Unintended consequences

However, oddly enough, a decision that should make everybody happy sometimes ends up causing hurt and confusion. I’ll never forget a situation over 20 years ago in a worker co-op where I served as
human resources coordinator. There was a middle management opening in the marketing department. Our policy, passed by a vote of the worker-members, was that all internal candidates would be considered first before the co-op recruited from outside.

We had an internal candidate, but the marketing manager was hoping to find someone with more experience. Duly following the policy, she interviewed the internal candidate and then told her she didn’t have the needed experience. We proceeded to advertise for the position and received numerous résumés, most of them not remotely meeting the job qualifications. The marketing manager interviewed several people and finally concluded that the internal candidate was the best person after all. I went to bring her the news. To my shock and dismay, she jumped up from her chair and swore, “____ you, I quit!”

The worker-owners of the co-op had meant to ensure job security and advancement opportunities for co-op members. The unintended consequence of our policy was that internal candidates, instead of being empowered and honored by being chosen as the best, had to be rejected before others could even be compared to them. We learned that lesson the hard way and changed the policy to allow for simultaneous consideration of internal and external candidates.

Leveling the playing field

Another source of frustration for an internal candidate is being a known quantity. The manager knows the insider all too well, or at least thinks she does. It’s hard to look with fresh eyes at someone you’ve known a long time and set aside prejudices that have accumulated over years of working together. The internal candidate may have baggage, past mistakes, or past enmities that he hasn’t lived down. You also may assume that certain people are, on the face of it, simply not qualified for the position.

When considering external and internal candidates, it’s important to follow the exact same process with both. Ask the insider for a résumé and references, just as you would an outsider. Unless you’re swamped with inside candidates or need to hire for an emergency, it’s good to interview all internal contenders, whether for a shift leader or a general manager position. It is a courtesy to these employees, and you may learn something you did not know. At the very least, you have allowed them to express interest and identify themselves as people who could take on more responsibility in the future, even if it’s not a promotion
to a whole new position.

Lynn Dickinson, chair of the board’s general manager search committee at Co-Opportunity in Santa Monica, Calif., seconds this advice. There were three internal candidates to replace the co-op’s retiring general manager, and the search committee interviewed all of them. “You may be surprised by what you learn,” says Dickinson. “It’s valuable to have contact with people who have that level of concern for the co-op. They
gave us ideas of things to ask other candidates.”

Following an identical process with internal and external candidates helps to overcome a natural obstacle that insiders face. Dickinson says, “You could be harder on a known quantity. You know their flaws, while the outsiders look bright and shiny.” With three finalists, one insider and two outsiders, the Co-Opportunity search committee took pains to ensure that all were treated the same way. Each candidate went out to dinner with the board and each met with the management team to answer questions.

The internal candidate, Bruce Palma, was the store manager and supervisor of many of the members of the management team. Nevertheless, he appeared before them to present himself as a candidate while board members in the room observed the process. “This gave us information we wouldn’t have had otherwise about how the person interacts,” Dickinson relates. “It’s tempting not to bother with putting the inside candidate through the same process as the others, but we gained information every step of the way.” In the end, the board chose Palma to be the new general manager.

Great expectations

Another pitfall in hiring comes from a sense of entitlement on the part of assistant managers. At a retail co-op with an open grocery manager position, management passed over the assistant department manager in favor of another internal candidate who had been manager of another department. The assistant manager’s coworkers shared his sense of grievance. Wasn’t the whole point of being assistant manager to be groomed for the department manager job?

Perhaps this problem is not entirely preventable, but you can do your best when hiring someone as an assistant manager to let her know she is not the heir-apparent for the general manager or department manager job. Then bring up the subject in annual evaluations, gauge her interest in your job and let her know what skills she needs to work on to make herself promotable. But reinforce the message that the process will be competitive and that nothing can be taken for granted.

