The foundation of a successful transition – whether you’re planning to someday sell to a third party or pass the business down to the next generation – is having the right people in the right positions within the company. In an ideal scenario, you would have top performers filling every position, and the company would continue to run itself after the transition occurred. Of course, this isn’t always realistic – but it should be an ideal that you’re committed to striving towards.
The time and money investment it takes to train people and make your bench strength stronger can be a concern. Take this conversation between a company’s CFO and CEO as an example:
CFO: “What happens if we train them and they leave?”
CEO: “What happens if we don’t and they stay?”
We advise our clients to look carefully at the long-term benefit of investing in their key employees versus the risk they run by not having the best bench strength to support the goals of the company. Of course, this doesn’t mean that you can (or should) pay top-dollar for every person who walks through the door – that’s not practical or realistic for any business. However, investing in the long-term development of your key players – the future of the company – will put the business in a better position for success with a strong team to back it up.
Choosing to invest in your employees by building a talent pipeline internally has three key benefits:
- Hiring for high-level positions is expensive
Improving your management team by hiring externally for a high-level position is expensive; you aren’t going to find a management-level candidate who is content making a mid-level salary that isn’t too far off of an entry-level offering. The skillset and the level of expertise a management-level candidate brings to the table is likely worth the higher price tag to an extent – but you’re also assuming they will come to you with a long-term commitment to the company and be a good cultural fit. Developing employees internally, even with the cost of training and development, can work out to be better bang for your buck in the long run.
- Developing current employees shows your commitment to the team
Employers send a strong message to the company when they take the time and money required to invest in their employees. Of course, this doesn’t mean you should promote everyone tomorrow, but taking training and development opportunities seriously and encouraging your employees to take part in continuing education can go a long way. People like knowing that they’re valued – and showing a genuine interest in helping them achieve their goals is a great way to do that.
- Making great people even better
Developing career paths for existing talented employees means that you’re working with people that already live within the current culture and are committed to the company. If you already have a great team around you, why not make them even better?
Many business owners get comfortable with the status quo; they have a good core group of employees and things are running fine. Challenging yourself to develop a stronger talent pipeline through your key employees not only puts you in a great position for success in the long-term, but also allows you to benefit from having a stronger team in the short-term. It’s a win-win… who doesn’t like that?