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Inside Versus Outside: Which is Better?

At a retreat held for middle and upper managers of a large medical center, one manager observed that essentially all management positions at all levels of their organization were held by people who came up through the ranks. They had all worked together for a long while, some for as much as 25 years, and most of them had started at the bottom of the hierarchy. The manager's question: Would it not be wise to occasionally recruit managers from outside, especially for key positions?


There is always some advantage in bringing in an occasional "outsider" into the ranks of management of just about any organization. However, this is not especially truer for so-called key positions than it is for other management positions. In point of fact, the top position in a health care organization is more likely to be filled from outside than most other management positions.


The question applies most appropriately to lower and middle management, where positions are usually numerous and turnover is common. The case in favor of filling some management positions from outside while filling most by internal promotion can be made by examining the advantages of each approach.


Reliance on promotion from within offers the following:


* It fulfills the needs of employees to see the true opportunity for promotion and growth within the organization. Many people harboring management ambitions will remain with the organization because they see others advancing. The ability to see promotion from within actually at work, rather than simply hearing about it as a hollow philosophy as is often the case, works as a positive motivating force through the ranks.


* The internal candidate is already there in the organization, making possible better job continuity and minimal recruiting cost.


* The present employee already knows much about the organization's tasks, methods, and equipment, and is already acquainted with many of the people and their capabilities.


* The insider may be seen by employees as less of a threat than the unknown outsider.



Occasionally, however, there are some distinct advantages to be gained in going to the outside for the new manager:


* The outsider frequently brings fresh ideas and different ways of thinking into the organization.


* The outsider can avoid the potential complications of existing interpersonal relationships of the inside candidate. The outsider can enter the position with no personal likes or dislikes concerning employees, no biases that arise from prolonged acquaintances with people, and generally no barriers to extending equal regard to all people in establishing a complete set of new interpersonal relationships.


* In seeking an outsider, the organization can look for specific technical strength that might not be available internally or an established record of success in management.


* Once past employees' natural fear of the unknown quantity, the manager from outside may be regarded with more credibility than one who has long been seen by employees as "one of the gang." The outsider is more likely to be seen as a true manager right from the start.



Overall, too much promotion from within-and "too much" is occurring when essentially all but an occasional management job is filled internally-leads to an inbreeding of management style as all managers respond to the same kinds of role models and learn the same patterns of behavior. In the long run, this has a narrowing effect on the overall management of the organization, leading to managerial stagnation.


On the other hand, a preponderance of external recruiting can lead to management instability as a variety of styles clash. Demotivation of the work force can occur, likely accompanied by increased turnover, as the better performing and more ambitious employees come to see the limitations on upward mobility. The instability and demotivation contribute to a general sense of insecurity that is likely shared by many employees.


It is generally healthy for an organization to espouse and practice a policy of promotion from within. Realistically, however, not all management positions can be appropriately filled from inside-but neither should all just automatically be filled from outside. A mix of inside and outside is required. This will ordinarily favor inside candidates, but some amount of external recruiting should be evident as well. The organization needs the insiders' contribution to continuity and stability for effecting day-to-day functioning; however, the outsiders' contributions of new ideas and fresh approaches are necessary from long-run success.


This issue of The Health Care Manager offers the following articles for the reader's consideration:


* "Hospital Turnarounds: Agents, Approaches, Alchemy" addresses the essential role of a capable "turnaround agent" in the formulation and implementation of a turnaround strategy for a distressed hospital and examines different potential approaches to the daunting task of saving an organization that appears to be headed toward failure.


* "Does Age Influence Intensity of Care in a Managed Care Organization?" reports on a study of elderly HMO enrollees intended to answer the title question by determining whether an inverse relationship between age and intensity of care existed in a functionally impaired population.


* "Characteristics of Effective Health Care Managers" reports on a closely structured study intended to identify the order of importance of several elements of managerial behavior that exert direct influence on an individual manager's organizational effectiveness.


* Case in Health Care Management, "The Elusive Employee," asks the reader to consider the difficulties inherent in attempting to supervise a direct reporting employee who spends the majority of work time away from the manager's presence.


* "Managing Human Resources to Improve Employee Retention" addresses the increasing importance of appropriate employee retention activities in this era of lagging supply of health care workers possessing the skills required by the health care system.


* "Correlates of Nursing Staff Survivor Responses to Hospital Restructuring and Downsizing" reports on a study undertaken to examine correlates of 4 archetypal responses to organizational restructuring and downsizing: hopeful, obliging, cynical, and fearful.


* "New Approaches of Organizing Care and Work: Giving Way to Participation, Mobilization, and Innovation" reports on research conducted within the health network of the Province of Quebec to determine the optimal approach to making changes to the organization of care and work for patients, health care workers, and health care organizations.


* "Reimbursement Challenges for Emergency Physicians" addresses the problems inherent in attempting to deliver emergency care as needed in a financial environment in which limitations on payment for care, some significant, create constraints that threaten to adversely affect quality of care.


* "Manager-Physician Relationships: An Organizational Theory Perspective" examines working relationships between physicians and nonphysician managers from several perspectives and suggests the means for developing a theoretical model that encompasses all essential perspectives and facilitates productive, cooperative relationships.


* "Larger, Smaller, and Flatter: The Evolution of the Modern Health Care Organization" examines some significant changes that have been occurring in the structure and configuration of health care organizations and suggests how the individual manager might best survive in this rapidly evolving environment.