The entitlement dilemma is intensified when the opening is the general manager position and the outgoing general manager’s right-hand person applies. It might be tempting to the board to forego a lengthy, uncertain search process in favor of quickly choosing a sure thing, the internal candidate anointed by the former general manager. After all, isn’t this what management succession planning is supposed to do? Moreover, the internal candidate will usually be popular with the staff. However, recruiting outside the co-op and requiring all candidates to go through the same steps actually puts the insider in a better position if and when he is eventually hired. If he were chosen without competition, that just gives ammunition to any detractors, who can say the co-op could have done better.

One of the more vexing questions about internal promotions concerns “pieces of jobs.” When is it just an added responsibility you are giving to a willing and motivated employee, and when is it a separate position for which all should have the right to apply? If you keep assigning new duties and projects that allow one person to develop her/his skills, are you setting up an unfair situation where others can’t compete for an actual job opening? While there is no absolute guideline for the difference between a skill development opportunity and a promotion, the presence of an accompanying pay increase seems to designate a promotion.

Awkward moments

In a competitive hiring involving an inside candidate, there can be awkward moments when an external candidate comes to the store for an interview and a tour. Giving the internal candidate a head’s-up and a choice about how much to interact with, or avoid contact with, a rival will help minimize the potential discomfort. Also, be sensitive of what you say about the hiring process and the candidates in the presence of an inside candidate. This is particularly true at board meetings where an interim manager may be a candidate for the permanent general manager position. If the board wants to discuss the hiring process, it could choose to go into executive session or excuse the candidate.

Whenever a decision is made on a potential internal hire, the employee is de facto being evaluated, but she often doesn’t get the benefit of this evaluation. Unless the person who made the rejection decision is also the supervisor of the employee being rejected, it is no one’s job to close the feedback loop and let the employee know what she needs to work on in order to be more “promotable” in the future.

In cases where the manager responsible for hiring is not that employee’s boss, you need a mechanism in place to ensure that the employee gets feedback and counseling. If your co-op has a human resources manager, this person would probably fill that role. In a small store, it might be the general manager. If you don’t plan ahead for this, you could have a motivation problem on your hands.

This sort of counseling session is crucial when the successful candidate is going to be the rejected employee’s boss. You could be setting up a new manager for failure if no one meets with the employee to listen, to give honest feedback, and to ask for her support. Even if there will be no supervisory relationship, the new hire will still need the cooperation of the person who didn’t get the job.

At Co-Opportunity, the general manager and store manager created a marketing director position, one that had never existed before. The membership director applied, but as the managers began interviewing for the job, they realized that the co-op needed someone with marketing experience, which the internal candidate lacked. When they hired the outsider, they let her know that there had been an inside applicant. Management then sent both employees to the CCMA conference, which proved a bonding experience.

First-time managers

When employees without prior management experience are promoted into managerial positions, they are changing their relationships to their former coworkers, perhaps more profoundly than they realize. They would benefit from counseling about the change in role they can expect. As part of the hiring process, make sure they agree to become members of the management team and not just advocates of their own people vs. management. Your management team could develop a code of conduct, which candidates for management jobs would be expected to uphold.

Recommendations

To summarize the points raised here for promoting from within:

• Make sure your personnel policies facilitate simultaneous consideration of inside and outside candidates.

• Treat internal and external candidates as nearly the same as possible. Ask internal candidates to provide résumés and job references. If outside candidates meet other staff besides the hiring manager, allow inside candidates to do the same.

• Interview all internal candidates if possible.

• Manage the expectations of assistant managers and “seconds in command.” Encourage them to develop their skills, but make it clear that they are not guaranteed or favored for their boss’s position.

• Be conscious of the cumulative impact of giving away “pieces of jobs.” If increased pay goes with any new responsibilities, you should probably post the position to give others an opportunity to apply.

• Give inside candidates the opportunity to avoid awkward encounters with competitors for the position if they so choose.

• Ensure that someone counsels employees who get rejected for promotions—their own supervisor if that person made the rejection decision, the human resources or general manager in other cases.

• Give candidates for management positions a reasonable picture of what will be expected of them. Develop a list of expectations of managers, and get them to agree to it if they wish to be considered for the job.