The following is an excerpt of an article I wrote, titled “Leadership Observations of a Management Consultant.” I will be releasing more excerpts over time.
The Dangers of Promoting From Within
There has been much debate over the years about whether the best qualified candidate for a leadership position comes from within an organization or outside to an organization. Those who favor internal candidates cite the individual’s working knowledge of the organization. Those who favor external candidates cite an unbiased, neutral perspective and tout the benefits of having external experience infused into the organization.
For the purposes of this discussion, let us define internal candidates as candidates who currently reside within the organization they seek to lead, and external candidates as candidates that reside outside the organization they seek to lead.
Promoting an internal candidate, job description qualifications aside, can potentially be the most destructive thing an organization can do. To explain this position, consider the following scenario.
Candidate A has worked in the cost accounting department for a number of years. They have moved up the ranks from Junior Cost Accountant to Staff Cost Accountant to Senior Cost Accountant. Candidate A understands the policies and procedures of the cost accounting department very well, and has occasionally substituted for the manager of the department when that manager has been away from the office. The manager of the cost accounting department takes another position within the company, leaving the manager position open. Candidate A applies for the position, and after much consideration, is selected for the position based on performance and knowledge of the organization.
Over the following years, Candidate A continues to receive promotions and move up within the Accounting and Finance organization. With each promotion, additional departments fall under Candidate A’s leadership. Candidate A knows that all of the accounting departments work together, but because Candidate A came from cost accounting and never worked in the other accounting departments, Candidate A is not completely clear on how the departments work together or how work flows from one department to another. By the time Candidate A reaches the top of the Accounting and Finance organization, the leadership knowledge of how the Accounting and Finance departments work together, and how the Account and Finance departments work with other parts of the organization, is lost. This phenomena is knows and the “Cone of Ignorance.”
An individual who moves straight up the career “ladder” takes the knowledge of where they started as their primary working knowledge, but they are missing that critical knowledge of how their department fits into the bigger picture. As they continue to move up, the bigger picture gets lost. And, since the leader of the organization is tasked with ensuring that those under their leadership understand how their organization fits into the larger organization, the knowledge within the organization of the bigger picture is also lost. This is how silos are created, and it is entirely the fault of the leader, or more specifically, the person who promoted the leader.
How to Break the Cone of Ignorance
Earlier, I stated that promoting an internal candidate, job description qualifications aside, can potentially be the most destructive thing an organization can do. However, I do not want to give the impression that only an outsider can effectively lead an organization. The fact of the matter is that the best candidate for a position is someone who has both internal and external experience. The internal experience helps the candidate understand the business of the organization. The external experience helps the candidate understand how the organization fits into the larger organization and what the needs of the interfacing organizations are.
I had the pleasure of working with a client in the wireless communications industry that was facing this sort of situation. Over the years, they had become a very silo-based organization. None of the departments had a clear understanding of what the other departments did or how they impacted each other’s ability to successfully satisfy the customer. We completely restructured the organization to be more customer-focused, but worried about the silos creeping back into the organization. To deal with this concern, we also changed the career path and promotion criteria for all jobs within the company.
For this particular company, each job family consisted of three levels of individual performer (junior, staff, and senior), and three levels of management (supervisor, manager, director) before reaching the officer level.
This company decided that, while it was possible for an individual to move up the individual performer ranks, no one could be promoted from senior individual performer to supervisor without first working in one of the other functional areas of the company. This means that a senior accountant would have to work in either sales, operations, or distribution before they would be eligible for the accounting supervisor’s job. This would ensure that all supervisors had a working knowledge of another organization, and more clearly understood how the two organizations needed to work together for the good of the customer.
The company when even further by deciding that no supervisor could move into a manager position without having worked in two other functional areas of the company. This means that if the accounting supervisor had worked in operations to moved into the supervisor position, they would have to transfer into sales or distribution also before being eligible for the manager position. To be eligible for a director position, the individual would have to work in three other functional areas. This would help ensure that no one could reach a senior leadership position without a working understanding of how all of the departments needed to work together to satisfy the needs of the customers.
These rotational assignments could be taken while the individual was still an individual performer, but more often the individual would continue to take rotational assignments after they had moved into a supervisor position. Each of the rotational assignments defined by this company had to be at least one year in length and the assignments were designed around preparing the individual for future leadership positions. A person who was a manager in one department would not necessarily have a rotational assignment as a manager. The focus was on learning about the new organization and how it interacted with other organizations to satisfy the customer.
The transition into this new model was handled very carefully, since, by the new definition, almost none of the leaders of the company were eligible for their positions. Individuals were chosen for the new leadership positions with the understanding that they had a fixed period of time to take the necessary rotational assignments to become eligible. Anyone not fully eligible for his or her position at the end of the fixed period of time would be removed from the position and reassigned.
As illustrated by this example, leaders who understand not only the inner workings of their own organization but also the inner workings of other organizations and how these organizations fit together, make much better leaders. They are able to make decisions with an understanding of the impact that those decisions will have on other organizations. And, they will be better able to coach and mentor their subordinates to have a more cross-functional perspective in how they approach their own work.