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“Growing Your Own” Leaders? Here’s How to Make it Fruitful

By Evan Sinar, Ph.D.

Evan Sinar, Ph.D. For many organizations, a “grow your own” strategy—that is, filling most leader roles with capable internal candidates—is an aspiration, a hallmark of corporate culture, and a well-deserved source of company pride. Those that pursue this approach and execute on it well are less susceptible to the expense, uncertainty, and time to find high-caliber leaders externally. These companies also send a clear, “we look internal first!” message to employees, clarifying that paths to growth won’t need to involve looking elsewhere, fostering engagement, and reducing turnover risk of valued talent.

While each of these is a critical reason why a company would state their commitment to prioritize current employees for staffing leader positions, they’re not enough to demonstrate either the impact or how-to for this approach. For a company deciding how aggressively to head down (or continue down) this path, three important questions remain:

  1. What is the impact of a “grow your own” strategy on key talent outcomes?
  2. What specific talent practices need to be in place to make this strategy work?
  3. Is there a tipping point where it’s possible to actually select too many leaders from the inside?

In a research project spanning 1500 global organizations, we gathered data on each of these questions, to gauge if the instinctive appeal of growing leaders internally is matched by its payoffs and in the unique ways that these companies manage their talent.

First, we found strong links between a higher rate of internal leader hiring and three high-value talent outcomes, shown below; companies hiring 80 percent or more of their leaders internally were 2.2 times more likely than those hiring fewer leaders internally to have strong leaders currently in-place, 3.8 times more likely to have a high success rate of leaders once placed in their new roles, and 5.5 times more likely to be able to immediately fill the majority of their company’s critical positions with internal candidates.

Improved Talent Outcomes for Organizations with a Higher Rate of Internal Promotion

“Growing Your Own” Leaders?

This trend was particularly clear for post-hire success of newly-placed leaders:

  • 48 percent success rate for companies filling 45 percent or fewer leader positions internally
  • 65 percent success rate for companies filling 50-75 percent of leader positions internally
  • 72 percent success rate for companies filling 80 percent or more leader positions internally

However, this trend didn’t hold up in every case; some companies hiring leaders mostly from the inside still weren’t getting the success rates they wanted, leading us to our second question, about the “how-tos” behind this approach. We found that even among these internally-focused companies, the most successful did five things differently:

  1. They link leader performance expectations to business strategy (on average, improved leader success rate by 12 percent versus not having strong links in place). They confirm that organization strategy fully cascades down to leader performance expectations. Their leaders consistently know not only what they’re accountable for but why, in the language of the business, and can channel this clarity through to their own employees to keep everyone motivated toward a common set of goals.
  2. They clearly define the competencies needed to be successful as a leader (improved leader success rate by 10 percent). They don’t rely on loose, subjective definitions of leadership effectiveness. They are unfailingly precise about the skills, traits, motivations, and experiences leaders need to excel, and align performance and hiring systems to make sure that every leader either has these before starting, or have a development path to close any gaps.
  3. Their leaders practice and receive feedback on key skills with their managers (improved leader success rate by 8 percent). Their leaders have ample opportunities to try out what they’ve learned with a manager, locking in learning in a safe setting, making sure that no learning and development opportunities are wasted.
  4. They make leadership competencies the foundation for multiple talent systems (improved leader success rate by 8 percent). They avoid having one set of standards for performance management, another for compensation, yet another for identifying leaders to place in high-potential pools, and so on. All systems feed off one another around core competencies, and as a result, their whole is greater than the sum of their parts.
  5. Their leaders regularly review development plans with their managers (improved leader success rate by 6 percent). This is a simple but too-often neglected step, and “regular” is the key term. These companies make leader development ongoing and proactive rather than a once-a-year, “so, how do you think you’re doing?” conversation tied to a rigid performance management cycle and scorecard.

Finally, we looked at whether it’s actually possible to focus too much on internal leader hiring. Although overall, success rates increased the more often leaders were promoted from within, we did find a point of diminishing returns. Past 80 percent, the advantages of additional internal hiring were minimal. For companies operating in ambiguous and complex environments requiring regular infusions of new perspectives and ideas, the risks of an exclusively, “internal at all costs” internal-focused leader staffing strategy (as compared to one that is only largely so) may outweigh the substantial benefits.

Growing one’s own leaders is a laudable goal that many companies pursue but few achieve. Our research shows that while the benefits of this approach can be massive, they are far from guaranteed. Increase the odds by recognizing the risks of an exclusive reliance on internal candidates and most importantly, by pairing a top-down commitment to internal hiring with a bottom-up implementation of the specific talent practices showing clear links to higher leader success rates.

Evan Sinar, Ph.D. is DDI’s Chief Scientist and director of DDI’s Center for Analytics and Behavioral Research (CABER).

For more information about the Global Leadership Forecast 2014|2015 research, including 25 highly-actionable findings about the current state of leadership, an evidence-based roadmap for leadership development, a scoreboard of 20 common talent management practices, and global benchmarks for 11 metrics about leadership talent, see http://www.ddiworld.com/glf2014.

Posted: 10 Nov, 2015,
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