October 2016 | Nano Tools | Management
Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.
Contributor: Matthew Bidwell, Associate Professor of Management, The Wharton School
Assure the success of your external hires by using a formal onboarding process.
Research clearly shows that there’s often more value in internal promotions versus outside hires. Outside hires perform substantially worse than similar internal promotions. One study reports that outside hires were 75 percent less likely to get rated highest than internal promotions, and 270 percent more likely to get rated lowest. These differences come from the amount of time that it takes people to learn to be effective in a new organization: external hires took three years before their performance was as good as that of those promoted into the job. It’s no surprise, then, that outside hires are 61 percent more likely to be let go and 21 percent more likely to quit. For that performance, though, they receive 18 percent more compensation than promotes, and that pay gap takes up to seven years to close.
Despite all of that bad news, there are upsides to external hiring. They include lower costs of development, new knowledge and perspectives, and skills that your team or organization is lacking. When any one or all of those considerations outweighs the negatives, or when there is no right internal person to promote, looking outside to fill a position makes sense. But how do you work to minimize the likelihood of negative outcomes?
Research is also clear about the best ways to onboard external hires to maximize their chances for success, and shorten the time it takes for them to start creating value for your organization.
A formal, detailed onboarding process is key to helping an external hire add value quickly. Use these six steps to help create your own process:
Nano Tools for Leaders® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director is Professor John Paul MacDuffie, Professor of Management at the Wharton School and Director of the Program on Vehicle and Mobility Innovation (PVMI) at Wharton’s Mack Institute for Innovation Management.
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