Internal Promotion vs External Hiring: Which Is Better?

It is time to fill a higher-level position at your organisation, and you have two options: promote someone internally or go outside the organisation for a qualified candidate. HR managers are frequently asked this question, which is difficult to answer. 

Here are the pros and cons of internal promotion and external hiring:

The Benefits of Internal Promotion

1. Internal recruitment will help you advance your talent, promoting retention and possibly improving performance. If you have established KPIs to identify your high-performing staff members, you may already know who is thriving in their role and may benefit from a fresh challenge.

2. Everyone benefits when one employee succeeds. Internal promotion boosts employee morale, demonstrating that your organisation promotes outstanding performance. Higher performance entails the possibility of taking on new or extra tasks, moving to a department of interest, or being promoted.

3. The recruiting manager usually knows internal candidates and has a relationship with them. Learning a lot about your internal prospects and their performance can often expedite the interviewing process and get you back to work faster.

The Drawbacks of Internal Promotion

1. When internally promoting, you may fill one post while opening another. You are now forced to return to the initial query for this new position since your candidate's role must be filled. It is like a chain reaction. Therefore, if you hire internally and suddenly need to fill that person's position, your internal options may be limited.

2. Internal recruiting maintains the status quo because existing employees may continue to use the same or comparable ideas and approaches as they have in the past. This may hinder your company's ability to experiment with fresh ideas or think outside the box. This strategy may not be as feasible if you want to shake things up.

3. While internal hiring can incentivise employees and push them to work well, it can also raise competition, negatively harming culture and team performance. Employees may feel compelled to compete with one another to advance, which can lead to interpersonal conflict. Employees who believe they are a perfect fit for your vacant roles but are not promoted may overstate this.

4. Opportunities for advancement may drive other employees to become impatient. If staff members think that the only way they will advance is if someone in a more senior position leaves, they may look for alternative options with faster advancement.

The Advantages of External Hiring

1. From time to time, a company requires rejuvenation. Bringing in new applicants from outside sources might give the organisation fresh ideas and perspectives to help the company grow and advance. According to SHRM, companies also use external recruitment to attract talent with the required skill sets, especially when looking to grow the company or move it in a different direction.

2. External hiring introduces the organisation to a far bigger pool of potential candidates. Only a few current employees in many organisations are prepared to fill an available post. External employment removes those constraints.

3. Candidates may have additional skills and experiences that would be relevant to the role.

4. External hiring reduces the likelihood of internal animosity, competitiveness, and conflict. As a result, staff members may not feel as though they are competing with one another for advancement, which may build a more favourable team culture.

The Drawbacks of External Hiring

1. External hiring is a time-consuming process. It takes time for HR or the hiring manager to sift through resumes, vet candidates, and conduct interviews (sometimes two or three interviews per person). This can significantly increase the time it takes to fill the post. 

2. The amount of information you can extract from a CV and interview is limited. They may have the degree and expertise, but are you receiving the full picture of their behavioural characteristics? It usually takes 3-6 months to fully understand a worker's personality and natural behavioural patterns.

3. There will always be doubt about how well outsider applicants would fit in (or not) with your current company culture. Candidates who appear to be excellent on paper and in interviews may wind up causing schisms in the business culture. Therefore, hiring for culture fit is essential when hiring external talent.

The ultimate truth is that both internal promotion and external hiring have significant advantages and disadvantages. Therefore, we urge that you evaluate your position objectives: what impact do you want this individual to have in your organisation?

Promotion from within may have a beneficial impact on retention rates, performance, and company culture. But if you need an injection of new ideas to shift direction, external hiring may be the trigger for dramatic change.

Visit the HR Library to acquire all relevant HR resources.
Contact here for more information on hiring employees.