Promoting from Within vs. Hiring Outside

You need to make a management-level hire. Do you turn to internal employees or search for external new hires? This decision can impact your business far beyond who’s better at entering data and creating spreadsheets. Who you hire impacts employee turnover, performance, and morale.

To assess both internal and external applicants for your next open position, learn how SENTIO’s hiring solution can help.

Hiring Internal Candidates

Pros:
1.) Internal candidates are already familiar with your business, meaning their ramp-up time to their new position is quicker compared to that of an external hire.

2.) Internal hires are proven to have better performance reviews in the first two years in the position compared to external hires.

3.) When you promote from within you send the message to other employees that your organization values hard work and commitment. It shows employees that the organization cares about their long-term success and wants to contribute to their career growth. This contributes to an increase in employee morale and retention.

Cons:
1.) When you promote from within you are often left with another position left to fill. Depending on the position, it may be easier to fill the management position.

2.) Hiring internally can create unnecessary competition between team members who strive for advancement. Employees may feel the need to compete with each other to get ahead instead of working together for the good of the organization.

Hiring External Candidates

Pros:
1.) External candidates can bring a wealth of new ideas and fresh perspectives to a company. They also bring their experience and best practices that the company can learn from.

2.) External candidates hired over internal candidates typically have more experience and education, which may contribute to the amount of work to which they can contribute.

Cons:
1.) External hires for the same position are paid 18-20% more than those promoted internally (Wharton, University of Pennsylvania). However, this is cited to be attributed to the increase in education and work experience that these candidates hold over their internal counterparts.

2.) When hiring external candidates, it can be difficult to gauge their cultural fit within the organization. This often results in an increase of employee turnover. In fact, external hires were 61% more likely to be fired from their new jobs than were those who had been promoted from within the firm (Inc.com).

3.) Compared to an internal hire who is already familiar with the organization and processes, a new hire must go through an initial onboarding and training period. This training period may take longer than hiring managers think. According to one study, it took two years for the performance reviews of external hires to catch up to the internal employees who got promoted (Forbes).

 

Overall, there are pros and cons to both promoting from within and hiring externally. For each position you are hiring for, it is important to weigh which option is best for the organization and team they would be working on.

Looking to fill open positions? Learn how SENTIO’s hiring solution allows you to assess which employees have what it takes to advance and which external applicants would make a great fit.