The stakes are high when it comes to hiring. A bad hire can cost a bomb to a company, whereas the right one can help you defuse one. So, should managers invest more time to source better candidates? Or should they invest in their teams to promote internal talent? Which is better? Hiring externally or Promoting internally?
The answer? It depends…
Let us look at the benefits of hiring externally and promoting internally, as well as instances in which one is better for your company.
Benefits of promoting Internal Talent
Lower cost? Better performance? Better morale? Check and check. Yes! Promoting internally has a lot of things going for it, including:
- Better Performance: Internal employees are accustomed to the company culture and the way work is supposed to be done, hence they work better when promoted to similar posts rather than external hires, who are new to the system.
- Lower Costs: Internal employees perform better than almost 40-60% of external hires. Hence resulting in higher productivity when an internal employee is promoted, all this while cutting down on another hiring process which is both expensive and time-consuming.
- It’s Faster: As pointed out earlier, it takes lesser time and effort to promote an internal employee than look for an external hire.
- Morale: One of the most common reasons people leave their company or job is that they believe there is no room for advancement. Thus, promoting internally additionally helps in boosting morale and retention.
- Company Culture: Internal people are well-aware of the company culture. Some people believe the most important factor in an employee’s success is cultural fit.
Benefits of Hiring Externally
Why consider hiring externally? Especially, given the benefits of hiring internally? There quite a few good reasons to do so:
- Discover Fresh perspectives, ideas and talent: New people can invigorate a team or company, and in a few industries, generate new ideas crucial to success and staying relevant.
- New Skill Sets: The skills you require are often not available internally, especially, when launching a new product or initiative, or sometimes even hiring for a new position.
Other Factors to Consider
In addition to considering the benefits of both hiring externally and promoting internally, it is equally important to consider the scenarios and circumstances within your organization which may make it better suited to going one way or the other.
Internal Promotions maybe better if:
- The company has a unique culture and a specific way of getting things done.
- Time – the position needs to be filled immediately.
- The company is doing very well. (If it is not broke, don’t fix it.)
- Career Advancement opportunities aren’t available in the company.
External Hires may be a better bet if:
- Company culture embraces different perspectives.
- When there is inadequate succession planning.
- The company wants to get things done “Differently.”
Ultimately, it is not an either/or proposition. There will be times when it is best to cast the company’s net wide for an external hire, and there will be times when it is best to promote internally. The trick is in knowing what to do and when to do it.