Finding New Company Leaders Can Be Inside Job
By Rodney Tanaka Staff Writer© Pasadena Star-News, June 3, 2007
Companies must develop talent and recruit for the future or risk facing a damaging talent drain.
Half of all companies surveyed by RHR International said they expect to lose more than half of their senior managers in the next three years, and 15 percent expect to lose 75 percent or more.
Companies need to plan for this talent drain or risk losing valuable leadership and institutional knowledge, said Eric L. Herzog, president of Los Angeles-based Quest Consulting & Training Corp. and author of "Future Leaders."
Baby boomers are reaching retirement age and organizations have downsized, he said. A reduction of management levels is shrinking the talent pool.
"For a variety of reasons they haven't necessarily made the resources or time available to develop that talent pool," Herzog said.
A company must identify critical positions and review candidates for those positions. "We've already seen companies with key positions they can't fill," he said.
The most cost-effective short-term solution is to develop employees' technical and leadership skills, promoting from within. One potentially untapped resource is long-standing employees nearing retirement. Herzog's consulting firm has developed a system in which a company's leaders learn to teach others, serve as mentors and help people solve problems on the job.
"Many of the people that will be retiring have considerable knowledge and skills," Herzog said. "Make sure they're transferring knowledge to those who will be running the company in the future. Every leader has the potential to be an excellent teacher."
Internal promotions ensure these leaders already have an understanding of how the organization operates and its products and services.
"Promoting from within also helps retention and recruiting," Herzog said.
"It's an opportunity to re-evaluate the people you have internally based on their performance," he said. "Look inside first. Only go outside if there are compelling reasons - if you need to move quicker or you can't find the talent inside."
"But sometimes promoting from within isn't an option," said Gary Kaplan, president of Gary Kaplan & Associates, a Pasadena-based executive search firm.
"Unfortunately, the reality over the past decade or so is companies have greatly reduced their portfolio of talent, and really many organizations annihilated middle management with the concept of doing more with less," Kaplan said. "In essence, a number of organizations have done away with their farm team, with their bench strength."
"Now they're finding themselves in a very robust labor market and an inordinate amount of competition for talent at a time when organizations are increasingly losing many of their skilled employees through attrition," he said.
"Companies must look internally, but they must also build 'bench strength' through recruitment, hiring the best and brightest to supplement any dearth of talent they already have," Kaplan said.
"Companies are now recruiting both for specific skills to fill vacant spots as well as looking for leadership ability, with these candidates possibly filling more senior roles in the future," he said.
"Also, more organizations are coming up with strategies to retain people reaching retirement age, hiring them as consultants or keeping them on a part-time basis," Kaplan said.
"Companies must also focus on retention," he said.
"Do everything in your power to create an atmosphere and environment where people don't want to leave," he said.
