THE GRASS IS GREENER

The grass may be greener but it’s likely to be a lot more dangerous.

A recent 20 year study in the USA by consultants AT Kearney and the Kelley School of business at Indiana University shows that Chief Executives promoted from within an organisation generally outperform those recruited from outside. They conclude external recruitment is “more risky, costly and disruptive.”

How much more costly? 65%.

How much more disruptive? 40% of outsiders last 2 years or less.

So it’s game, set and match for talent development and succession management.

Which is no surprise to anyone I speak to in most large or smaller corporations. Because whilst non executives and consultants are all going to be proponents for change and disciples of pundits like Lester Thurow of MIT who said:- “A competitive world offers two possibilities: you can lose or, if you want to win, you can change”, few of them are bent on annihilating the organisation they are trying to improve.

Change does not mean big, random, “asserting my will” changes an incoming CEO often from a different culture, a different country and, like as not, a different market, might want to make. Change, as in changing course, seldom means doing brutal hand-break turns or going from 30,000 feet to 10,000 feet to shake up a few people. Change can mean skilful pruning and working with the best one’s got. Usually an incumbent executive will be better at that than a stranger who’s got a huge package with vast incentives, a mandate for carnage and is unencumbered by knowledge.

UK companies who tend to promote from within include Tesco, Shell, Next, HSBC, Glaxo SmithKline and GKN. And in the USA General Electric, Intel, Nike and a host of others are succession management junkies. And when Apple went outside look what happened to them.

This puts a big premium on Talent Management and Leadership Coaches. Yet this is where the most important investment any business can make resides. Their task is not to clone conservative CEOs who don’t rock any boats but to grow and develop free thinkers who understand what RA Butler, the 1950s brilliant politician, called “the art of the possible.”

There’s a great book on golf by Robert Rotella called “Golf is not a Game of Perfect”. Neither is running a company or finding a new leader.

In fact that greener looking grass might be more toxic than it looks or it might be concealing some very venomous snakes.