Whom Do You Hire – and From Where?

It’s not as old as the chicken-or-egg question, but it’s certainly more meaningful to the success or failure of a business. When it comes time to add more managers, should you look outside or promote from within?

Reasonable arguments can be made to support either decision.

One variable that is undisputed, however, is the importance of the role of managers in any organization. The people you hire as managers, noted Gallup CEO Jim Clifton, will constitute the biggest job-related decision you’ll make. Get it wrong and you’ll have a hard time undoing the damage.

Likewise, management guru Peter Drucker reminded us that worker productivity is the manager’s responsibility. A survey by Randstad agreed and found that 80% of employees believe their relationship with their direct supervisor impacts their level of job engagement.

Unfortunately, only 18% of current managers possess the talent required to succeed in their role, and the most common reason employees give for quitting is their manager.

Collectively, it gets worse: a Gallup study estimates that unengaged and disengaged managers cost the US economy over $319 billion annually.

Managers bear a heavy burden in any organization. It stands to reason, then, if you want to improve your organization, you’ll need to start by improving your managers.

A Good Worker Does Not a Good Manager Make, Necessarily

When it’s time to add to the management team, first decide whether your needs will be better met by an outside hire or by promoting from within.

A Matthew Bidwell study show that an external hire is usually more qualified than an internal employee, at least initially. Yet outside-management hires cost more, score lower on performance reviews and are more likely to ultimately be fired than those promoted from within.

Granted, workers appreciate a chance to advance through the ranks. A BlessingWhite survey found that nearly 30% of surveyed workers cited lack of career opportunities as the key factor that would make them think about leaving their current job.

Although promoting from within is cheaper, faster and can foster staff retention, don’t assume it will be an easier process.

This is especially true for people serving as working or hands-on managers. They may excel at their job without insight as to whether they’re motivating people, managing compliance or meeting their other roles and responsibilities.

Managers and the Law  

As admirable as promoting from within might appear, there’s substantial legal risk involved.

For instance, much of what we see in the area of employment law isn’t intuitive. Managers must be skilled at understanding the issues they face and how those issues impact their teams. New managers must deal daily with a variety of employment issues that they didn’t have to know or worry about prior to their promotion.

A new manager might come across an issue involving the Fair Labor Standards Act. Or it might be a workplace harassment matter. For harassment issues, the manager would need to observe and identify when the no-harassment policy is not being followed. This is neither intuitive nor easy.

Because your managers are essentially the organization, what they do – or don’t do – about a sexual harassment incident can legally bind your business.

Not only is it important for managers to know and be able to observe when violations of the no-harassment policy occur, they also must be willing to recognize or report any other violations of the law. Managers who neglect or mishandle this responsibility create liabilities.

Sexual harassment law also treats managers differently than regular employees. If a manager is involved in sexually harassing behavior and then takes a tangible employment action (such as discipline), the action could be found to violate Title VII of the Civil Rights Act. Your organization could face significant liability as a result.

Even if upper management didn’t know what that manager was up to, as long as he or she engaged in misconduct, the manager could create liability with no possibility of an affirmative defense. If that happens, the company is on the hook.

Whether you’re hiring from the outside or within, make sure managers understand the law.

Position Managers for Success

New supervisors might find managing people is a lot harder and more challenging than selling or servicing products.

Employment law can be a potential minefield, especially for new managers. Compliance training can provide them the clear path they need to truly succeed.

Toby Graham is marketing director at KPA, a provider of online training and on-site audit/loss control services.