The limits of employee development

Developing your employees is one of the best investments you can make to boost both motivation of your employees and improvements for your business. In a growing company you will need to continue to develop your employees in order to meet the increased demands of your business but when the growth of the company or the change in direction of the company moves at an advanced pace, can you still develop your employees or is there a moment to start recruiting from outside? You know the joke about the CFO cautioning the CEO saying: “what if we invest in educating our employees and they leave?” and the CEO’s response: “What if we don’t and they stay?”.

The question you will be faced with at some stage is whether your staff can develop fast enough to take on the larger roles your company requires as a result of the organizational growth or that you will have to go for talent from the outside.

You may be familiar with the “Peter Principle” that, in short, explains how employees are promoted to do a bigger job based on their current performance and how they will eventually stop being promoted when they fail at their position. If you follow this logic most senior managers by definition are incompetent. Well likewise when your company grows and the employees not necessarily get promoted but their job just increases in size and dimension as a result, how do you prevent the Peter Principle to occur?

If growth of the company means just more work but similar work, you may be able to add employees to handle the additional work load. When you add more employees you may need to add more managers to supervise and manage the work. But when the company expands and, as example, the accounting needs to move from a small business mode to a large corporation mode, or when you move to go to the stock-exchange and have to face the scrutiny of the media, the public and an independent board of directors, you need to take decisions about the staff that works for you and determine if you can develop them to face the increased job size or to replace them with experienced outside hires.

HERE is a link to a white paper about strategic leader development and how you need to assess the candidates that will be most beneficial to invest in.

You may be familiar with the Greiner Curve of organizational growth. It is a great model to evaluate where your business is and what steps you need to take to move forward.

When you don’t follow the smooth path of the Greiner Curve but find yourself in a situation of corporate action with acquisitions and mergers there will be a more immediate emphasis on staff evaluation and making decisions about who is up for the larger task and who will need to be replaced with talent from the outside.

A few points to keep in mind:

  • Ensure you work seriously on both current performance evaluation and growth potential when assessing your employees.
  • Employee development needs to be a continuous process, see it as proactive maintenance of your most precious resource.
  • Think about employee development as an investment rather than as a cost.
  • When you reach the conclusion that your business has outgrown the potential and capabilities of your staff, be quick and decisive in replacing talent. I have yet to hear anyone telling me they made the move too soon.


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