Recruiting, Talent

Pros and Cons to Internal Promotion vs. External Hiring

There are numerous factors hiring managers and other executives must take into account when making decisions for a new position. These include everything from defining a job description to creating a salary range and, of course, whether to bring in an external hire or promote an internal employee. This is typically one of the most difficult decisions, especially within a smaller, tight-knit organization. The choice to hire externally is made 18% more often than promoting an internal employee. Despite this fact, there are pros and cons to both options.

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External candidates may offer new ideas that bring about change in an organization, while internal candidates are already up to speed on company policies and procedures. It’s important for the success of the hire and the business that managers make the most informed decision. Here are some of the pros and cons that come with hiring externally and promoting from within.

Internal Employee Promotion

While statistically, external hires are made more frequently, there are numerous advantages to promoting an employee from within. First, existing employees are already aware of all policies and procedures and have possibly even completed certain similar job tasks in the past. External hires often take longer to get up to speed and may be less successful than internal hires.

In fact, external new hires are 61% more likely to be fired from their jobs than those who were promoted. The slower pace of learning and failure to thrive can be costly to a business. Excess training may be required to ensure effective learning and productivity, and businesses spend anywhere from $1,075 to $1,886 on training per employee.

However, there is one major con to promoting an internal employee. On occasion, employees experience burnout due to stress or other factors, which often leads to lower productivity and lack of creativity.

Searching for an External Hire

Option number two for hiring managers to consider is making an external hire. These candidates often bring with them new ideas and a clean slate filled with creativity and new opportunity for growth and learning, which can be beneficial for teams and the entire business. Often, businesses don’t always recognize their need for change, and external hires can help illuminate the necessity.

On the flip side, external hires can also cause a variety of issues. For example, there may be animosity if an existing employee thought he or she might receive the new position or if the internal team struggles with the new leadership. Either way, these are possibilities that executives must prepare for.

Hiring is always a challenge involving numerous factors and decisions that must be made. When it comes to choosing to hire externally or internally, all the pros and cons must be taken into account in order to make the most informed decision that is best for the business and the overall bottom line. However, if all possibilities are accounted for and the correct choice is made, organizations should find themselves in a successful situation.

Jason CarneyJason Carney, HR Director of WorkSmart Systems, joined in 2007. He has extensive knowledge in all aspects of HR, through his nearly 20 years of experience in industries such as finance, staffing, and technology. Carney holds a B.S. in Business Management/Human Resource Management from the Indiana University Kelley School of Business, and is a Senior Professional in Human Resources (SPHR).

Carney has often been described as a “business-friendly HR person” who understands how employment decisions affect the bottom line. In his free time, Carney enjoys golf, coaching baseball, softball, football, and basketball, and spending time with his family.