Internal Hiring to the Rescue

The latest survey by the American Management Association states that one third of organizations prefer to hire within. What are the other two thirds missing out on? Today’s Advisor will explore the ups and downs of this topic.

The relationship between a recently open position and hiring can seem simple and obvious. When one employee leaves, hire another. An American Management Association survey, discussed in a recent article by BLR®, says that the majority of employers take this stance. They wait until they need someone before they start looking. As a result, the company is already behind before it even begins interviewing.

Sometimes, a more proactive approach is in order. Many organizations find that a program of retaining and developing existing employees—and then hiring from that pool—can be of great value. Employers who rely on outside hiring don’t consider an important factor: employee loyalty and morale.

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While employee loyalty has no exact dollar value, it is nonetheless a vital metric. The reactionary method of recruiting talent from the outside has the downside of making current employees who may have been a good fit for the open position feel overlooked, damaging their sense of loyalty.

As every manager should know, low morale can have sweeping consequences. Performance will suffer and employees will be more likely to leave the company, resulting in even more vacancies to fill. Employee turnover costs U.S. businesses approximately $11 billion every year, making overall retention the perfect tool to fix the problem. An important part of retention involves hiring from within.

Take a Look Around Your Company; the Best Candidate Might Be Looking Back

Hiring from within can help boost morale, and a lot more. Here are some other advantages of hiring within:

  1. You’re hiring someone you know. Let’s face it, when you hire from the outside, you don’t even know if the person will show up for work every day and give you a good day’s effort.
  2. You avoid advertising costs associated with recruiting. Recruiting costs time and money. An email to your employees outlining the job costs nothing and takes only a little time.
  3. You don’t have to offer sign-on bonuses or hire high in the range. While not every company offers sign-on bonuses, remaining competitive while hiring often requires offering bonuses or extra high salaries. Internal hires often consider moving up (and all of the advantages it entails) to be a bonus in itself.

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  1. Your hire hits the ground running. No matter how talented or experienced they are, outside candidates have to learn the ins and outs of the company from scratch. An internal candidate already has an understanding of how the company works, and can be brought up to speed on the new job much more quickly.
  2. You save time and money on training. When training time is reduced, that frees up the time of the employee(s) conducting the training as well. In this way, you are effectively doubling down on time saved, and therefore on money saved.
  3. You build retention and engagement. Hiring within shows employees that you consider them important and offers them fresh duties. Both of these advantages directly engage the employee. An engaged employee is much more likely to remain focused and productive at work.

Tomorrow we’ll take a look at the nuts and bolts of dealing with potential internal hiring trouble, plus an introduction to BLR’s HR Playbook: HR’s Game Plan for the Future.