Feature
Lack of advancement opportunities has become one of the most cited reasons for employees leaving an organization. Yet many managers face the ongoing labor shortage by trying to keep their best people right where they are.
However, standing in the way of your employee’s chance to develop or get promoted — otherwise known as talent hoarding — doesn’t just affect workers. It also has negative consequences for leaders and organizations, according to new research published in MIT Sloan Management Review.
Promoting Pays, Hoarding Hurts
Study co-authors JR Keller and Kathryn Dlugos studied 96,712 internal job applications for 9,896 open jobs posted by 3,431 US hiring managers over the past four years, and what they learned is fascinating: Managers known for promoting their employees received many more applications than those known for blocking staff members’ paths.
And while talent hoarding can ultimately cost organizations dearly — top employees leave if they feel stuck — most companies don’t invest in resources to help leaders develop the talent they have so they can advance.
Keller, an associate professor of Human Resource Studies at Cornell University, has spoken with leaders from dozens of companies worldwide who have admitted to hoarding talent on purpose at least once, either by not exposing their team member to high-profile developmental opportunities that would help boost their internal profiles, discouraging them from applying for other roles or blocking promotions outright by telling their subordinate they’re not ready to advance.
This approach is not only toxic, it can also backfire. Managers who practice this behavior can find themselves short-staffed because word gets out and employees leave.
“They think: ‘If I'm not going to get supported to find a new job at the company I already work at, I'm going to look somewhere else.’ That's bad for the firm because it results in higher rates of attrition, and you’re not optimizing the skills you have in the organization,” said Keller.
Related Article: How Does Learning and Development Relate to Employee Retention?
A Common — and Costly — Mistake
Duane McFadden, chief people officer at Telecare Corporation in Alameda, California, says talent hoarding has become more widespread because managers believe the best recruitment and employee engagement strategy is keeping the people you have and making sure they have a good experience.
“Leaders are very comfortable holding onto the bird in hand versus the two in the bush because the unknown is always a bit daunting,” he said, noting the talent shortage of the past few years has played an important role in this growing trend. “It takes a lot of energy, work and time to replace talent.”
McFadden views talent hoarding as the process of hanging on to talented individuals regardless of their fit for purpose for the organization “because you see letting them go as a loss, versus creating a spot for a potential gain,” he said.
“But you have to understand why you’re hanging onto someone, versus letting someone go when they’re ready — and then trusting the process.”
One of the problems, Keller said, is that managers are rarely criticized or penalized for hoarding talent. So he set out, with the help of Dlugos, to find compelling data to convince managers that encouraging employees to branch out is in everyone’s best interest.
“We had this hunch that employees had a decent sense of which managers were hoarding talent and which ones are really good at helping to develop their people. But when we saw the effect sizes in the data, we realized this was bigger than we thought,” said Keller.
“It was amazing how every person we talked to could name managers in their organization that have hoarded people and who had reputations for holding onto talent. They were super frustrated by this, and it was really widespread.”
Keller notes that decades of research have shown that employees stay put when they believe they can further their careers. That’s why many organizations have talent markets where workers can learn about opportunities and be noticed by hiring managers. This process reduces recruiting costs and fills roles quickly.
With talent hoarding into the mix, there’s less internal movement. Jobs remain open longer, and costs pile up, as HR searches externally. The ongoing labor market shortage hasn’t helped.
“There’s increased worry: ‘How will I fill this position with anybody, let alone somebody as good as the one that's leaving?’ And in some organizations, there's even the worry that if you let somebody go, you won’t get a requisition to replace them, which just means more work for you and the rest of the team,” said Keller.
Related Article: Remember This: Developing Learning That Employees Will Retain
The Pitfalls of Talent Hoarding
Cost, attrition, reputation and a lack of talent can all be consequences of talent hoarding.
“When you're making promises to people about their future and giving them an opportunity to play in different sandboxes, at some point you're going to have to make good on those promises,” said McFadden.
If you don’t deliver after someone turns down an outside opportunity to stay with you, that employee will feel disengaged or resentful, which can create a lot of tension in the organization, he added.
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“Ask yourself: ‘Is what I'm gaining from hoarding this talent worth what I'm losing in potential growth areas for other people?’ I’ve always found that when somebody who’s really talented and almost irreplaceable leaves the organization, it's amazing how other people step up around them,” said McFadden. “You start seeing capabilities in your team that you didn't even know were there because there wasn't space for it.”
Related Article: Employees Crave Career Growth. Talent Mobility Is the Answer
Hoarding Talent Can Limit Managers' Careers, Too
It may sound counterintuitive, but managers who want to attract talent must be willing to give up talent, too. Your reputation as a leader who encourages workers to grow and succeed can follow you throughout your career, said Keller.
“If you don't have a good reputation for developing people, you're less likely to be a prime candidate for upper-level jobs, where building a great team and having super loyal people that want to work really hard for you matters a ton; you end up short-circuiting yourself,” said Keller.
“But if you’re good at sending people throughout the organization, you’ll have this huge network of people to support you, praise you and help build your status within the organization.”
Keller notes that leaders might forget that as ambassadors for an organization, they need to show their team the company is an attractive place to work where employees will be developed and promoted. “You set the tone for people that are working for you, and you're modeling the behavior for when they become leaders.”
He added: When people describe themselves as looking out for their employees, it's often because they had somebody who modeled that behavior for them, and it becomes a core part of their identity as a leader. Often, managers who hoarded didn't always know they were doing it; they simply weren't developing their people because nobody had shown them how to do so.
Related Article: Ready, Set, Grow: How to Build a Culture of Learning at Your Organization
Helping Employees Advance
Companies can implement brilliant policies to spread talent around, but unless you can convince managers to get onboard, not much will change, said Keller.
Some organizations, he said, find it challenging to convince managers to support these mobility efforts. “It's clear that it's good for employees and the organization to move around, but it's less clear why it's good for managers to help their best people leave their teams,” he explained.
Some companies reward managers who promote their workers. For example, Chipotle has offered its leaders a $10,000 bonus for every staff member they train to become a general manager.
“It can be a useful way to change the culture and incentivize the behaviors you want managers to engage in. It signals an organization cares about leadership and the constant development of its people,” said Keller.
Approaching talent development with pay perks for managers can, however, become a double-edged sword that organizations should be careful using.
“We want people to be promoted, rewarded and developed for the right reasons. [But] the main incentive should be seeing the organization succeed. Through that, the rewards will come,” McFadden said. “It's our corporate citizenship responsibility to demonstrate that we’re growing and developing people around us. We need to continually be looking at where we have single points of failure: If so-and-so leaves, we should have a plan so that business can continue whether they're there or not.”
Keller urges leaders to think of themselves as stewards of the organization, thinking farther ahead than a three-month-long project because, ultimately, playing the long game benefits the whole team and the company.
“In our data, we see patterns that managers who help their people advance their careers are rewarded really quickly and consistently have people that want to work for them,” he said.
