For many businesses one of the biggest risks to their future success is having the right leadership talent in place as and when key leaders leave the business or retire. However, because of the changing nature of the world we work in, it is likely that competition for talent will get even stiffer over the next decade. It is worth noting that:
- Companies operating on a global scale will have the reach and ability to attract the best from around the world.
- Changing demographics means that it is estimated that one in four of the working population will be over 45 in the next few years – the typical age for senor executives.
- A change in working culture and the life choices young people tend to make mean that younger people are more likely to move jobs more often.
Interesting, research conducted by the Chartered Institute of Personnel and Development (CIPD) concluded that in 1986 most people could expect to have a maximum of two different jobs by the age of 25, but by 2006 this figure had doubled to four jobs, and is likely to increase in the future.
This provides a number of challenges for organisations who wish to find and retain talent. At first glance it may appear that the right thing to do will be to hire talent from the outside, to bring in “fresh blood” who will provide the organisation with a different perspective and leadership imperative. However, is recruiting external leadership talent really the best thing for the business?
Certainly with competition increasing, recruiting externally will become a more time consuming and expensive process. It has been estimated that it “costs” between 1-2 times the salary before a newly recruited middle manager becomes effective. In other words, if you hire a manager on £50,000 p.a., it may cost the business between £50,000 -£100,000 before that person starts to be effective. This is a significant investment in an ‘unproven’ person.
The key issue here is that many businesses don’t manage or develop their leadership talent properly. So when a key manager leaves, there tends to be a knee jerk reaction, and the businesses recruits externally.
As the marketplace for leadership talent becomes even more competitive, it is vital that organisations wake up to this challenge and establish their own leadership development and talent management programme. The investment in leadership development will more than pay for itself by developing leaders who are ready to move into key positions as people leave, by eliminating (or certainly reducing) the need for expensive external recruitment. After all, why risk recruiting an unproven manager when the leadership talent you need is right under your nose!