In business, there will be occasions when you are required to create a job vacancy that holds significant responsibility. You could be expanding and need someone to run a new team, branch, or facility for your company.
Whether you promote from within or hire a new candidate can be a tough decision to make, as both have their advantages and disadvantages.
The Benefits of Hiring from Within
Matthew Bidwell looked extensively at the advantages of promoting existing staff compared to hiring in. In his study, he found that not only did promotion from within provide better results for the employer, but it also saved money in both the short and long-term.
One of the biggest finds from his study was that new hires are paid 18% more than those promoted from within a company for equivalent jobs, and were 61% more likely to be fired.
Performance review results were unexpectedly lower for new hires, and the main reason cited for this is that new hires often don’t have the support basis they require to do the job effectively from day one.
30% of hiring managers believe it can take over one year for their new hires to become effective. Other recruiters state it can take up to two years for new hires to become a valuable resource for their organization, while the Harvard Business Review believes it could take at least eight months.
The loss of a new hire can be expensive. The cost of hiring a new employee is on average between $40,165 and $56,770 per worker. When 46% of new hires fail within 18 months, the costs for your business can be extensive.
You would need to rehire for that position and the damage done to your organization might be unseen, but it is present and high.
An existing employee who is promoted knows how the organization works, how it’s run and who does what task. This can have a significant impact on the performance of a new leader. Good promotion practices might save you money in both failed new hires, lost productivity, and wages.
Yet this doesn’t mean that there aren’t challenges when it comes to hiring from within.
The Issues With Hiring From Within
When promoting from within an organization, candidates are often not asked to update their resumes and their interview skills are often poor. This can mean that their suitability for the position might not be apparent to hiring managers.
Candidates who are promoted can also change behaviors. They could try to make life difficult for rivals, which could lead to a sudden loss of key players within your team. Likewise, those not promoted might sabotage the work of the promoted employee to make his/her position difficult. This is not always so with seniority promotion, where those with the longest service are promoted, but just because they’ve served your organization for years doesn’t mean they are a great candidate.
Finally, promotion can sometimes be based on emotional preferences rather than data which supports a candidate’s suitability. You might like an employee better than another, but that doesn’t mean they will be better at the work. Emotional detachment is necessary for any potential recruitment process.
Navigating the Minefield
The above negatives about internal hires shouldn’t imply that they can’t be recruited successfully. There are many ways you can create a good internal recruitment process that can help you identify and promote the right candidates.
1. Use Goals to Prepare Staff for the Potential of Promotion
It is likely that at some point you will want to promote a member of staff. Therefore, you should look at your staff development early on. Giving good performance reviews, and setting and monitoring goals for your employees before a position is available, will help you:
- Determine who is performing as expected within your organization.
- Identify who has the drive to be successful within your organization.
- Develop your employees so they are ready for the next stage of their career.
- Give clear expectations to your staff of what is expected from them currently and in the future.
Staff who are given clear goals, will also be more focused on their work and more efficient.
2. Treat Any Internal Recruitment Process Like an External Recruitment Process
While you might think you can be more relaxed with your internal recruitment process, it is best to keep it professional and like an external recruitment process. Start with an official job opening announcement, place it on your intranet or another place that anyone in the company can view.
Then have a process that can provide reassurance to your candidates that it will be a fair process, by submitting CVs and attending formal interviews. Candidates should then be assessed as any new hire would be, and then a formal job offer can be made.
This helps your hiring team to prevent bad decisions based on emotional attachment or for potentially successful candidates being left aside because they don’t have the social connections within the office.
It is highly advisable to use applicant tracking software within the process to ensure every candidate is treated the same. Therefore, no-one can complain about bias during the recruitment process. ExactHire’s HireCentric applicant tracking system offers an employment application option for internal employee transfers for just this type of scenario.
3. Be Transparent With Decisions
One of the key areas of concern when promoting from within is how others will react. Generally, people in the office are supportive, but at times there can be conflict. This can be from jealous colleagues who feel they should have been promoted instead.
To minimize the risk, you should contact each applicant and talk about the decision. Why were they not chosen, why the successful candidate was promoted, and what is expected from them in the short and long-term.
Higher positions often hold more responsibility and greater influence on the success of the business. Therefore, you want the best people for the role from the start. While new hires might be suitable for your business, don’t discount the talent already working for you. They are already acclimated to your corporate culture, know your processes, and they can better adjust to new tasks than a new hire. They can also be more cost effective.
That doesn’t mean an internal recruitment process doesn’t have its issues and these need to be addressed with the correct short and long-term processes. With the right frame of mind, the best processes in place, and good technology you can promote from within and hire new talent at lower levels.