Why you shouldn’t go outside the industry to find talent

It’s no secret that there is a war for talent in Canada’s property and casualty insurance industry.

But before you look outside your brokerage or insurance company for talent, take a look inside, advises Tomas Chamorro-Premuzic, the chief talent scientist at workforce solutions company ManpowerGroup and Jonathan Kirschner, a business psychologist and founder and CEO of business management consultant AIIR Consulting.

Chamorro-Premuzic and Kirschner wrote a blog for Harvard Business Review that noted firms often hire externally when they could source better talent from within. The blog was written for general business audiences and not the insurance industry in particular.

“Scientific reviews show that external hires will take longer to adapt and have higher rates of voluntary and involuntary exits — yet, they are generally paid more than internal candidates,” said the blog How the Best Managers Identify and Develop Talent, published Jan. 9. “That’s why it’s valuable to look for talent internally before you search outside your organization.”

Internal hires tend to have higher levels of adaptation and success rates than external hires, not least because they are better able to understand the culture and navigate the politics of the organization, the authors wrote. They are also more likely to be loyal and committed to their company. Further, promoting internal candidates boosts other employees’ engagement.

In order to be a great manager, you also have to be a great talent agent, the blog said. But becoming a great talent agent is not always easy: it requires leaders to be more open-minded and to throw away outdated, albeit popular, hiring tactics. “Too many of us look for talent in the same old (wrong) places, or follow the popular trend of thinking the ‘best hire’ is the ‘best culture fit.’ These approaches undermine efforts to boost diversity (demographically and cognitively) and ultimately hinder creativity and innovation.”

The two authors and colleagues outlined seven science-based recommendations to help organizations update their hiring techniques and develop talent management skills along the way. Among the suggestions to develop talent management skills:

Think ahead – Prospective employees are often asked during job interviews what their five-year career aspirations are or where they see themselves in five years, yet few managers ask themselves what their five-year talent strategy is. If managers know where they want to go, they can focus their efforts on hiring someone with the needed skills, abilities and expertise to move forward.

Focus on the right traits – The two biggest mistakes managers make when they evaluate other people’s talents are: focusing too much on their past performance (even when they lack reliable metrics) and overrating the importance of their resume, hard skills, and technical expertise. The blog noted that the World Economic Forum predicts that 65% of today’s jobs will no longer be around in 15 years, meaning leaders cannot place too much emphasis on the current educational curriculum. People need certain soft skills, such as emotional intelligence, drive and learnability.

Think inclusively – Most managers have a tendency to hire people who remind them of themselves, but this tendency harms diversity and inhibits team performance. “When we hire people just like us, we reduce the probability of creating teams with complementary skill sets, those with different and even opposite profiles,” the authors noted. “Celebrate people who challenge traditional norms. The engine of progress is change, and change is unlikely to happen if you only hire people who perpetuate the status quo. We all know that companies with a diverse talent pipeline tend to have better financial results.”

Be data-driven – When you hire someone, outline clear performance goals that can be easily evaluated by others, and see whether your view of their performance aligns with what others think and see. Likewise, before you nominate someone as a high-potential employee, arm yourself with solid data and evidence to ensure that your decision is fair and sensible, even if the future proves you wrong. Talent identification is an ongoing process of trial and error.

“The most important part of this process is to never stop thinking about your employees’ potential and talent,” the blog concluded. “No other factor is likely to make such a big difference when it comes to building a high performing team.”