Let Your People Go

By Joe Mullich

Feb. 23, 2005

Promoting from within brings plenty of documented benefits–higher employee engagement, better morale and lower turnover, for starters. So, with all the good that comes from internal mobility, who could be against the notion? Often, it is the boss who doesn’t want to lose his best workers to other departments.

    “The high-potential people you want to move to better positions are likely to be the ones their boss most wants to keep,” says Rich Wellins, senior vice president, global marketing, at the consulting firm DDI. “They have a built-in bias against letting them go that is sometimes manifested by not letting the person take on development assignments.”

    A recent survey of 1,400 people randomly chosen by found that 63 percent of workers who had a bad relationship with their boss often saw little opportunity for advancement. A lot of the dissatisfaction over lack of career opportunities, experts say, will be revealed by employee surveys. But sometimes companies don’t find out until anexit interview when a high-potential employee is heading out the door to a competitor.

    Certainly there are many bosses who do promote their workers’ careers. “In the 1980s, I worked for a boss who took pride in and kept track of the number of people who were promoted into and out of his office,” says Pat Bridger, vice president and senior human resources officer at CNA Insurance. “He always wanted to be on the giving side. And because of that, everyone wanted to work for him, even though in those days that meant having to relocate to another branch.”

    Conversely, she says, “no one wanted to work for the managers who didn’t want to let their people go–who didn’t take the time to develop them.”

    But given the importance of employeeinternal mobility, that may not be something to leave to chance. Companies are finding it worthwhile to set up systems that encourage managers to play a stronger role in advancing their underlings’ careers, or that at least prevent managers from hindering workers who want to transfer.

    Part of this is a matter of giving employees more power over their own career development. Take Deloitte Consulting. In 2002, the worldwide consulting firm implemented an intranet-based career counseling site that all employees could contact for confidential one-on-one advice. The company’s initial fears that managers would try to hang on to their best people dissipated after its top leaders conveyed the ongoing message that internal mobility was good for everyone.

    Many companies have implemented specific policies that encourage movement. At Lands’ End, for example, any employee can ask to work in another department for a two-week period and, if successful, can then transfer to that department. “They’d rather transfer someone than lose them,” says Bob Nelson, president of Nelson Motivation Inc.

    Nelson gives the example of Duke Power in Charlotte, North Carolina, which lets any employee post his or her job for other employees at an equal grade level for a potential swap. Duke workers still need the approval of their managers to make the exchange, but experts say these kinds of policies create a corporate mind-set that encourages managers to be more open about movement across departments.

    Some companies, Wellins notes, set up “acceleration pools” of high-potential employees. These employees get extra attention in terms of development, mentoring and assignments with the assumption that they can be ready to move horizontally or vertically into new positions when the company needs them. “These companies make it clear that those high-potential people’s careers belong to the company, not to the department managers,” he says.

    Adobe Systems, the software maker, rotates employees through upper-management positions to encourage learning, mobility and personal growth. In one year, 29 percent of employees had such a stint, according to Nelson.

    Other firms find that they need the stick as well as the carrot to encourage managers. Bell Canada initiated a policy that employees could move to other positions within the company without the approval of their managers if they had completed 18 months on the job and earned a satisfactory approval rating. The company also implemented another policy that kept managers from dragging their heels on transfers. All eligible employees had to be released to their new positions within 30 to 45 days, unless that would negatively impact customer service.

    Some companies are even more liberal about transfers. CNA Insurance, for example, used to have a policy that employees had to be in their positions for six months before they could move to another. “Now even a new employee can come into a job and post out in two or three months,” notes Bridger. “There is no restriction, though generally someone needs six months to learn a job.”

    In 2003, iLogos Research surveyed more than 70 global corporations and found that 76 percent said that an internal mobility program was a key factor in improving employee retention. SAS Institute, in Cary, North Carolina, for example, has no formal rules that prevent movement, and as the head of human resources has said, “We’re not going to tell people how to direct their careers. Employees can leapfrog around the organization to pick up the skills they need.”

    Partly because of this attitude, before the dot-com bust, SAS had attrition rates of only 4.5 percent a year in 2001, which was about 15 to 25 percent less than the average for companies across the country in Silicon Valley. Stanford University professor Jeffrey Pfeiffer says the low turnover has saved the company $75 million a year.

Motivating the manager
    Eventually, a heavily promoted attitude in favor of internal mobility will spread throughout the company, though there may always be holdouts.

    “If you think about it, in the typical business situation, a manager who has reached the point where employees do their jobs well has little motivation to disrupt that equilibrium,” says Liz Ryan, a workplace expert and founder of WorldWIT, an online networking community for women. “Even if the employee would appreciate the promotion and the company could benefit, the manager would be stuck hiring and training a new person. So what’s in it for a manager to move people up the ladder?”

    Experts suggest a variety of approaches to provide the needed incentive:

    Include in each manager’s annual performance evaluation a metric based on employee development, which represents 25 percent to 50 percent of the total measure. Ryan suggests a few questions that such a review should probe: How did you as a manager prepare your people for future promotions? Have you outlined career paths with each of your team members? What did employees learn at their jobs for the first time this year?

  • Encourage managers to develop their own mini succession plans. If they have a good backup in the pipeline, they will be less reluctant to let someone go.

  • Create an award for the most effective mentoring manager in your company.

  • Make it very easy for employees to apply for positions in other departments. Suggestions: make salaries for transfers similar to those an external employee would get; use simple application forms; and allow workers to apply for and interview for any position without approval from anyone.

    “Think about it. You wouldn’t ask anyone’s approval to apply for a job on,” Ryan says. “So make it painless for employees to find opportunities elsewhere in the company, even if their own manager isn’t supportive.”

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