Talent Risk – The Illusion of the “Best Athlete”

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Talent Risk – The Illusion of the “Best Athlete”

Big Ben Carter dunking the pillOrganizations are overlooking their best candidates for job openings and leadership positions while adding hidden costs and risks to the firm in the process.  Many hiring managers and human resource recruiters have accepted the often stated illusion of hiring the best athlete for the opening which too often is perceived to be an external candidate with more experience from a competitor firm. 

In a recent study by Matthew Bidwell, Wharton School’s Penn State University, “external hires will initially perform worse than workers entering the job from inside the firm and have higher exit rates, yet they will be paid [18%] more, on average, and have stronger observable indicators of ability as measured by experience and education.”  The best athlete myth is called the Halo Affect by cognitive scientists.  External talent is perceived to possess skills not evidenced by empirical data.  

Blame professional sports for creating many of these illusions.  We see our favorite sports teams pay millions to athletes in a never ending search for the “right mix” of position talent to win the national championship of the team sport.  What we don’t fully understand is the failure rate of this flawed philosophy or the poor odds of success in this strategy. 

Professor Bidwell’s study points out that “workers promoted into jobs [cost less] and have significantly better performance for the first two years than workers hired into similar jobs and [have] lower rates of voluntary and involuntary exit.”  Few firms calculate the risk or cost of turnover of external hires but it they did they would be shocked by the negative results.

So how does an organization overcome this bias in talent management and avoid these inherent risks? 

Reallocate resources into internal staff development to acquire the perceived skills gap that is missing.  Organizations must consider human resources a strategic asset that is refined and developed over time.  Behavioral science has established that it takes approximately 10,000 hours to perfect a skill or become an expert.  Manage those hours to the benefit of the firm!  New and existing employees should have a path to expertise that ensures the organization is creating the talent it will need for the future success of the firm.

Talent risk is a self-inflicted wound that can only be overcome by changing how organizations perceive its internal talent.  According to a study by CareerXRoads, 58% of new job openings were filled by external hires.  While it is not always possible to fill existing openings with internal staff its takes new hires 2 – 5 years to become proficient in their new roles in any organization.

Talent risk is a strategic risk every firm can manage.  Firms can save money and build sustainable risk cultures by hiring and promoting its internal talent.

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