Why Promoting from Within Might be a Better Choice

As a manager of a growing company, you must be asking questions yourself daily about how to improve your organization's culture? How're you going to manage the sales targets for the next year? What are your employee's expectations from you? How will you celebrate your accomplishments, and how to deal with failures?

Your decision is very crucial to the business because everything is interlinked. One of your decisions might overlap with other areas of concern.

However, one of the most important decisions you will make as a manager is to decide whether to promote from within the company or hire someone from the outside.

That's because human resources are the most important asset of any company. A skillful staff will thrive the company. So you should carefully consider who you would trust for your company's competitive advantage.

Promotion from within

You know more about that person's work ethic, habits, and strengths than you do about someone new to the organization.

You can be confident that the person is familiar with the company culture, which can help them adapt more quickly and easily.

It is less costly to bring in someone who already knows how things work in your organization than to hire someone who is unfamiliar with your processes, systems and culture.

If you are looking for someone who can jump right in, it makes sense to promote someone from within.

However, if you are looking for someone with a particular skill set that is not available internally, or if you need someone for a brand new specific role that you just needed, then it could be better to hire someone from the outside.

According to the University of Massachusetts Global article, external hires may bring in a fresh perspective, but it is becoming a less popular choice. The whole hiring process costs the firm a six to nine-month salary every time it hires someone externally.

When you hire externally, you are likely to post job ads on several boards, followed by interviews and an almost two-month-long process of reviewing the potential candidates and interviews to find the best fit for the position.

After you conclude the hiring process, onboarding them takes place. The new candidates must be trained and learn the company culture, which takes more time to adjust. Furthermore, the external hires are paid almost 18% more than the internally promoted workers.

On the other hand, if you promote from within the company, people will see an opportunity and are more likely to stick to the company helping your company's retention strategy.

Here are some of the benefits of promoting from within.

Less risk if you promote people from within

According to a survey, almost 30% of the people leave the company after the first three months of being appointed because they don't fit well in the culture.

Furthermore, according to a research, conducted at the University of Pennsylvania, managers most often layoff or terminate the employees who were hired externally in the first two years of their employment compared to internal hires.

According to a survey, almost 30% of the people leave the company after the first three months of being appointed because they don't fit well in the culture.

The reason behind this is pretty simple. When you promote an employee from within, you know exactly who they are as a person and what their work ethics are, how they work in a team environment, and their leadership style.

Interviewing an external candidate sometimes can be misleading because you cannot assess a person entirely with the highest accuracy in half an hour!

The whole company gets motivated when you hire from within.

According to Forbes magazine, promoting a team member from within the company motivates others to do their best.

When they see that hard work, dedication and loyalty are rewarded by the management, and they will feel valued. Everyone loves to work in an environment where their opinion matters.

Hiring from within promotes interest and motivation in the entry-level workers, and it becomes easier to retain talented and skilled employees.

According to the research conducted by Harvard Business Review on over 400,000 workers found that when employees feel that promotions within the company are on merit and are effectively implemented by the upper management, they are likely to be more productive and put in extra effort because they see themselves as part of the company in future.

The trust level in the management increases by five times because of the belief that the administration takes decisions with integrity and without any bias.

Internal hiring is less costly.

Recent SHRM article claims that hiring internally costs less than external hiring for the following reasons.

Cost-saving due to minimum job posting

The internal candidates are accessible to inform them about the open positions.

The hiring manager can place the job ads simply on bulletin boards in the main hallway or cafeteria, or they could send an email to all employees instead of publishing them in newspapers or posting them on the job board websites to reduce costs considerably.

No need to subscribe to resume databases

When you hire internally, there is no need to pay a hefty amount to resume databases to find the perfect candidate for the job.

You can ask the managers to recommend a person with skills specific to the job. You can also ask coworkers to find a team member that is better suited for the role.

No need to spend money on background checks

You benefit from the known when you promote from within. Your Human Resource Manager does not need to spend extra time and money on background checks because the internal candidate is well known and trustworthy, and you have already conducted those checks while interviewing the employee for the first time.

Internal candidates already know the company culture

The external hires take a lot of time to adjust to the company culture. Therefore the performance of the people hired externally is usually low in the first two years.

Another benefit of promoting the employees from within the company is they already know the culture, and it would be easier for them to move forward with their new jobs.

These are the candidates you screened earlier and realize they are talented. Don't let their talent go to waste.

According to an article by Business Insider, instead of searching for talent in the job market, search for them within. You will be surprised to find that the most talented and worthy people have been working with you all along.

They need to be discovered and polished. You need to set a clear "career matrix" for your employees right from the start so they can follow a path from which talent can emerge.

The value of external hiring is still there

Sometimes promoting from within is not an option because there might be no one fit to fill the position and take on the managerial responsibilities within the organization.

In that case, external hiring is the best choice. According to SHRM, external hiring is better suited when the company is making a strategic shift. In addition to that, an external candidate may bring a new perspective that most of the internal staff don't possess.

Disadvantages of promoting from within.

1- Deviate a high-functioning employee from their current job.

One of the significant drawbacks of promoting from within the company is that you might take away a high-functioning employee from a job they are good at.

When you promote an employee, you need someone to fill that position as well; the new employee might not be able to fill in the shoes of the previous employee.

2- Impact negatively on co-workers relationship.

The promoted team member may feel distant from the rest of the team because, in most organizations hierarchy still matters.

The same co-workers who first included you in the post-meeting discussion, pitch in for a gift, or grab a coffee or lunch might feel alienated from the promoted person. In most cases, they start teasing and mocking your authority by making jokes about your new promotion.

3- Increased competition.

Promoting from within can be a motivating factor, but sometimes it turns into an unhealthy competition between employees to achieve the next promotion.

They will start to act selfishly and avoid working in teams and try to take credit for all the work. It brings about negative culture in the company, which might be hurtful in the long run.

4- Increased turnover due to impatient employees.

Promoting from within is helpful in a continuously growing organization because there is plenty of room for promotions.

It might not be the case with small companies where employees become impatient and cannot wait for years for other employees to leave the company to get promoted to their position.

They will ultimately start looking for new opportunities and leave the organization.

Internal vs. External Hiring, What to decide?

A Forbes article suggests that promoting from within a company is the better choice because external hires' cost is high compared with internal promotions.

The best way to deal with internal hires is not to advertise the job if you already have a candidate in mind.

As a manager, you should refrain from personal bias and favoritism, and the promotion should entirely be based on merit.

Furthermore, it is advised to explain to the other team members why they were not selected and what they can do in the future to increase their chances. It would be best for managers to work with their Human Resources Professionals before making a bold move.

Conclusion

There will be pros and cons to every hiring decision you will ever make. So make sure that you base your decision on the company culture and values.

You can motivate the employees with internal promotions only when it is based on potential; otherwise, you are risking your integrity.

Every company is different, and what works for one company might not for the other. Hence, the decision to hire externally or promote form within totally depends on the situation and the challenges you face. It would be best if you carefully determined the pros and cons of advancing from within.

Take your time in understanding the scenarios and whether the internal candidate has the potential to take on the duties of the new job.

So whatever your decision is, you must keep in mind as a manager to continuously work on employee development and training to retain talented and qualified employees.