Developing, coaching and promoting internal people to a leadership position is significantly less expensive than:
Advertising, recruitment fees, time wading through resumes, relocation and interviews with unknowns, signing bonus and the training/break-in costs typically required bringing in someone new from the outside. Some studies indicate that 50% of the new hires at the executive level only last between 6 to 9 months. Just like good new customers are often expensive and hard to find, so too is good new leadership.
2. MORE COST EFFECTIVE
Studies show that replacing a management level employee by hiring from the outside can cost between two and four times the annual salary of the position being filled.
According to some firms, this is a conservative estimation as they have seen the cost go to as high as six times the annual salary.
3. LESS FRUSTRATING
Most managers find the process of recruiting; time consuming and frustrating because:
Managers do not hire on a day to day basis and normally are not well prepared or trained in effective interview/hiring techniques. As the economy grows, hiring will become more of a problem. If you have kept the very best through the down times - and I would suspect you did - why would you not want to develop and use this ready talent for your key positions as you begin to grow?
4. A WIN-WIN
By developing and coaching in-house high potentials and key management individuals... the organization wins because:
A succession planning process is embedded in the organization, it helps to preserves acquired skills, maintains both product and organizational knowledge gained by your top people, promotes longevity and dedication from the best people in your workforce, provides growth and educational opportunities for key individuals, lets them know they are valued, helps reduce turnover of your best people and... provides evidence and a comfort level to your board of directors that future organization leadership is in place.
5. A GREAT RETURN ON INVESTMENT
Investing in the development of your best... to make them even better... is a very bottom-line savvy tactic, as well as an ethically sound philosophy.
