How to decide whether to recruit from outside or promote from within

Deciding whether to promote an employee from within or hire from outside the company can be a difficult decision, with many factors to be weighed. Promoting from within allows you a significant reduction in recruitment, hiring and training expenses but does not allow you a fresh perspective or new ideas. Hiring from outside the company gives you a renewed perspective and potentially different skill sets but can result in an adjustment period for the new hire and current employees.

“You must make an honest evaluation of your company’s needs and consider if those needs can be met with current talent,” says Michelle Elson, corporate director of operations with Ashton Staffing. “Consideration of company structure and politics must also be made, as well as if internal changes would harm or inspire company morale.”

Smart Business spoke with Elson about the pros and cons of promoting from within and hiring from outside and how to make the best decision regarding hiring.

What are the pros and cons of hiring from within?

Pros include:

  • The current employee’s familiarity with the company and a reduced adjustment period should allow for a faster transition.
  • Significant reduction in recruitment and training expenses, which is a benefit for any company.
  • An increase in motivation and loyalty from internal employees, which boosts company morale.

Cons include:

  • A fresh perspective is sometimes lost if an employee has preconceived ideas or thoughts on the position.
  • A reduction in morale may occur if other employees feel slighted by a colleague’s promotion or lateral move.
  • Internal hiring reduces the size of the prospective talent pool, limiting your access to the broad experience base available.

What are the pros and cons of recruiting from outside your company?

Pros include:

  • Access to a larger talent pool, with knowledge and skills that are not currently available in the company.
  • New hires bring in a fresh perspective and do not have company-specific experience to cloud their outlook.
  • The combined experience of recruiters and access to an established pool of prescreened candidates makes an agency a good resource for external hiring.

Cons include:

  • An increased expense to the company for advertising, recruiting and screening.
  • Potential resentment from current employees.
  • An increased adjustment period, learning of company culture, and training on specific software and products.