Leadership in an organization - Make or Buy

It is undoubtedly a fact that there is a shortage of effective leadership skills amongst the repertoire of skills possessed by managers in the corporate world. This becomes all the more evident when it comes to appointing people in the leadership positions. Inevitably most of the organizations then start looking out for leadership talent in the job market. Few organizations look internally for availability of suitable leadership talent. Getting leadership talent from outside of an organization may impact the performance of an organization either way in the long term, but doing it most of the time, for sure affects the growth and morale of people within the organization. The vacuum in critical positions at leadership level may disrupt the work in the short term till an organization finds suitable talent from the job market if it is not available from within. Does it make a strong case then for development of leadership from within? Why are organizations so paranoid about ‘Succession Planning’? If ‘Loyalty’ is a passé then is it worth investing time and money in developing leaders within the organization?

Although on the face of it the proposition ‘Developing Leaders Internally’ looks like an ideal solution, there is an inherent irony that an organization is not a closed system and there is a continuous influx of talent either at entry level or mid-level. So in the first place we need to define the time spent by an employee in the organization to be eligible to be called as an internal talent. Once we have done that we can put in place a definition for leadership within the organizational context. Having done all this is when the organization can decide whether to buy leadership talent from the market or to make it internally.

In my opinion the challenges that an organization has to surmount for a make decision versus buying leadership talent from market is as given below:

1. Hobson’s choice – whom to select and whom not? Dissatisfying many while satisfying one.
2. Analysis paralysis – Is it the right choice? Given the fact that a lot of information is available on internal candidate as against an external one.
3. Glass ceiling effect - will the desired change be brought? Considering the fact that internal candidate is soaked in a given organizational culture

So does it make a strong case for getting leadership talent from the market? Let us look at the issues that will need to be addressed if an organization always buys leadership talent from the market. An employee works in an organization for money, job satisfaction and growth. Thus if an organization does not offer avenues for growth to a potential talent, it will fly away. Each organization develops, over a period of time, unique methods for getting things done and any newcomer will take time to acquire this ‘Tacit Knowledge Capital’. Going by the law of demand and supply, abundant leadership talent within an organization will make it dispensable thereby saving the cost of acquisition. The predictability of performance and continuity of operations is guaranteed when an organization makes leadership talent inside. When an organization decides to prefer a make decision over buying leadership talent, there is a focus on development of soft skills in addition to technical skills. This facilitates in improvement of people management skills across organization not only due to development of soft skills but also due to the importance given to this aspect while promoting talent.

In conclusion, both the decisions of Make Vs Buy, when it comes to leadership talent, have benefits and disadvantages. Therefore, it is for the organization to decide what will augur well for it given its context and the requirements. However, it is a must that the organization shall make it a conscious and proactive decision whether to make or buy when it pertains to driving force of an organization i.e. leadership talent.