From Brent’s Desk: Your Next Key Executive: Build or Buy?
It is a little known fact that the classic Benjamin Franklin quote we all know so well was originally “There is no sure thing but death, taxes, and unplanned vacancies.”
OK, that’s not a fact, little known or otherwise. But it is true and every company should plan for the day a key executive must be replaced. Whether it is for other opportunities, a spouse’s job move, retirement, illness or any of a number of reasons, people will leave.
Much of the strategy behind replacing key people revolves around “build or buy, decisions” that is whether to develop people to promote from within or to bring in fresh talent from the outside. There is no pat answer to this. There are times when an outsider might be preferred for a fresh look at a company’s strategy and direction, though it’s a mistake to automatically assume that can’t be accomplished by an “insider.” We have seen many talented middle management people who are full of ideas and inspiration and need only the position and authority to make them happen.
There are other times when it may make sense to maintain the continuity that can be provided by an insider. That’s no sure thing either; Apple CEO Tim Cook, for instance, has had high-profile missteps and mixed reviews in his enormously challenging effort to replace Steve Jobs.
In short, we’ve seen both strategies succeed and fail. The biggest calamities, though, can arise when a company hires from outside because it has to rather than because it’s the best choice.
It is shortsighted not to develop the people you have to help prepare them for the next step in their careers. Those with drive will leave anyway if they see no career path at your company, and it severely limits a company’s options if its only choice is to routinely hire from outside.
If you have people capable of advancing to the next level in your company but make a strategic decision to bring in an outsider for a valid business reason (as opposed to having no other choice), you have options in case the outsider doesn’t work out. We have seen several situations in which a talented, prepared insider was able to right a ship after a “star” from the outside ultimately failed to fit the organization’s culture or needs.
Developing people for the next step in their career does put a company at risk for losing them to other opportunities; I have joked with Geoff Chinnock, my partner in Morrison, that one way to prevent this is to employ people that no one else would hire. In our view, though, hiring and developing talented people is a lot less risky than having no viable internal resources to fill a key absence.
About the Author
+Brent Morrison is managing principal at Morrison, providing business valuations, business planning (including budgeting, cash flow forecasting, strategic planning), feasibility studies, interim executive CFO services, competitive grant writing and special projects that don't fit into any conventional category. You can contact Brent directly at email@example.com or via telephone at 530-893-4764 ext. 202.