Why You Should Promote From Within - the pros and cons of hiring internally
One of the most far-reaching and impactful choices in any organisation is when a hiring manager has a role to fill and needs to decide whether they want to look within or recruit externally. Sometimes, a role requires an experienced leader who might bring external knowledge and perspective. But there are many benefits to promoting from within as much as you. In this two part blog series we’ll be looking at the pro’s and con’s of promoting from within and how to do it well.
What Is Internal Promotion?
Internal promotion happens when you choose to promote someone within the company, rather than hire someone new. The employee can be promoted from the same team or it could be someone with cross-functional skills from another department. Whilst it can mean moving into a more senior role it could also be a sideways promotion into a new team or function. There are plenty of reasons your dream candidate could be right under your nose, but when and how you hire internally is key.
Pro’s of internal hiring
Faster onboarding
When you promote internally, the candidate will have already gone through all of the basic company training at the least. At the most, they will have been on the same team and will have nearly all the information they need to start. They’ll become operational much faster than external hires. You won’t have that 6- 9 month “bedding-in” period where they have to get to know the team and start building those working relationships.
Retaining organisational knowledge
When you promote from within you ensure key company knowledge sticks around. Your people have experienced first-hand how your organisation has handled challenges in the past. They remember situations that may have happened years ago that are key to what your company will and will not do now. They will be able to make faster, better decisions you can trust. Whilst a new hire can develop this they are going to need someone to guide them who gets your organisation and understands how it works.
Higher employee retention
If employees know there is a possibility for them to grow within a company, they’re more likely to stay. You don’t want your best talent walking into a new job, taking their experience and skills with them.
“A survey of more than 3,300 employees conducted in March 2022 revealed that fewer than one in three employees knows how to progress their career over the next five years. Many employees do not feel that they can rely on their managers for help – only 50% of employees report that their manager tailors feedback based on the role they want to move into. As a result, employees are increasingly considering leaving their organisations” Gartner HR Research 2022
If you can provide internal promotion and mobility for employees, you could cut turnover by up to 75%. If you want your best employees to stick around, show them that there is a path to progress.
Study after study after study from the likes of PwC, Gallup, Deloitte, and LinkedIn shows that employees value growth and development in their careers. When you promote from within, you're demonstrating to your people that if they stick around, do a good job and want to develop, they can be rewarded.
Breeding loyalty
Do you expect loyalty from your people but it’s a one way street? Are you disappointed or even hurt when you see your good people leave? You could be forgetting loyalty down. When you recognise people for their loyalty and demonstrate your loyalty to them, you keep your part of the social contract as their employer. Whilst praise and appreciation can go a long way you'll need to make larger gestures to keep your best people. When you promote from within, you're making a significant gesture.
Reduction in staff turnover
While some employers view turnover as a natural part of doing business, the reality is that it can be incredibly costly and damaging to an organisation. According to the Society for Human Resource Management (SHRM), the average cost of replacing an employee is six to nine months of their salary. For high-level or specialised roles, the cost can be even higher. Replacing employees can lead to decreased productivity, decreased morale among remaining staff, increased workload, and decreased customer satisfaction. The importance of employee retention cannot be overstated.
Retaining and developing employees can lead to a more engaged and productive workforce, lower recruitment and training costs, and better customer satisfaction. Employees who feel valued and supported are more likely to be motivated and committed to the success of the organisation.
When taking costs such as recruitment fees, productivity and team impact into account, Culture Amp estimated the cost of replacing an employee starts at 30%, rising to 200% for top performers. Given the average salary in the UK in 2023 was £34,963, employers face substantial costs of between £10,500 and £70,000 per employee to replace talent.
Increased employee development
Internal promotion goes hand in hand with challenges and personal development. Going internally means you’ve already hired someone performing well enough to be considered for a promotion. By promoting them you’re helping them acquire new skills, making them an even more valuable employee.
Think about organisations who offer graduate programs after internships. They identify development potential and train these people to progress. Showing your people you have faith in them to tackle new challenges is a win-win. For your employees, they get a new challenge and opportunity to prove themselves again, growing within the workplace. For senior leadership, this gives you a way to show everyone what matters and what you want to see more of.
How are you rewarding your best people? Who are the role models you're choosing for your company? These are questions you should take time to deeply reflect on and understand your answers fully.
Better cultural fit
Not everyone makes career decisions based solely on salary and traditional benefits. Half the battle of joining a new company is fitting in with the work style, values, and culture.
“Employees have said that the pandemic has caused them to rethink the place of work in their lives. The Gartner survey revealed 75% of employees want to spend more time on their personal lives, while more than two-thirds report they want to find purpose beyond work” Gartner Hr Research 2022
By promoting internally you can ensure the new manager not only fits in but also exemplifies the culture you want to promote. Culture is like concrete, so the more you promote from within, the more you establish key values that you want to reward.
This is an idea of Joe Gebbia, the co-founder of Airbnb “When it is first laid out, culture can take many shapes until it hardens. However, after some time, it will harden and then it's very hard to change.”
Choose the qualities you want to see on your team carefully. Once you do, be very intentional about looking for them in your emerging managers. Reward the behaviours you want to see by promoting the right people to roles that require those values and skills. It’s easier to deal with a bad promotion than a bad hire.
Reward what you want to see more of
Promoting from within shows your team the traits you want to see more of. These qualities represent a blueprint for future leaders. When you hire externally it may not be clear to your team members why you made your choice. Think about what option makes more sense: Nurturing the qualities you want to see and being clear about what you expect from managers, possibly shaping an entire future generation of leaders or taking a bet on someone new without telling your team what motivated your decision and diluting your company culture?
Reducing the risk of a bad hire
When you promote internally you won’t end up hiring someone that secretly has no idea how to use Excel but found their way through the entire hiring process. You know the internal hire will fit in with the company and has succeeded in their current role. They are a known quantity.
Cons of promoting from within
Now we’ve seen all the reasons for promoting within let's take a look at the other side. While hiring internally has many tangible benefits for an organisation, it’s not always possible or the right option.
Groupthink
Groupthink is a psychological phenomenon that happens when a group of people continuously make decisions without challenging or being challenged. This type of thinking leads to less strategic and more comfortable decisions. It’s a risk if you constantly promote from the same teams that have similar ideas and reasoning as their predecessors.
Lack of diversity
Diversifying your employees can combat groupthink and make your company more inclusive. Internal promotion could go against this. Make sure to consider this when thinking about internal promotion. Determine if you’re (unintentionally) promoting one type of person, or leaving growth opportunities open to everyone.
Internal conflict
Internal candidates going for the same job will be up against each other but still have to work together afterwards. Ultimately those who don't get the role might decide to leave later on due to conflict. But this is just a possibility and one that is very preventable based on how you handle the promotion process.
Passing by a better candidate
If you promote from within simply because it’s easy and more cost-effective, you’ll often become a victim of this. You can get into some real trouble if you promote an employee who isn’t ready for a leadership position, doesn’t have the experience necessary for this job or isn’t easily trainable. If you promote someone in any of these situations it’ll end up costing you more. And even worse you may have to face letting them go and starting the whole process from scratch.
Promoting from within so often comes out ahead. The culture fit, knowledge retention, faster transition, and improved retention makes going with an internal candidate the lower risk option in most cases. Sometimes you will recognise that your organisation needs fresh perspectives from external hires or maybe you need an injection of diversity of thought to guard against Groupthink. But when you have qualified internal candidates, promoting from within should be your first choice as long as you take time to reflect fully on what a good internal promotion process looks like.
Come back for Part Two of the blog next month on how to make sure you get your internal hiring process spot on.