The Cost of Growth
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“From the standpoint of society as a whole, the cost of anything is the value that it has in alternative uses.” – Thomas Sowell, US Economist
When looking to expand its employee base – what must an organization consider? The costs of such an expansion varies, increases, or decreases greatly – based upon the actual “cost per hire”, the compensations required for new, displaced, or promoted employees, as well as the necessary exertion or work provided by the involved departments – be that HR, recruiting (corporate or outsourced), and also the department wherewith the hiring or expansion are to take place.
Nothing in Life is Free
When it comes to business, there is cost attached to everything. Perhaps you’ve heard it said, “There’s no such thing as a free lunch.” This is most certainly true; we often overlook the opportunities that may be gained by lunching especially when it isn’t free. I’d like to address one opportunity cost, in particular: Succession Planning – the process by which an organization builds their future workforce from within – through the development of current employees in preparation for executive or supervisory turnover.
An Outdated Hiring Philosophy: Promoting from Within Never Works
One of my first assignments as an executive recruiter was to fill the role of Oncology Manager for a large hospital district in a small mid-California town. Several highly qualified nurses worked within this department and had they been prepared, would have been able to step up and fill this very difficult-to-fill nurse manager role. But a succession plan had not been put in place and a lengthy, as well as costly, search to recruit the role began. Nearly 14 months later, a qualified replacement had been identified 700 miles away and an offer of employment was extended. Additional costs ensued as relocation monies were assigned and housing necessities fulfilled. While I was proud that my diligence and tenacity paid off as I was able to complete the arduous task of this protracted search, I was dismayed by the lack of internal preparation that could have ultimately saved this hospital precious resources: time and money.
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The Sad Truth about Succession Planning Today
If this were a lone and solitary tale, it would be easily fixed, but it is not. Companies and organizations today have strayed from a “built to last” mentality when it comes to successfully implementing, navigating, and utilizing an optimal succession planning strategy. Executive leadership often fails to realize the serious opportunity costs waiting to be gained when such a plan is in place. For goodness sake, implementing a succession planning strategy isn’t like betting on an unknown horse. A company with good forethought is basically betting on a horse already familiar with the track where it trains and races, knows its competition, and also finds comfort in the stall where it discovers respite. Why not provide opportunity to race on a new, better, and bigger track where greater wins can be achieved?
With great risk comes great reward
Built to Last
Shifting generational factors along with the growth of global or multi-cultural and diverse leadership and staff will undoubtedly present significant talent management challenges for tomorrow’s organizations. When the focus of a hiring company is expressly shifted to include a change in their retention efforts, several effects will begin to occur. Company culture and loyalty are inspired and nurtured. Employment branding from within sparks a change in how normal, everyday business opportunities are approached and satisfied.
Built to Retain
Studies show that organizations with leadership development strategies will continue to dramatically outperform those companies which don’t.(1) Can you afford to ignore this type of opportunity cost? Do you think your competitors will ignore it? It’s time to place a greater importance on the types of programs and processes that increase employee, as well as client and customer retention.
by Rayanne Thorn
**My company is offering a Free White Paper: “Built to Last: Cultivating Leaders in the Multi-Generational, Global Workforce” here and watch this space as we break down what makes succession planning successful.