July 19, 2024
The Case for New Blood
The best companies invest in talent and strive to promote from within. Insiders bring knowledge of the business, culture and people that enables them to be productive quickly.
But promoting from within can be taken too far. Companies that rarely hire from outside become inbred. Among humans, inbreeding brings out undesirable and unhealthy traits, and the same thing happens with companies. They develop a dysfunctional conformity that’s hostile to new ideas and new ways of doing things.
That's why infusions of new blood are good for business. New people bring new ideas, new perspectives, and different ways of doing things. They are a catalyst to innovation, which is particularly valuable in times of rapid change like the one we are in now.
What’s the right ratio of internal to external hires? As a rough guideline, I think insiders should be promoted to at least half of open executive positions, and no more than two thirds of them. That means a third to a half of those jobs should go to outsiders. Staying within that range provides desirable continuity with enough new blood to prevent the organization from falling into groupthink.
Promoting from within is important, but doing it exclusively is a very bad idea. Finding a healthy balance is essential to long term success.
