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When Should You Hire Outside Your Company or Promote Internally?

Updated: May 11, 2022

When it comes to creating the team that will give your company the best chance at growth, it is important to evaluate what the company needs and what the company already has. Once this evaluation is complete, the option of expanding your company's team could be considered. Thus, the great question of "should you hire externally or internally promote?" is the first step to ensuring your company grows correctly.

External Hiring:

This is likely the most common conclusion to jump to. Which makes sense when you believe there must be a new leader to surpass a plateau. When you should hire externally is when you are presented with one of the following:

  • Company leadership, direction, and vision need to be stronger;

  • Your current talent pool does not have the skills/experience to push through to the next stage of company growth;

  • Your company needs rejuvenation through fresh ideas brought to your company's culture;

  • Employees cannot handle the current workload; and

  • New cultures and target markets are to be reached.

Leadership at its core is the ability to guide and inspire, not manage people. Managing people who are in line with a strong vision and want the same as a leader will follow with excitement. New skills, ideas, changes, and vision can all happen throughout different levels of your company with external hiring. This is through a wide talent pool and selecting candidates that could potentially change a department/team instead of needing entire corporate change. At times workloads can be too much to handle with too few team members. Instead of forcing teams to endure the difficulty of said workloads, having extra help can solve problems through increased efficiency and saved employee morale.

Internal Hiring:

Internal hiring works to improve cost efficiency and the interdependency and working relationships of a company. When you look to a team member and tell them you believe they can lead, that they can implement change, and could improve the entire company, they change. That individual recognition and trust you give to a team member could take them to a higher level of personal development. In turn, it could raise everyone else around them as well. The key aspect of internal hiring is to improve your company from the inside-out.

When to hire internally:

  • Rewarding a team member for their loyalty;

  • Build internal leadership skills; and

  • An opening becomes available that matches a team member's skills and career path.

Alongside these situations, the advantage to internal hiring is you mitigate business risk from less initial training costs, faster onboarding times, and better retention rates. It is estimated that 86% of employee's decide whether they want to stay with a new company within 6 months of employment and 33% of new hires look for a new job within six months of starting that job. The cost that employee turnover can have on your company is immense not only fiscally, but also with output. Employee turnover is estimated to cost 100-300% of the former employees salary and it takes, on average, 8 months for a new employee to reach their full productivity. In many instances, promoting within is a better option for your organization as you know the person you are promoting and they already have a place in the company culture.

Written By:

Benedict, CMO

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