Promote from within or hire externally: the ins and outs of finding your next hire

When seeking to fill any open position, one of the first decisions you’ll likely make is whether you hire internally or externally. Growing a business is an exciting and challenging time, and having the right team on-board is vital. Knowing which path to take can be confusing and stressful. Whichever path you take, you need the same thing. Great people.

So, where do you set your radar? Do you look internally at existing personnel assets, or do you broaden your scope and look externally? Both avenues have compelling benefits. To make the decision its important to consider timing, cost, time to productivity, impact to existing staff, culture and more. Sometimes the best approach is a blend of considering both internal and external candidates.

Internal hiring is filling a role from within the business with existing employees. It may be via promotion or horizontal re-positioning. Promotion is where an employee is recruited to a more senior position based on a performance or merit system. Horizontal re-positioning is where an existing employee is recruited to a new open role within the business, but it is not based on reward, rather it is based on the needs of the business and the desires of the employee. Many companies opt to promote from within to nurture a culture of advancement, ongoing learning and to offer career paths to their teams.

An internal search gives you the benefit of hindsight. The business knows the person already and has a sense of trust in their capabilities and loyalty. The employee has likely already proven their understanding of the business strategy, structure, vision and culture.

External searching is the process of sourcing new talent outside the business, through external channels such as advisory services. These candidates are handpicked based on the needs and qualifications of the role, and the purpose of that role for the business. Hiring externally can be a valuable way to bring fresh perspective to the business. Fresh talent can shift team dynamics for the better.

Sometimes it’s necessary to look outside the business to find the ideal candidate. Smaller businesses won’t always have the internal network to recruit from within. Larger businesses may need to drive change or bring fresh ideas to bear. One of the greatest advantages of external hiring is that you have access to a vast network of candidates with skills and experience that can compliment your existing team without compromising your existing structure or talent pool.

There are many factors to consider when looking to fill a role. Here are some pros and cons to keep in mind the next time you’re debating whether to promote from within or hire externally:

Benefits of hiring from within Benefits of hiring externally
- It can be a much quicker process to hire as there’s often a smaller candidate pool from which to select
- Less down-time during transition
- Lower cost to hire
- Candidates and their strengths / weaknesses are already known by the business
- Candidates know the business, processes and values
- Candidates are already likely a good culture fit
- Employers who show that internal advancement and change is possible can motivate the wider team and boost company morale
- Broader options from a larger candidate pool
- Candidates can be targeted based on very specific skills and expertise
- New talent, with new ideas and energy
- It builds team numbers
- Fresh perspectives can breathe new life in to a stagnant team, which can be not only uplifting but also essential to drive positive change
Disadvantages of hiring from withinDisadvantages of hiring externally
- If an employee moves internally, their previous position may require backfilling
- There will be fewer new personalities, ideas and energy coming in to the business
- The potential pool of candidates could be limited
- Unless managed effectively, seeing a colleague advance can make other team members feel personally undervalued
- It can be a costly process with minimal guarantees of success
- Reviewing larger pools of candidates can be time consuming
- Decisions are based on interviews and/or test- based scenarios rather than proven work ability
- Difficult to assess how a candidate will truly fit with the team culture

When making your next hiring decision, focus on:

  • Hiring the right person for the role, not the ‘almost’ right person. Even if that means taking a little more time than you’d prefer in order to search externally
  • Assessing both hiring practices upfront. Consider using a combination of both
  • Thinking about what your current employees want. Are they where they want/need to be professionally? Could they do more? Do they want to do more?
  • Whether the business benefit from the expertise and the potential leadership vision of a new person?
  • The loyalty of your existing employees, especially if they are qualified for the role or if they believe they’re qualified for the role

Begin the process by building yourself a business case to determine if an internal or external search strategy is best for you, and you’ll be able to manage the process with a clearer understanding of who you want for the role and why you want them.

Best practice is whichever process works for your organisation, and this practice will likely change as roles evolve and become available. Best practice is knowing your needs, setting your parameters, and running with the strategy that will have the biggest and best impact on the business.

For more tailored advice on whether to hire from within or seek talent outside your four walls, please contact us for a confidential conversation.