In the movie the Wizard of Oz, Dorothy finds herself marooned far from her native Kansas. After vanquishing not one, but two witches, she watches her companions (the Tin Woodman, The Scarecrow and the Cowardly Lion) all receive their life long wishes while Dorothy still finds herself stranded in the Land of Oz. It is only after she is alone again does the good witch Glinda let her know the ruby slippers Dorothy has been wearing since the beginning of her journey will grant her wish. It is then Dorothy realizes “there is no place like home.”
I think of this story when I see companies looking outside their ranks to fill their key positions. I listen to leaders on how they need “fresh ideas”, “more experience”, or “great leaders” and wonder if they are ignoring their home-grown talent for “greener pastures.” Many of these narratives have the added dimension of an expectation that when this new person comes on board, everything will be better and/or fixed.
In the past three weeks, I’ve shared three types of #2 or second-in-command leaders in this blog:
The fourth (and last) type is the Lifer or Trainee. The Lifer is typically a long-term employee who started at an entry level position and has worked their way into the #2 position by strong in-company performance and their particular knowledge of the industry.
I have saved the Lifer for last because he or she most often is not only a long-term employee but also some combination of an Entrepreneur, a Fixer or a Professional. Because the CEO or owner typically only sees the Lifer as a long-term employee or trainee, the Lifer is also the most often overlooked #2 leader.
Understandably, in the beginning – a new entrepreneur may only have himself and therefore, it only makes sense to look for reinforcements from the outside to fill their team. However, once the company has developed some stability and growth, it becomes possible to have long-term employees move into leadership positions.
Properly developed and matched to the needs of their position, the Lifer second-in-command has the best chance for achievement and longevity – both key attributes to the overall success of company leadership. And for the company that is looking to further its current prosperity, who better to help than someone who is highly vested in the company culture and has a strong understanding of the customers and industry you are serving?
The other benefit of the Lifer second-in-command is that he or she is often best-suited for succession to the top position. This is no more apparent than in some of the top companies from the Forbes 500 list. Six of the top 10 companies have CEO’s who either have at least 20 years of tenure or worked their entire career at the company they lead. Of the four that remain – two – Berkshire Hathaway and Apple have somewhat unique circumstances. Warren Buffet is still leading his company nearly 50 years later and Apple’s Tim Cook most likely didn’t think he would be taking over for Steve Jobs as quickly as he did or if he would ever succeed him at all.
The importance of leveraging Lifers as a key leadership strategy is nowhere more critical than at the privately held or family businesses where talent, loyalty and culture all play a significant part to the long-term viability of the firm. This plays out in all areas and across all levels of the company. Also, the ability of a leader to create the framework of leadership development can payoff directly.
Compare two employees with approximately the same experience for the same position – the outside hire will typically take two years to reach the same proficiency as the inside hire. They will receive poorer reviews and you’ll pay them more. (The pay discrepancy is typically created by compensation for the outside hire’s perceived value of a higher education level. However, education is considered a weak predictor to long-term job success.) For more on this study about internal versus external hires, read this by Matthew Bidwell.
On the plus side for an outside hire – if they are successful after two years – they have an equally as strong chance for success as an inside hire. However, in today’s hiring environment – especially in small companies – I see very few companies willing to wait two years for their hiring decisions to come to fruition. And often, if someone has been on the job for over two years they are often no longer considered an outsider.
So, in considering the need for a strong #2 in your company, it’s important to know if you need an Entrepreneur, a Fixer or a Professional. But additionally, if you need or want to successfully grow all this talent from within, you will come to reap the benefits of what Dorothy knew – there’s no place like home.