When it comes to the question of whether it’s better to promote from within your organization or to hire from outside, the evidence is clear: Promoting from within is the way to go. Of course, as guest blogger Allan Steinmetz wrote for us recently, there are instances where bringing in outside talent is the better option. But those instances are the exception, not the rule.
A University of Pennsylvania study found that the average external hire gets paid 20% more than internal employees promoted to the same job. But they also consistently get lower performance reviews. The Penn study also found that outside hires are 61% more likely to be fired than those promoted from within, and external hires are 21% more likely to quit.1
But promoting from within is more than changing a colleague’s title and giving them a raise. Here are 5 key considerations to keep in mind when reviewing candidates for promotion.
1. Internal Hires Adapt Better to New Roles
According to one national survey, nearly 30% of all job seekers have left a job within 90 days. Some 43% said that their day-to-day role wasn’t what they expected, and another third cited a clash with corporate culture.2
An internal hire knows the landscape and the various teams. They embody the organization’s DNA. Promoting internally helps you avoid the friction of ramping up someone from the outside. They also serve as an example of an opportunity for those who aspire to for more responsibility.3
2. Weigh Larger Impact of Internal Promotion
About 29% of workers say a lack of career opportunity within their organization is the top factor that sends them looking for a new job. When they move on, they leave behind employers nursing two damaging blows. The first is felt financially, in the form of spending time and money on recruiting new talent. The other is felt culturally, lowering levels of engagement and escalating the sense of unease created by a perceived revolving door.
After all, hiring through recruiters isn’t cheap. Recruiting and training a middle manager can cost between six and nine months of the candidate’s salary. Employees that make six figures or more can often cost twice their annual salary to recruit.4
The practice of internal promotion helps create a culture of belonging. When employees know they are the first to be considered for a more senior role, writes Adam Foroughi on Entrepreneur.com, they work harder to ensure company growth for the long haul. Promoting from within enriches your corporate culture and helps everyone feel like they’re working toward a common goal.
3. Seek Evidence of Respect, Not Popularity
One analyst considers collaboration, teamwork, and respect to be the holy trinity of signals that an internal candidate is ready for promotion. But when hiring teams mistake well-liked for well-respected, a candidate may be set up for failure from the start.5
Today’s workplace culture has left behind fierce internal competition and rivalry for an emphasis on collaboration and teamwork. The best internal candidates for promotion use these approaches to produce work that earns the respect needed to persuade others to follow their lead.
For example, a strong candidate would likely seek out responsibility, focus primarily on solutions (vs. seeking credit), and support their colleagues’ recognition and development.6
4. Ensure Fairness with Clear Evaluation Criteria
Few moves erode work culture and team morale as effectively as the promotion of the wrong internal candidate. The Hire Talent, a pre-employment assessment testing service, recommends the following steps to ensure fairness in the internal promotion process:7
- Examine past performance. Even if the candidate lacks the exact experience you’re looking for, you should be able to see the skills, work habits and other key attributes needed for success.
- Talk to coworkers. The outgoing employee may recommend a replacement, but don’t stop there. Talk to relevant colleagues, especially supervisors, who can be trusted to be discreet and honest.
- Collect documents, if need be. If you don’t know the promotion candidates well, review their performance evaluations, resumes, and assessment test results.
- Avoid favoritism and personal issues. While it’s important to hire someone with the personality that fits the role and expectations, don’t favor your friends or eliminate people you may not connect with. Hire the best person for the job, which means someone who can work effectively with their future coworkers and subordinates.
5. Simplify the Process with the Right Tools
The right tools make all the difference in any job. Especially when the job calls for a lot of hard data and person-to-person communication. Interestingly, many of the tools you need for that process are the same ones used to execute an effective employee engagement program.
A platform like HubEngage gives you the real-time data you need to evaluate employees’ performance across a number of metrics, from their level of engagement and satisfaction in their current position to sales metrics to their team’s level of satisfaction, and more.
With hubEngage, you can track the data and engage in the communication required for an effective internal promotion process. Our SaaS solution helps you build stronger relationships among your team, encourages collaboration and open communication, and ultimately, ensures effective promotion practices. To see how hubEngage can dramatically impact your employee engagement and how you fill your vacancies, schedule a demo today.