time they were already certain she was a very strong candidate. Of course, when she did hear who the search was for she was shocked too that it had taken an external search firm to identify her for an internal role.
The outcome is that we did indeed appoint her as CFO, a post which she still fulfils very effectively today – and it cost us a lot of money!
But the deeper lesson is obvious, and what a wake-up call it was for us, and how embarrassing. Ever since then we have instead heavily in proper, deep career discussions with all of our key people to make sure this never happens again and that we have a sure grasp of the talent we have inside the organisation, and people’s careers goals.