Have you ever been in a position where you had to decide between promoting from within or extending an offer to an outside hire? While it may seem necessary to fill the position externally, you could be missing an opportunity to promote a qualified employee who is already familiar with the ins and outs of the company.
There are a number of reasons to look internally when filling a position, with the biggest motivator being the financial aspect for many companies. Investing in training and development is often less expensive than hiring talent from the outside, especially when you consider that internal employees already fit your culture. While external hires potentially have a higher level of education and more experience, they also require more compensation than an internal hire. According to Wharton management professor Matthew Bidwell, employers pay external hires an average of 18-20% more than employees they could have hired internally. If your company’s budget is a factor, then looking internally will help you avoid overspending on an external hire. A word of caution though, you don’t want to significantly undercut an internal promote salary-wise as that could have damaging effects on morale. More on this later.
Another important, but less tangible, reason to promote from within is improved morale amongst employees. When you hire from within, employees see that there is opportunity for growth and advancement, and it motivates employees to deliver excellent work when they know a promotion could depend on it. If you continually hire externally, employees become discouraged at the lack of opportunity, and this will directly impact the caliber of their work. Hiring internally also reduces turnover. According to Bidwell, external hires were 61% more likely to be fired than internal hires. An unstable culture due to constant turnover of external hires could be an impetus for internal employees to look elsewhere for employment. And not surprisingly, a perceived lack of advancement opportunities is also a key driver of turnover.
Rounding out the top reasons that you should consider promoting from within first is the tight labor market we are currently facing. Labor constraints are not expected to improve in the near future given the decrease in population. As a company, depending upon the industry you are in, you may struggle finding external employees to bring onboard during a tight market. However, by looking internally, you would eliminate the time, energy, and money needed to look for outside talent.
Let’s take a look at how you can implement internal promotions. Internal employees will most likely need training to be able to fulfill the position; therefore, establishing leadership and management training programs are vital. In addition to their company knowledge, they will still require additional training to help them excel in their new role. This additional training will often focus on management promotions, revolving around educating employees on the difference between leadership and management. As leaders, they need to be able to guide others to company goals.
Another important tactic to prioritize hiring from within involves constantly evaluating internal hires’ salaries. While internal employees are typically promoted at lower salaries than external candidates, working to make their salaries equitable as they gain experience shows that you’re invested in their career as well as ensuring that they are paid sufficiently to meet the demands of the market. Exit interviewees often reveal frustrations that they are significantly lower paid than external hires, and this causes them to leave their employers for higher pay elsewhere. When promoting from within, it’s important that employees understand what is expected of the new position. Providing competency profiles for each position clearly outlines requirements and guidelines for current employees to see what steps need to be taken to take to secure a promotion. By providing the competencies for each position, employees can set career advancement goals to strive towards. Remember to celebrate employee promotions as it shows your team that their accomplishments are noticed and valued, which will motivate them to strive for new goals.
The next time you have an opening, look within your organization first.
https://www.forbes.com/sites/susanadams/2012/04/05/why-promoting- from-within- usually-beats-hiring-from-outside/#6fd18e5236ce