Recruiting the right people is a powerful and important strategy in any business. People are, after all, one of the most important assets a business has. With the right talent in place, a business can gain real competitive advantage.
Getting the right people isn’t all about recruiting from outside. Talent management includes nurturing existing employees. Investment in culture and employee engagement also matters and is an essential for talent retention.
So, when you have a vacant position, do you promote an existing employee, offer a lateral move internally, or is it better to get fresh blood in? It’s a question many businesses and HR personnel wrestle with.
There are pros and cons for promoting staff within as opposed to hiring somebody new. A variety of circumstances and forces within the organisation will come into play when deciding which is best.
Let’s take a look at when it is a good idea to promote internally and when it is better to recruit from outside.
Why promote internally?
Generally, promoting from within is easier and far more cost effective. With an internal promotion, you won’t have to advertise the post, sift through CVs or interview lots of candidates.
Your employee already understands the business and its core values, so a lengthy onboarding process is avoided. When an existing employee moves into a new role, training is generally less time consuming and less expensive because your employee is already familiar with the software, systems and processes in the business.
Gartner report that a lack of future career development is a key driver of employee attrition. When you recruit externally this can cause bad feeling and encourage good staff to leave if they feel progression opportunities aren’t being taken seriously.
Internal recruitment can thus contribute to reducing employee turnover. Promoting internally is a great affirmation of your learning culture and sends a clear message that you are interested in the training and development of your employees.
Importantly, with an internal promotion, you already know a lot about the people in your business and can more easily select the person you think has what it takes to nail the position.
With an existing employee, you already know the person’s strengths and weaknesses and can target training accordingly to support them as they transition into the new role. You can feel confident they will do a good job, whereas with an external hire you have no experience of whether the candidate is true to form or is overselling themselves.
Sometimes, a ‘better the devil you know’ approach can pay off. And you already know that your internal people are a great cultural fit.
Promoting from within is usually less expensive. New recruits generally demand a higher salary, and this is especially true in our current talent-short market where candidates suddenly have the power to demand higher pay. While your internal promotion will leave a gap in the workforce, recruiting for that position may enable you to fill the post with a less experienced and lower paid worker.
Internal promotions also help your employer brand and act as a magnet for talent in the future. Job hunters will be impressed that you offer career development opportunities.
Why choose to recruit externally?
It’s not always possible to promote from within – if you have ambitious growth targets you may not have the time to train existing staff up for new positions and you just may not have the right talent available in your small team. This is a common scenario for small businesses on a rapid growth trajectory who need new staff with specific skill sets fast.
Bringing a new person into the business can provide a fresh perspective. It’s easy to get stuck into a pattern with process and a fresh pair of eyes can prove invaluable in spotting ways to be more effective and more efficient. New energy and new ideas are especially useful if the culture and innovation in the business needs a shake up.
The main advantage of hiring externally is in being able to bring someone in who already has the exact skills required for the job in hand. Many internal promotions happen in good faith, but a common problem in growing businesses is promoting unsuitable people into managerial positions. Managing people is a real skill. Not everyone can do it.
Hiring from within can mean compromising on some of the skills you really need. With an external hire, you can be very strict and specific about the essential skills required for the role. There is also the issue of expectations if you continually promote from within – staff can come to expect a promotion as an entitlement – i.e. ‘I’ve been here for 3 years now, so I should be promoted to a more senior position.’ This kind of entitled culture can result in people not putting maximum effort into their jobs.
Promotions shouldn’t be the only way employees can progress in a company – lateral moves and combining roles can also offer opportunities. You can still do this and hire externally.
There isn’t a right or wrong answer to the hiring conundrum. Ultimately, you want the best person for the job. That may be someone already working in your business, or it could be somebody from outside who is already equipped with the skills you need.
Considering internal promotions is however important if you are keen to grow a culture that supports the development and career progression of its employees. It’s great for staff morale. If you believe in the aspirations of your people you should be investing in them. If you don’t, they will only go elsewhere.