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The East African : Jun 7th 2015
The EastAfrican 42 BUSINESS JUNE 6-12,2015 MANAG E R Posting o≥ sponso≥ship: Which is the best way to hi≥e f≥om inside you≥ fi≥m? COMMENTARY JR KELLER “Organisations should think seriously about expanding their use of posting. An added benefit to posting may be that it creates good bosses, too.” A few years ago, I started to notice an interesting trend: Frustrated with finding and integrat- ing good external candidates, organisations were beginning to invest increasing amounts of time, energy and money into developing their internal hiring capabilities. There is reason to believe that these investments will pay off. Recent research by my Wharton School of Business colleague Matthew Bidwell, for example, shows that internal hires routinely outperform external hires. Internal hiring, however, is not foolproof. A study by the Corporate Executive Board found that 40 per cent of internal moves involving high-potential employees end in failure. And these are presumably the employees whom the organisations know best. My colleagues and I combed through the literature to better understand what is going on. We found that while advice and research about hiring from the outside is easy to find, information about internal hiring can be difficult to come by. So we set out to find answers by analysing the two primary ways internal hires are made: Posting and sponsorship. Posting is a formal, market- oriented process in which a hiring manager posts an open job to an internal job board and invites internal candidates to apply. While less than half of companies posted anything other than blue-collar jobs in the mid1980s, that figure rose to 60 per cent in 1999 before exploding to over 95 per cent in the mid-tolate-2000s. However, few internal hires are made that way: Although many companies have adopted policies encouraging managers to post open jobs, few require it, and no state or federal laws require firms to post jobs internally. Managers therefore typically have the option of sponsorship, an informal, relationship-oriented process in which a hiring manager fills an open job with a candidate known through a personal connection. As a result, posting and sponsorship operate side-by-side as equally viable ways to identify potential internal candidates. But which process is better? We expected to find that sponsorship would, on average, yield higher-quality hires. After all, research has shown that people typically have better information on colleagues they know well than those they don’t, which should enable them to make better hiring decisions. This is one of the primary reasons organisations rely so heavily on referrals when hiring externally. We found the opposite. Using data on more than 11,000 internal hires made between 2007 and 2012 in a Fortune 100 firm, we found that candidates hired through internal postings outperformed sponsored internal hires on nearly every conceivable dimension. They received higher competency and contri- managers must still select which information to use and which to ignore. Work by Max Bazerman and Dolly Chugh on the concept of “bounded awareness” has identified two common decision-making errors related to managers’ use of information. First, managers often overlook information that could improve their decision-making. The mechanics of posting require a manager to create a formal job description, which in turn establishes a set of criteria against which to evaluate potential candidates, whereas sponsorship lets managers informally mould the job requirements around their preferred candidate. Having a set of formal evaluation criteria increases the likelihood that a hiring manager will be more likely to seek out information that allows her to evaluate a candidate’s ability to perform well in the job. Second, managers often allow information irrelevant to the decision at hand to influence their choice. For example, the fact that a candidate may share similar interests as the hiring manager may bias the decision even if it has little relevance to the candidate’s ability to do the job. Posting reduces that bias by embedding a unique form of accountability into the hiring process. And because it forces managers to rely on objective information, posting can help minimise any sense of unfairness that could decrease motivation among other employees. We also found that the post- Candidates hired through internal postings are less likely to quit or be fired during their first two years on the job. bution ratings during their first year on the job, and were both more likely to be considered top performers. Internal candidates hired through internal postings were 20 per cent less likely to quit or be fired during their first two years on the job than sponsored internal candidates. Why does posting lead man- agers to make better internal hiring decisions? For starters, even the most connected managers in large organisations cannot be expected to know about every potential candidate for an open job. By enabling employees outside a hiring manager’s personal network to present their qualifications, the posting process reduces the likelihood an exceptional candidate will be overlooked. In addition, while hiring managers possess more information on candidates in their personal network, access to information alone is not enough to ensure a good decision; ing process holds tremendous promise for transferring valuable knowledge across internal boundaries. Posting is substantially more likely to facilitate moves across divisions, functions, states and cities; it even increases the frequency of moves across buildings within the same city. Employees also feel more em- powered to negotiate their salaries when moving through posting, which may help to reduce salary discrepancies. JR Keller recently received his PhD in management from the Wharton School of Business Why today’s teens a≥e mo≥e ent≥ep≥eneu≥ial than thei≥ pa≥ents 70pc A JOINT REPORT NYT News Service OUR TEENAGE daughter made plans to go to Korea for two weeks this year. Which meant that she needed to come up with nearly $3,000. So she decided to become an entrepreneur and start a baking business to finance her trip — one $5 loaf of home-made bread and $12 pan of cinnamon rolls at a time. This work is different from the kind that we did as teens. One of us (Whitney) worked as a cashier at a Burger Pit in San Jose, California, while the other (Roger) worked on a berry farm in southern Maryland. But, among our daughter’s peers, becoming an entrepreneur appears to be the rule, not the exception. The abysmal job market for American teenagers is forcing many of them to think differently about work. According to the US Bureau of Labour Statistics, the teen employment rate from 1950 to 2000 hovered around 45 per cent, but since then has steadily declined. As of 2011, only 26 per cent of teens were employed. Certainly, there are many reasons for this drop. They range from a struggling economy, to competition from older workers, to time conflicts, to the fact that many teenagers just don’t want traditional “teen jobs.” A quick poll of our peers revealed that about 60 per cent of them had traditional teen jobs when they were younger: Flipping burgers, waiting tables, office work that ditional teen jobs. A whopping 70 per cent of these children are best described as self-employed, whether that means selling products on eBay or teaching piano lessons. Today’s teens are getting a com- The percentage of children described as self-employed — selling products on eBay or teaching piano lessons included typing, filing and reception duties. But when we asked our friends what their children do today to earn money, we discovered that only 12 per cent of them have tra- pletely different work experience from the one we had, which is better preparing them to be innovators. The media is playing an impor- tant role in this shift. Television shows like ABC’s Shark Tank featuring young entrepreneurs, as well as local and national media coverage of feel-good stories about successful teens have changed the way our youth view work. In fact, according to a 2011 Gallup poll, 8 out of 10 children want to be their own bosses, and 4 out of 10 want to start their own businesses. A unique confluence of circum- stances — a tough economy, an increasingly competitive college market, a changing technological landscape — is creating a culture of innovators. Needing to, and having the op- portunity to, shape themselves into something quite different from their parents, today’s teens instinctively understand personal disruption. Some people call post-millennials Generation Z, but we think a more appropriate moniker would be Generation Innovation. By Whitney Johnson, an author, and Roger Johnson, a former assistant professor at the University of Massachusetts Medical School.
May 31st 2015
Jun 14th 2015