This has been a dilemma for management teams forever.  Many data facts are available which suggest that promoting from within is the mantra followed by the most successful companies that continue to be leaders through the test of time, as opposed to the numbers that have excelled under leaders that were hired from the industry.

It intrigues me all the time, whether you are of blue blood only when you join as a GET or a Management Trainee and reach to be at the helm of decision making through your career span or you are also blue blood if you came in a decade ago and have since been navigating the company to great heights. Would it depend upon whether the leader joined at the inception stage or maybe to lead the turnaround, and has been there since?

If you look deeper into the when it then unveils some interesting aspects-

Promoting from within is a norm for most cultures  Japanese, Chinese, Korean especially when they grow globally and believe that they would be able to trust only their own man who spoke the language and understood what they stood for. The family-owned businesses have their own culture too, irrespective whether they are Italian, German, Swedish, French, Indian it would be the promoters trusted man either a family member or a long term employee, who would be eligible for the top job. Then there are the General Electric’s of the world who might have started with similar thoughts generations ago and somewhere along the line, realized the value of preparing the talent for the possibility of growth, which was a given, considering the ambition that has been hereditary, the will to be there as a tall leader for generations to come.

The option of hiring from the industry has been used and many a time abused. I say this when the hiring company is making this choice because they believe the grass is always green elsewhere. The decision-makers are unable to come to a unanimous selection or the organization continues to be taken by surprise by the events around them. One of the most amusing views that I have come across, is when companies do not have enough time! And unless a fully ready leader was not to be found, the small window of opportunity would be lost forever never to return, who knows whether they would live to see the next one. And yet, here they are, continuing to survive and continue to make similar decisions, without learning from the past.

The will to succeed and not just survive through generations, the necessity to make a difference, the obligation to contribute to society along the way, that your people are the only means that you need and have to achieve these objectives, through technology, right financing, the go-to-market strategy it all… is the only way of life, that companies big or small, old or new, from the manufacturing or services sector, multi-national or otherwise, have to have as their sole reason for existence.

And they have to invest and continue to invest in their people, irrespective of the market trends, similar to how they invest their money in SIPs to grow their monetary wealth. And if you do, you make the choice of promoting from within or hiring from outside for the right reasons. It is then based on who is right for that situation – today & tomorrow. And the pros and cons of these two options are weighed in the context of the environment and not for reasons of patronage.

A European MNC, the world leader in their product category chose India as their next growth destination. They sent a handful of their experienced leaders to set up the operations, way better than the last plant that the team had set up anywhere in the world, take all those past experiences and apply all the learning to establish a world-class facility. Whilst, still in the project stage, a shadow team was hired, who would take over from the ex-pat managers/leaders in a period of three years, after the operations were reasonably established. This strategy offered them super benefits. The future Indian team was part of the setup stage, they, therefore, were party to the choices of equipment, the layout of the plant, flow of the material, hiring of the operating workforce, establishing of norms and so on. The hiring and training of the leadership, managers and operating teams were based on competencies and attitude required, not only considering the roles of today but the need for the next five years.  I had the opportunity to work very closely with them in defining their hiring and people development strategies. Today, ten years later, despite the adverse market conditions, this location has grown at a CAGR of 20+ year on year. It has provided leadership talent to other global locations of the parent company. It attracts the best of talent from the market place for any level of position that opens up. Competition and many others try very hard to attract talent from this company for their top jobs owing to the comprehensive management exposure of cross-functional working and leadership training.

The abridged version of this article has been featured in the Times Ascent. View it here