Hire or promote? Featured

7:00pm EDT December 26, 2009

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.

How can you decide which route would be best for your company and particular hiring need?

Consider the following:

  • What is your budget for this hiring?
  • Is there a viable candidate already established within your company?
  • Is your company in need of new ideas and fresh perspectives?
  • How will company morale be affected by an internal or external hiring decision?

Each company will have different answers to these questions and careful thought will ensure that an informed decision has been made. If you are on a tight budget, internal hiring would be the most cost-effective solution. An internal hire generally does not require a large monetary investment, other than a possible salary increase. Costs such as advertising, screening and more in-depth training would need to be planned and budgeted for if you choose to hire from outside the company. You also need to prepare for a training period and allocate necessary staff for either promoting from within or hiring from outside.

How can you deal with any backlash if you decide to recruit from outside the company?

Careful planning can neutralize the potential for unhappy employees. Post the position both internally and externally for a reasonable period of time, and make the job description as specific as possible. Make sure all skills, education and requirements for the position are outlined carefully. Interested employees may initially feel like they are qualified for the position, but may decide to include or preclude themselves after being presented with well-written qualifications. Be open-minded; an internal employee may be qualified and should be considered, as well, for the position. Establish trial periods, set reasonable goals and plan an evaluation at the end of the probation period. This allows you to cite an impartial process and feel confident in your decision if backlash does occur.

Bringing new people in or moving someone internally can affect company morale, both positively and negatively. You can’t control people’s feelings. You can minimize the impact by making fair hiring decisions and making sure the management team is proactive and addresses negativity with positive statements.

How do you make sure employees are well-trained and prepared so you are able to promote from within?

Cross-train and reward your talented and committed employees. Don’t let talent go to waste. You would be foolish to dismiss an employee’s initiative if he or she is interested in learning a new skill. Mentoring also establishes a culture of teamwork and preparation. Offering reimbursement and recognition for the completion of relevant continuing education classes will encourage employees to sharpen and maintain their skills.

Michelle Elson is the corporate director of operations at Ashton Staffing. Reach her at melson@ashtonstaffing.com or (770) 419-1776.