Friday, August 21, 2009

Internal vs. External?

Here's a question from Mary Jo Asmus, my blogging friend from Intentional Leadership:

"Can you describe the balance between when it makes sense to do leadership development programs "in house", using internal facilitators vs. going outside and hiring consultants?"

Thanks for the idea, Mary Jo, and congratulations on your free book. Having been in positions that require "make or buy" decisions for leadership and training programs for a few companies, I think I can offer some guidelines.

5 Advantages of using internal resources for a leadership development program:

1. They are less expensive.
There's no out-of-pocket expense needed to use your own people. Yes, there's payroll and benefit costs associated with having full time trainers on staff. However, if fully utilized, the yearly cost of an internal trainer is generally less than if you used contractors and consultants for the same work. Subject matter experts are even less expensive. Experienced managers can be used to train newer managers, and functional experts (i.e., finance, marketing, HR) can be used to teach their areas of expertise.

2. They know the business and culture.
An internal trainer knows the culture, unwritten rules, and company-specific nuances that are a part of any organization. There's no "breaking-in" period required, or long (and sometimes costly) "tell me all about your business" process required to get started.

3. Empathy and credibility.
In some companies, especially successful ones, internal trainers carry more credibility because they have "walked in our shoes". It sort of ties back to #2, knowing the business, but it's also a feeling of "they are one of us, they get it". A new sales manager may be more likely to sit up and pay attention to an experienced sales manager that has made or exceeded quota for the past 10 years in a row.

4. Continuity and integration.
An internal trainer can be involved in other aspects of leadership development and HR, so they are in a position to make sure all of the pieces, messages, and processes are consistent and aligned.

5. Added development for your internal resources.
Teaching is a great way to learn and develop. Using a manager to train on the topic of coaching forces that manager to brush on up the topic. It also puts a little pressure on them to be a role model in that area, so they are seen as "walking the talk".

5 Advantages of using external resources for a leadership development program:

1. Internal expertise may be missing.
External resources are sometimes needed when the required expertise is missing or in short supply within a company.

2. Innovation.
An external resource can bring a fresh perspective and new ideas into a company.

3. Ability and willingness to take risks.
Some external trainers and consultants are more willing and able to challenge people and processes without fear of political consequences. In other words, they can sometimes "get away" with something that an internal trainer wouldn't dare try. Participants are often more comfortable opening up to an outsider.

4. Better use of internal resources.
There is a cost to using internal subject matter experts and senior leaders - their time. Taking one of your best sales managers out of the filed to train means less time spent coaching sales reps and meeting with customers.

5. External resources are easier to "fire".
Let's face it, if you're a trainer manager, and you somehow end up with a mediocre trainer, you're going to be spending a lot of time on coaching and performance management. It's much easier to replace an external resource.

BTW, some of the best leadership development programs I've designed or attended have used both internal and external resources, leveraging all ten benefits of both.

9 comments:

Mary Jo Asmus, President, Aspire Collaborative Services LLC said...

Hi Dan,

Thanks for answering my question, and very thoughtfully.

I especially like the idea of leadership developing program using both internal and external resources. I have been involved in one of these for several years, and it is extremely successful.

Perhaps a follow-on post might be a descriptor of such an internal/external resource program? What makes it work successfully?

Jennifer V. Miller said...

Dan,

I think your "leverage both" has great merit. Might I add a hybrid solution that I'm currently experiencing: hire an external resource who used to be an internal resource. I just signed a contract with my former employer (of many years ago) to build a leadership development program. So, in my case-- I bring 7-8 of the benefits you mention. As the workplace demographics continue to shift to an "outsource" sort of mode, you'll see more and more of this.

Jennifer

Wally Bock said...

Thanks for doing a fine job of laying out the options for two different ways of handling leadership development. I think you're dead on with the "leverage both" point. The best programs I've seen have been a blend.

I would strongly urge every company, though, to make sure they have senior managers involved in their programs. There are lots of ways to do this. Training is more than simply skill development. It's also the way culture is transmitted and no one can do that better than senior managers.

Dan McCarthy said...

Mary Jo -
Thanks, and I just may do that.

Jennifer -
Interesting - thanks for sharing. Could be a new trend, I can see it's advantages.

Wally -
Agree! Senior leadership ownership and involvement is a must for either options.

marion chapsal said...

Thanks to mary Jo for this new topic and Bravo for the free book! :)
Dan, I also related to your "blended" approach. Being involved in several Corporate Universities (Suez, Saint Gobain, along with INSEAD, ESSEC or Cranfield), the Leadership program is at his best when both Senior Leaders and external consultants contribute.
In some cases, Wally, I would also suggest Gen Y young managers to give their testimony and share their experiences. These could boost younger managers and also make feel more at ease in asking questions and speaking their language... (this was a feedback I had from several L'Oréal Marketing young Directors last month at Cranfield)

What immediately came to my mind, for why using internal resources was "CONFIDENTIALITY". Has been brought a lot in France, especially.
Could that be another subject for one of your post?
Along with Global Leadership and cross-cultural Leadership; the use of English as the main corporate language and training language; cross generational Leadership, the integration of 3 generations at work.
Voilà!

Scott Peters said...

Terrific Post.

Having recently participated in all three scenarios.

Internal
External
Hybrid

The hybrid has been the most successful. Co-Presenters are always a stronger way to go, and the combination of the characteristics you described so well provide the greatest opportunity for true transformational change.

Thanks again and be well

Kelly H. said...

Check out a new book just out in June of 2009 called Leaders as Teachers, it completely describes how you can integrate an internal leadership program using your existing senior leaders.

Great Blog BTW!

Dan McCarthy said...

Marion -
Good point about confidentiality. I've been burned by this before (always get a signed non-disclosure agreement). And thanks for the new post ideas!

Scott -
Thanks.

Kelly -
Thanks for the book suggestion.

nickhalen said...

Dan,

Great article and great points!!
I like how you had the positives for both types of training.

This article is very useful in deciding what kind of training a specific company may need.

I personally like to always be learning new ways to improve on how to train and also how to be trained.

Great points!!