Finding the right fit for an open role can be a real challenge in today’s job market. Companies are struggling with high turnover and niche positions are requiring more specialized skillsets. Not to mention, companies are investing more than ever in their employer brand, which only increases the level of competition for quality candidates. It’s undeniable—hiring is a complicated process that requires a fluid, ever-evolving strategy.
The topic of internal promotion only further complicates things. Deciding between whether to hire internal or external applicants—the “build or buy” question—isn’t an easy thing to do. The truth is, there are pros and cons to going with either option.
Why Should Your Company Promote Internally?
When looking at the positives of an internal promotion, it’s important to note that this kind of job fill can be mutually beneficial for both the employer and employee. An internal promotion can be a way to recognize high performers and reward them for their work. It can also say a lot about a company when they promote from within. People tend to respect businesses that value and hold onto their workforce. And the benefits don’t end there.
5 Pros of Internal Promotion
1. It reduces cost.
It’s expensive to source and recruit new talent. On average, HR professionals and recruiters spend a lot of time finding and converting job seekers into active applicants. A Glassdoor study found that the average length of the hiring process in the U.S. is about 23.8 days. Additionally, once a candidate is converted, they’ll often negotiate higher salaries compared to existing employees. Sometimes new hires will also require a signing bonus or even coverage of moving expenses, which an internal promotion would not necessarily need.
2. It reduces time-to-productivity.
When employees are promoted, they can typically hit the ground running in their new role. Sure there will be elements that may take time to ramp up, but they already have a handle on company culture and operations. This can help boost productivity compared to individuals who are brand new to the business. Their already established understanding can save their own time, the team’s time, and an HR professional’s time too.
3. It improves employee retention.
If high performers don’t see potential for their own personal growth, they are more likely to disengage and eventually leave a company. Top talent wants to progress, in both title and salary. Businesses should want to retain their top talent and not lose them to competitors. Internally promoting these employees is one way to recognize and reward their performance. Further, when others see one of their peers promoted, they may feel encouraged to strive for an internal promotion themselves—and thus stay on at your company as well.
4. It bolsters team morale.
As mentioned, internal promotions don’t only benefit the directly affected employee. These types of job fills can also keep other employees engaged and reinvigorate team morale. Witnessing firsthand the success of fellow peers can inspire others to work harder and can also show that hard work is valued, which reinforces a positive outlook across broader groups.
5. It strengthens your employer brand.
Job seekers want to apply to an employer brand that resonates with them, one that has a mission that aligns with their own beliefs. People are more attracted to a company culture that supports internal growth than one that struggles with high turnover and employee retention. Internal promotions demonstrate that your company values hard work and is willing to reward it. Recognizing employees in this way can help strengthen your employer brand to both future candidates and consumers. Consumers are also more likely to support a brand that treats their employees well. In fact, a CareerArc 2017 Employer Branding Study reveals that 64% of consumers have actually stopped purchasing a brand after learning about the company’s poor employee treatment. What better way is there to show your investment in your employees than to promote from within?
4 Pitfalls of Promoting From Within
While there are worthwhile benefits of promoting internally, there are also some downsides to consider before making a decision. Each hiring opportunity will be different, so weighing the pros and cons can help you make the right choice at the right time.
1. It can increase failure rates.
Not every internal promotion will be better than an external hire. In fact, the failure rate for an internal promotion is higher than one might think. While still less than an externally hired employee’s failure rate, it’s been found that about a quarter of internally promoted senior executives fail in their new role. There are many reasons why an internally promoted employee may struggle in their new position—for instance, they may have excelled in one role for a long period of time and not be ready for new responsibilities, or they may have a hard time managing people who used to be their peers.
2. It may limit outside knowledge or advanced skill sets.
When compared to internal promotions, external hires may have more advanced training that they can now bring to your brand. They may also have more exposure to industry advancements and a fresh perspective for solving age-old company problems. It can be true in these circumstances, that an outsider’s perspective could be more worthwhile. To widen your recruitment net, you may want to consider social recruiting to source external candidates and let both internal and external candidates go through the interview cycle.
3. It may invite negative company politics.
Just as an internal promotion can bolster team morale, it can also tamper with it. Receiving a promotion can open an employee up to teasing or ridicule—sometimes done in good humor, but other times done out of jealousy. These kinds of challenging situations can distract a recently promoted employee and take them away from their new duties. It can also complicate things for HR departments if harmless teasing evolves into a bullying or harassment situation.
4. It may drive away a high-functioning employee.
Some high performers are already in the right spot and placing them in a new role may added unwanted pressure for them. They may want their old position back, but it’s too late. Or, they may take advantage of their new title and additional training but start looking for a new company that is willing to give them more money. Either way, if it doesn’t work out, you’ll lose a valuable employee and still be faced with having to spend time and money filling the position.
How To Make The Decision Between Hiring Internally vs. Externally
There are pros and cons about every hiring decision you will ever make. When choosing whether to go with an internal or external candidate, make it about potential. Think about the role, but also think about the team and its cognitive and cultural diversity. Take the time needed to weigh the pros and cons in each hiring situation. This will help you identify your greatest potential and needs, which can ultimately help strengthen your hiring decision.
Whatever decision you choose, one thing is for sure: employee development is always valuable. If you’re looking to retain your quality employees, read our blog post on the 8 Ways to Boost Employee Development in Your Organization.