It's a common threat and no organization is immune to its pull - but nowhere are its hazards more apparent than in small-to-medium sized businesses (SMBs).   To what looming peril am I referring, what danger that executives should be mindful of - even careful to avoid?   It's not the latest menacing security virus or a career ending IT investment gone bad, but instead an every-day occurrence that has the potential to be both a very positive and negative development.   I am referring to the often overlooked trials and tribulations of home-grown managers.

Promoting high-performing employees to the ranks of management - what we all know as "hiring from within" - is something that many organizations make an effort to do.   Such practices are rightly considered a vital part of an organization's promised career development path.  The rub is that depending upon the company's size, culture and resources, this policy can actually work to undermine the organization's success (and that of the individual).

So why is it that SMBs are more susceptible to falling victim to this benign hiring practice?  Why would this common-sense approach to hiring and promotions actually work to undermine performance?  The answer has everything to do with what happens after the promotion takes place - not the actual promotion itself.

The Devil You Know vs. the Devil You Don't

Today, organizations of all shapes and sizes are charged to do more with less.  With staffs running lean, it's difficult for companies to absorb the loss of any key employee, particularly a manager.  Because the market for highly qualified managers is tight - and those that are available are expensive - most SMBs are motivated to look internally, to existing employees, to fill management vacancies.  The most common approach to selecting this pool of candidates is identifying the department's high-performers or established subject-matter experts, and then selecting the one that seems best suited to transitioning from employee to manager.  While this approach seems logical, I'm reminded of the saying, "The best coaches are usually not the best athletes."  Just because someone is great at a certain job function does not mean that they have what it takes to be great at managing others to achieve similar - or better - results.

Even if the best internal candidate falls short of the company's preferred experience levels, a decision to promote is often made.  The reasoning goes something like this: What the candidate lacks in skills and experience, they make up for in understanding the company's culture, products, processes, and people, which contributes to a quicker transition than bringing in someone trained as a manager, but not well versed on company-specific factors.  In short, the decision to hire within sometimes is made because 'the devil you know is better than the devil you don't".

 Why the company selected a home-grown manager, though, is less the issue then what does or doesn't happen next - the next steps will determine whether this new manager will succeed.   

Make Lemonade

For companies that aim to hire managers from within, regardless of why, the encouraging news is that great results can be achieved - but only if the organization commits to truly developing the talent and management skills of these new managers.  It's true that some high-performers can - and do - make a successful transition and grow to become effective managers.  But, my experience tells me that this is more the exception than the rule.  Let's not forget the employee themselves.  As their excitement over the vote of confidence the promotion represents dissolves into stress and fear that they can't succeed, the employee can become quickly disheartened and begin to think their future lies elsewhere.  If it goes that far the company is right back to square one.

Back to my earlier point: SMBs are most vulnerable to this hiring practice because, though well intentioned - the 'luxury' of formal management training programs does not exist.  Large corporations devote significant budget toward internal training and leadership development programs, and consequently their practice of hiring from within - essentially grooming their next generation of leaders - produces exceptional results.

The challenge is that for SMBs to emulate this practice, and to do so with similarly positive results - requires SMBs to fill the management training void that typically exists within these lean operations.  They must, in short, view management training and leadership development not as a luxury, but as an essential component of their successful business operations.  To do anything less in the hyper-competitive climate of the modern American economy invites a painful and expensive HR lesson.

Federal Facts II:

By Kim Kisner