Shop or Shape: Which is Better, Hiring from Outside or Promoting from Within?

Have you ever been passed for a promotion? Have you ever wondered what goes into the decision-making process of filling a position? Or are you yourself looking for a candidate to occupy a vacant seat in your company and wondered whether you should promote one of your own or hire a new employee for the job?

 

Really, there is not a simple answer to that question, but hopefully this text can give you some insight as to what you should consider.

Why Promote?

As I’m sure you are aware, there are several pros as to why an internal promotion is a good solution. First, the employee already knows the company which means that generally it is less expensive. It is also good for employee morale; knowing that there are possibilities of advancements within the company is a great source of motivation for many individuals. This option helps maintaining the company culture, having an employee who already knows how the business operates is great for maintaining that which you have spent years building.

Why Not?

When you promote from within, yes, it is less expensive in the short term, but it isn’t always so in the long run. External hires allow the employer to pick from a larger pool the right candidate for the job. Sometimes an onboarding period is a necessary cost for an optimal candidate. It is also good to have, on occasion, fresh blood within your company; it brings in new management ideas, a fresher perspective, etc. if there is a problem within the company culture, it might also be better to hire someone new.

But the real question might not be whether you should hire or promote, rather, under which circumstances should you do one over the other? I have prepared the following table as a general guide. Now, this is by no means an exhaustive list, but it aims to give you some general insights relating to different circumstances:

Outside HireLook Inside
If new strategies or new ideas are required to change certain features of your company and to keep it afloat.If your company is doing great.
If new strategies or new ideas are required to change certain features of your company and to keep it afloat.If your employee reviews and performance evaluations are clear and reliable.
If data and means to evaluate the employees’ performances are not available or reliable.If the skills required are specific to your organization.
If unique competences are needed for a specific job.If the onboarding process is not well established and the support for the job restraint.
If having fresh perspectives is part of your corporate strategy.If your company culture is unique and might be difficult to understand from the outside.

This is, of course, not a one-size-fits-all type situation. Many variables will go into the decision-making process when it comes to fill in an open position, but hopefully, these few pointers might have helped you. Remember that it is not only important to weigh in the pros and cons, but to evaluate the circumstances around. Your business will have to both shop around and shape an employee for a position, but what is important is to take the right decision at the right time.