Is it better to promote from within or hire externally?

The time has come to fill a senior position within your company and, like many hiring managers, it is likely you will be faced with an almost universal dilemma: should you promote someone from within the organisation, or are you better hiring externally? Both have their merits and the option you choose can only be determined by the specific needs of the business itself.

In this article, we’ll look at each one in turn with the hope of providing you with a clearer idea as to which option is right for you.

The case for promoting from within

The so-called ‘great resignation’ came about because people were forced to delay making any career change decisions during the COVID-19 pandemic. With workplaces able to re-open once again, accompanied by a rebound in the economy, hiring quickly picked up and workers were no longer prepared to tolerate poor pay and a lack of career advancement opportunities; hence, their decision to jump ship and swim the seas to perceived better opportunities elsewhere.

When employers listen to their people and do everything they can to provide them with what they want from their careers, these employees will be some of the most loyal, productive, motivated, and effective workers in your organisation. They will share the business’s values and invariably be one of its biggest brand ambassadors.

Moreover, a high staff retention level and demonstrable commitment to providing opportunities for people to develop and grow significantly enhances your profile as an employer of choice, both for current and future employees. This in turn can boost employee referral rates and help save time and money on recruitment costs because individuals are already familiar with the organisation’s culture, processes, and more importantly its expectations.

However, there are drawbacks to hiring for a senior role from within.

The case for hiring externally

Obsessing over cost per hire and basing the decision to rule out hiring from outside the organisation without focusing on quality of hire is a mistake that many employers make. So, what do we mean by ‘quality’?

Essentially, we’re talking about perspectives. While promoting someone from within comes with a degree of trust and familiarity, it also comes with a sense of continuity. And that isn’t always the right thing for the organisation especially during times of change.

Businesses need to constantly be innovating in order to remain competitive and grow. Organisations are getting better at building cultures of innovation, but external influences can provide a much-needed injection of fresh ideas and new approaches garnered from experiences gained elsewhere.

Bringing people onboard from outside the organisation is also good for those already within it. Yes, there may be one or two people who will be frustrated if they feel passed over for promotion. But hiring external talent is a clear demonstration of the organisation’s continued commitment to attracting and retaining great people, and this can significantly improve morale and loyalty.

So, which approach is best for your business?

There are various factors that need to be considered – availability of talent both inside and outside, knowledge gaps, budget, perceptions among existing employees with ambitions for personal growth and development, and the company’s goals over the next 12 months and beyond to name but a few.

In an ideal world, all organisations would have a system in place to develop internal candidates and nurture future leaders. Of course, that is not always the case despite best intentions. Opening up the role to an external candidate symbolises change, whereas appointing someone already working for the company could signal continuity because the individual is a ‘known’ quantity.

There is no universal rule of thumb and the approach you take will be the one that is in the best interest of the business in terms of where it is now and the direction you want it to travel.

If you need support in identifying the best approach to take for your next senior hire, we’re here to help. Maranello prides itself on providing objective strategic counsel to clients to enable them to make the right hire in the right way and at the right time. Can we help you?