A study from the Wharton Business School showed that external recruits tend to be paid 18% to 20% more than internal employees doing the same job, but receive lower performance reviews in their first two years. The research also revealed that external hires were 61% more likely to be fired or laid off from their role and 21% more likely than internal hires in similar to voluntarily resign.
One of the most critical decisions a company will need to make during times of growth is whether they should promote from within or hire talent from outside. While occasionally there will be a firm case for hiring externally, there are so many benefits to promoting from within that it should be your goal to do so as often as possible.
Saves your company money
Finding a new employee can be time-consuming and expensive. You spend hours on the recruitment process, and then the candidate selected needs to receive training, which often pulls necessary resources away from their primary function. Productivity is also lowered while a new employee gets up to speed, which may take a couple of months depending on the role. With proper mentoring, an internal candidate can easily transition into a new role. Save money and time.
The learning curve is shorter
When you bring in someone new, they will not be familiar with the work culture of your company and they certainly won’t know any of your company’s best practices. Often this translates into a longer training period for an external hire. While they may bring a fresh perspective, differing management styles can sometimes cause a serious culture clash which can end up damaging morale. When you promote from within, your employee already knows the systems, culture fit, management style, and day to day of the business, ensuring that everything carries on as usual.
Motivated employee work harder
When there is an opportunity to be promoted from within, employees work harder to accomplish goals. It keeps them motivated and provides extra incentive year-round. When the sky is the limit, you work harder and deliver more. Start promoting on merit when a position opens up, rather than waiting for annual reviews.
Keep institutional knowledge
Long-term staff are the keepers of knowledge in your company. They’ve experienced obstacles, and they’ve learned how best to problem-solve while aligning with company values. This allows for faster, better decisions you can trust. If a long-term employee leaves, they take with them years of valuable knowledge which hurts the skills of the team they are on.
Boost employee retention
When employees know they are first to be considered for a more senior role, they have the opportunity to be more strategic in planning a career with their company over a significant period of time. This raises overall company growth and drives retention. Employees appreciate when their company invests in their career through training and development. It builds incentive to stay with the company long term and provides employees with a greater sense of job security.
Remember the following before you promote from within
It isn’t a case of having to choose only internal or external recruitment practices. There are several items to consider. Remember, if you are going to be cultivating people intentionally, then you need to advance them when the time is right.
Weigh pros and cons
Every role you hire for will have very different needs. Consider every open position critically: examine hiring and training costs, as well as how quickly a hire will need to know internal processes. Only then decide if it is in your best interest to hire externally.
Develop a system to train entry-level hires
Initiate succession planning to train employees to take over more senior roles five years down the line. Keep moving junior staff into more complex positions. It is much easier to replace entry-level roles with external hires.
Keep key people in place with great benefits
When a new employee starts, make sure to negotiate a good package of benefits along with a competitive salary. You don’t want to lose a team member because a competitor offered a better health plan, flex time, or vacation length. Stay as competitive as possible in every aspect so you have those dynamic people in place, ready to be promoted.
Maximise your ability to promote from within
If you are looking to fill newly opened roles with pre-qualified candidates that are a good fit and will be long-term assets in your company, connect with one of us today! Let’s work together to make your company the success it should be.