A few weeks ago I wrote not one but two posts about how age and experience factor into career promotions. My argument was that company’s seem to put too much importance on hiring “outside the box”, trying to bring in more experienced, star talent instead of recognizing the contributions and performance of current, but less ‘experienced’ employees.
I recently found an article from the Harvard Business Review (as published in part by Portfolio.com), that reinforces my point about the risk of bringing in outside talent.
“Top performers resemble comets more than stars: once they’re lured to another firm, their performance plummets by as much as 20%—permanently. That’s because just 30% of a star’s performance stems from individual capabilities. 70% derives from resources and qualities specific to the company that developed him—such as reputation, information technologies, leadership, training, and team chemistry.”
“When you hire a star, he leaves all that support behind—so his performance flags. Worse, his group’s performance slips, as resentment over the star’s spectacular hiring package corrodes morale and productivity. Meanwhile, your company’s market valuation erodes, as investors decide you overpaid to bag your star.”
Why hire an outside candidate with greater potential in terms of years of experience, performance at another company or even another industry and risk them falling flat on their face, when you could simply promote someone from within the company that has a proven performance record and the company/industry-specific knowledge and relationships?
By promoting from within, not only does a company save itself costly recruiting, hiring and benefit payments but it also lowers turnover and retains existing talent by giving employees options to advance without having to look elsewhere.