How to determine whether to recruit from outside the company or promote from within Featured

8:37pm EDT October 31, 2012
How to determine whether to recruit from outside the company or promote from within

When a position opens up at your company, a decision must be made whether to fill it with someone working in the company or hire someone from the outside. Each course has its benefits and drawbacks.

“When assessing your current staff, consider possible positions that a highly skilled employee would benefit from,” says Mary Delaney, an account manager with Ashton Staffing, Inc.

She says it may be the case that certain employees are outperforming or underperforming in their current roles and highly skilled employees may not be using their abilities to their fullest in their current positions.

However, there is reason to exercise caution. Delaney says, “Internal hiring immediately limits the prospective hiring pool and the company may miss out on a better-suited candidate.”

Smart Business spoke with Delaney about the difference between promoting from within and seeking to fill a position with a new hire.

How should a company evaluate the talent it has on its staff?

Aside from role-specific evaluations, monitor the employee’s work ethic. Look to see if they abuse sick days, are consistently tardy, if they share the company’s values and mesh well with its culture and if they’re able to adapt to changes within the company.

Consider the dedication level of the employee, which can be measured by the number of years they’ve invested with the company and what they have contributed in that time. Don’t just rely on numbers for this. Think back to instances where the employee succeeded in building and creating a flawless name for the company. Seek feedback on the employee from customers, phone surveys, email responses or co-workers.

Discuss your findings with the employee. Let the employee know they are not going unnoticed. Choose areas in which an employee has overachieved and acknowledge them for his or her hard work and dedication. Suggest ways of improving specific areas of concern you have with them. If there is a suitable promotion or role change, offer it to them.

What are the risks and benefits of looking inside the company to fill an open position?

Hiring from within can be very beneficial. A current employee’s familiarity with the company will allow for a cleaner and simplified transition period. Already aware of the company culture and policies, the current employee will most likely get up to speed much faster than a person new to the organization. Time spent interviewing and negotiating with an external employee is eliminated. Many companies use promotion from within as an incentive tool and a reward for good work or longevity with the company. This increases motivation and loyalty from internal employees. Hiring from within is typically economically beneficial. The position to be filled immediately transitions to a lower-level, less skilled position. This can significantly reduce the costs of recruitment and training expenses.

Hiring from within the company can also have some drawbacks. An internal promotion may inhibit the opportunity for innovation and progression. The company may lose out on fresh ideas and the creativity that can come from an external hire. Company morale could be negatively affected and friction among colleagues may arise if an envious employee feels slighted by a colleague’s promotion.

Ultimately, each company’s hiring decision is going to be unique. What’s best for one company may not work for another. Be sure to consider both positive and negative implications of internal versus external hiring before opening the position. Consider your budget, time frame, company culture and prospective talent on hand first. Internal hiring is generally faster and cheaper but may create hostility between colleagues and leave the company without the best-suited candidate or fresh innovative ideas.

How can a company ensure it has qualified candidates prepared to fill positions as they come available?  

Both mentoring and cross training are great tools for motivating your employees and sharpening their skills. By implementing a combination of these two, your employees will step out of their normal role and comfort zone by taking on new challenges. This keeps both the employee and job role from becoming stagnant. The challenge gives the employee a sense of achievement, which increases confidence and overall job performance.

Mentoring establishes a positive atmosphere of teamwork and success. When a talented employee displays initiative to go above and beyond, support that with cross training. Give them higher-level responsibility. Invite that employee to participate in more company-wide planning and decision-making meetings. Give them room to establish more goals and priorities. Reassign responsibilities that the employee does not like or are routine. A great way to promote company-wide training and development is by providing access and reimbursement to continuing education classes or company-specific training seminars, which ultimately sharpen employee skills.

In terms of cost, which is most often the more prudent: hiring internally or from outside the company? 

Hiring internally can save you time and money. You avoid expenses on advertising, screening and in-depth job training. Current employees are familiar with company policies and culture, and generally transition instantaneously into their new position.

However, if you strictly hire internally to save on these costs, you may lose out in the long run. Consider the risks and benefits of internal and external hiring before you make your decision. Each company is unique. Consider how your company morale will be affected if you hire internally. Do you already have a candidate who is an excellent fit? Or would you be sacrificing the need for ‘new blood’ and fresh ideas?  Hiring internally to save on costs up front may lead you to losing out in the long run. Determine which is the best route for your needs before you decide to open the position.

Mary Delaney is an account manager with Ashton Staffing, Inc. Reach her at (770) 419-1776 or mdelaney@ashtonstaffing.com.

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