This article appeared in The Sunday Times 12 July 2009
Hiring new staff is expensive. Yes, the recession has increased the number of people looking for work but it has also made high performers wary of leaving their jobs without a significant financial incentive.
A survey by the Chartered Institute of Personnel and Development suggests that it costs companies an average of £20,000 to replace senior managers who leave. Across all levels of employees it costs an average of nearly £6,000.
However, other research suggests that when the productivity drop associated with recruitment is included, the true figure for replacing a key manager is more like five times their salary, or ten times for a Director, said Jane Sunley, chief executive of Talent Toolbox, the people management system.
The answer for employers, according to Sunley, is to develop existing employees and promote from within. "it's good for morale for people to see others in their team being promoted."
Companies that have a good sense of where individual employees' aspirations and abilities lie are better placed to develop their succession, too, and its an effective way of protecting the company's brand.
"Business depends on their people. It's really hard to get brand consistency if you keep changing your people. Customers are demanding and they don't want to wait for people to get up to speed," said Sunley.
Gary Knowles, engineering and quality manager at Fascia Graphics in Chippenham, Wiltshire, said: "When you bring people straight into senior positions they might not necessarily understand how the company works and its ethos."
Knowles, 33, was himself promoted, literally, from the shop floor after joining at 20 to work on the production line making membrane keypads. "It wasn't what I wanted to spend my career doing but as a starting block it was fine," he said.
He took the job on the understanding that he would rise up the ranks when a suitable opportunity came up and that was exactly what happened - and has continued to happen.
Rather than simply promoting people and leaving them to it, Fasca ensures staff get the training that they need to move up. One technique they use is "multi -roling" - allowing employees to shadow someone to learn new skills before they step into the new job.
Organisations that want to promote from within should be open-minded about where high-potential staff can be found as not all future leaders join in management positions or even on a graduate programme, said Lesley Uren, the Chief Executive of Jackson Samuel, a recruitment firm.
"Talent does not always present itself in obvious places," she said. "If you build in too many criteria, such as that they have to be a grauate or they have particular experience, it limits your ability to spot raw talent."
Instead, look for people with a gift, such as an instinctive understanding of customer, resilience or charisma. "You also need to be willing t develop that talent," she said. "When you are looking for diamonds in the rough you have to knock a few edges off."