If you’re looking for new ways to attract top talent and increase employee retention (and, honestly, who isn’t?) you should probably look at your company’s succession planning and internal promoting. Leaders are going to quit, get fired, and retire. And the quicker you can fill those roles when they do, the better off you will be. The simple practice of identifying and developing leaders within your organization will not only keep your operations running smoothly, it will also go a long way towards helping your recruitment and retention.
Did you say “recruitment and retention?” I’m listening!
One thing candidates and employees really want is advancement opportunities. I once conducted a survey with a colleague in which we asked Canadians, “All things being equal when it comes to salary, benefits, and location, which of the following factors is most important when considering a new position?” The most popular answer was “Opportunities for advancement” (followed by “a relaxed fun working environment” and “On the job training, learning opportunities”). And separate research shows that lack of advancement opportunities is one of the main reasons that top talent will leave a business. Why? Nobody wants to feel that they are stuck on a hamster wheel, destined to do that same thing day in and day out for all eternity. Everyone wants to feel that they are moving forward and upward in some way.
In our research, we also found, however, that more than 80% of employees have to move on to move up, because companies are not offering these opportunities. A vast majority of companies will look outside of their organization to fill senior roles rather than look at promoting from within.
This isn’t just a turn off for potential employees, it costs you and your business in revenue.
Why a lack of succession planning and internal promotions costs you
It generally costs less to promote an existing employee than it does to recruit, hire and train a new one. Recruitment costs money, and so does onboarding. An internal promotion is already familiar with your company culture, mission, and values, whereas an external hire needs to be brought up to speed.
Moreover, a study by Matthew Bidwell from the University of Pennsylvania’s Wharton Business School found that external hires perform worse in their first two years on the job but are paid 18% to 20% more than internal employees doing the same job. The researchers also found that external recruits were 61% more likely to be fired or laid off and 21% more likely to quit than internal ones.
Also, separate but similar research shows that lack of advancement opportunities is one of the main reasons that top talent will leave a business. If you don’t create some sort of career pathing, your employees will leave you. They have no choice unless they want to stay in the same role forever. Creating these pathways will also generate a positive and dynamic environment in your workplace. People are more motivated to do their best when they feel there is somewhere to go.
We’re not suggesting you eschew external hiring entirely. New blood is required to keep an organization fresh and vital. But when you do have a bright, shining star on your team, it’s smart to keep them around. And you’ll want that person to tell their equally talented friends about the great place where they work with awesome advancement opportunities. Succession planning will help. Don’t let them get away.