In many ways, construction companies should select from the pool of talent within their organizations. When promoting an internal leader, the individual knows the work rules, intuitively understands the culture and is a walking source of institutional knowledge. The internal candidate understands the hot button safety issues, the personality quirks of the team and the organizational discomfort with specific policies unique to a construction company. In essence, the internal leader is a known quantity. He or she has a well-defined cost, and possibly modest expectations for increased compensation due to the impending promotion. Certainly, the morale of others may rise as evidence of promotions becomes suddenly real. At least, that’s the ideal.
The real world is usually less black and white. Promoting the wrong person from within can be extremely expensive – 10 to 20 times the cost of the individual’s annual salary. Selecting the right person regardless of source is always the best solution, even if it’s not the easiest one. Unless there is a clearly-defined, obvious, and well-thought-out choice waiting to take the helm, limiting the selection pool to internal candidates is a mistake more often than not. The pressure is on leaders to make good decisions. Leadership selection decisions are tightly linked to a depth of understanding of the role as well as the quality of options available. Employment selection decisions are rarely entirely rational. There is always a large dose of personal bias. Bias made in a well-reasoned purposeful manner may be good. However, bias from a narrow or ego-driven perspective may turn out terribly. So the question is: When is the appropriate time to go outside for a critical position?
Here are three telltale signs that a construction company should consider hiring from the outside.
1. The organization needs a specific skillset. A great example that comes to mind is BIM/VDC. Top firms have built extraordinarily talented teams in this area, yet many firms have not felt the demands of customers or the impact on their pocketbooks to make the investment required. On the other hand, companies without this expertise may not realize what they are missing. Skills come in many varieties: hard skills, leadership skills and culture skills. Now a new skillset has emerged and companies should invest in personnel who have skills and knowledge around BIM/VDC technology so they can stay a step above the average construction company. When a company doesn’t have the right skillset, it should be an easy decision to go outside.
2. The organization has operational issues. Construction firms live and die based on their reputations. It doesn’t take many bad projects, or projects that don’t get to a positive resolution, for that sparkling reputation to tarnish. Raising the project management bar is essential for every construction firm. Incremental change evolves processes and good firms keep track of new procedures. But when projects start to go south, leaders need to step into the gap quickly. Years ago, one chief operating officer canceled a meeting because his client called and he needed to travel to Texas to resolve a major project issue. Immediately, the client identified the deficiency and redirected the team. Project managers, tools and systems change all the time. Leaders must be able to respond, and if the company doesn’t have the sort of leadership that can respond quickly and clearly, it is essential for it to find a leader who can step into the gap. Furthermore, picking off a top performer from a competitor can bolster the team, inject some inspiration and weaken the competition all at the same time.
3. Innovation is in short supply: Innovation is the trendiest buzzword of the mid-2010s. Everybody understands that the intent of innovation is to make the business better. Trying new things is difficult and innovation takes energy, enthusiasm and commitment. Think about customer relationship management systems for tracking contacts and opportunities – merely a way of doing business with many construction firms, but a puzzle to others. One new engineering CEO recently pushed back on his board and said, “Our firm can’t be everything, so what do you want this company to be?” After convening more than 100 key leaders in the firm and painstakingly working through options, the company understood its goal. Finding leaders in the construction industry who understand how to nurture innovation is rare. Selecting such leaders takes intuition, vision and appreciation for the chemistry of the team. Developing an organization that systematically builds innovation into its work routine takes purposeful effort.
In today’s world of integrated projects, construction, engineering and architectural leaders must be prepared to dig into the psyche of their teams, ask probing questions and seek to understand what is missing. When leaders have a clear sense of where the organization needs to go, they must take clear and decisive action, including looking outside for their next hire.
For more than 20 years, Chris Swan has worked with construction, design and real estate companies on challenging and complex leadership roles. As a managing director for TRANSEARCH International, he is the global leader in the markets of construction, design and real estate, coordinating the efforts of dozens of search professionals as required by the needs of his diverse client base. Swan earned his bachelor’s degree in economics from Drake University and is currently earning his MBA at the Liautaud School of Business at the University of Illinois-Chicago. He can be reached at Chris.Swan@transearchusa.com.