Going outside

Companies often go outside their ranks to recruit management talent, and they may have good reasons for doing so. But William Byham, president and CEO of Development Dimensions International, points out that they often face serious pitfalls when it comes to bringing in people from outside the company.

Here’s why:

  • The new person won’t be imbued with the same feelings of loyalty to the company that a veteran employee might harbor and, therefore, may be more likely to jump ship when another opportunity comes along.

  • Long-time employees can be demoralized, their loyalty to the company eroded. That can make the new executive’s job that much more difficult.

  • It costs big money to recruit an executive. DDI has found that the first-year cost of replacing an executive can run into hundreds of thousands of dollars.

  • Odds that a recruit from outside the organization will succeed are about even. Byham says studies indicate that outsiders fail about half the time.

Ray Marano