Who is the best match for your next opening? Should you look outside or hire from within? The jury is still out.

Forbes recommends hiring outside for better performance. What if, however, you sided with business leaders like Jim Collins and instead of incurring the cost of hiring, working with a search firm and training, held on to current employees? What would it take to retain top talent? The answer can be narrowed to one thing—better managers. The very best managers are coaches, helping employees meet their maximum potential.

When 1 million US workers report to a recent Gallup poll that the number one reason they would quit is a bad boss or immediate supervisor, the problem is obvious to see, but not so easy to correct. When this statistic is followed by the fact that 84 percent of employees will be looking for a new job in 2012 according to a Manpower survey, the need for a solution becomes imperative.

The solution is turning supervisors into coaches, and it can begin with a three-step process.