Your resource for people wisdom and trends

The hiring process can be an intimidating time for an organization. It requires a lot of time and direction from the top and, if done incorrectly, runs the risk of drastically affecting your bottom line. There are several factors to consider when beginning the hiring process; but the first step is the most important – the decision to promote an employee or hire externally.

On one side, there’s a common assumption that existing employees might lack the skill set for a new position or that newer skills can offer a unique perspective to the organization. On the other side, a growing company requires positions be filled immediately, and it can be tough to find candidates whose skills will fit the hiring manager’s expectations.

There are few ways to evaluate whether to hire internally or externally. Luckily, tools like pre-hire assessments and team interviews can help you determine which decision is right for the specific role needed. To get you started, here are a few pros and cons to consider when choosing whether to promote employees or hire externally.

Pro: Internal promotions show opportunity for other employees, leading to higher retention

Hiring internally can often boost morale throughout the organization by showing the growth and opportunity that comes from staying with the company and excelling in your role. Showing your employees you appreciate them by promoting their successes can increase your retention rate and give your employees a sense of stability.

Overall, this boost in morale increases both the financial and cultural health of the company and encourages employees to work harder for the opportunity to be rewarded accordingly. Promoting employees shows that the company is growing and turning that growth into opportunities for its employees. It creates a greater sense of stability and helps employees at every level feel like they’re working toward a common goal.

Pro: Promoting employees means less of a transition period and a quicker adaption

Internal hires can adapt to new roles within the organization more quickly because they are already familiar with the organizational processes and office politics. If someone new is brought in, it can take some time for them to get acclimated to the company culture and understand best practices, which lengthens the onboarding period and sometimes prevents the employee from providing immediate results.

When you promote from within, you identify the characteristics that embody the foundation of the company and dispel any friction that may come from an outside force.

Con: Hiring internally could prevent opportunity for innovation and an outside perspective

A factor to consider when evaluating your hiring strategy is the opportunity that comes from pulling from the outside talent pool. An external hire can bring new ideas, fresh perspectives, and a change of thinking, which can help improve processes or bring new approaches to the organization. For organizations focused on innovation and new products, an external hire may provide desirable and fresh skill sets, depending on the open position.

This advantage is somewhat of a double-edged sword, as outside perspectives bring a fresh point of view but might also bring a drastically different management style that may stifle employee morale and productivity. This is where hiring tools and consultation may be especially useful in evaluating the pros and cons for the particular roles you’re looking to fill.

Con: Internal promotions to some may create chaos in company culture for others

Just as likely it is that promoting employees leads to a boost in employee morale, it also runs the risk of having the opposite effect. Although hiring internally requires less training, there is an adjustment to new expectations and responsibilities. Depending on where the promoted employee lies within the internal office politics, some employees might not agree with the promotion, which could create an environment of tense bitterness in the office with resentment towards the new leadership.

Let AHA! Business Consulting walk you through evaluating internal promotions versus external hires

As you can see, there are a lot of different variables and factors that go into the decision on whether to promote from within or hire externally. No two open positions or situations should be treated alike. In retail and service industries, the people you put into place are the ultimate drivers of your company’s success.

That’s why when hiring professional, outside resources can be instrumental in helping you navigate the pros and cons and lead you toward the right decision. Tools like PXT Select^TM Prehire Assessments, which help you understand human behavior, can provide unmatched insight into why people do what they do and how they can help you reach your business goals.

Contact us to find out more about how we can support your organization’s needs.