Within or Without: Where Should Your Next Hire Come From?

For most organizations, a combination of hiring internally and externally is the best way to land th...



Posted by Berkshire on August 31 2015
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For most organizations, a combination of hiring internally and externally is the best way to land the top candidate.

Many companies swear by the internal hire—as soon as a new position opens up, they send a company-wide email with the goal of promoting someone already in their midst. Others turn their gaze outward to find someone with different but complementary experience. But which one of these strategies tends to yield the better hire?

The answer is not simple and won’t necessarily apply the same way to two different companies. Organizations should determine what their needs are, who their employees are, and what direction they hope to go in. Read on for the benefits and drawbacks of hiring from outside and within.

Within: Motivate employees, but are they right for the job?

Companies with advancement opportunities for their employees use that as selling point when they do bring on a new hire. “You’ll start here on this bottom rung,” they might tell a candidate, “but if you do well and work hard, you’ll have every opportunity to advance quickly.” It’s a potent selling point and one that tends to work.

“We have found that internal candidates get to peak performance faster than externals do,” Leslie Joyce, Chief People Officer at Novelis, told Time Magazine. “They need less infrastructure and support to be successful.”

Additionally, employees are more likely to stick around if they believe there is a chance they could one day hold the same position as their superiors. Allison Cohen, Director of External Communications at Hill+Knowlton Strategies, told Time that employees like to know “they have a future at the company.”

Internal promotion is one way to motivate employees.Internal promotion is one way to motivate employees.

With that said, not every employee is cut out for management. It’s possible the best managers won’t come straight from the team. Inc. pointed out how some individuals are just great at what they do—but that doesn’t mean they will make for great managers. When those people are promoted to such roles and fail, they bear the blame themselves. Then the company loses a great worker and failed to find the right person for that position.

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“Not every employee is cut out for management.”

Without: Bring in someone external, but will it lower morale?

Hiring externally has the advantage of attracting candidates who may have stellar résumés and ideal experience. If that person doesn’t already work for the company, it may want to go find him or her elsewhere. Plus, these candidates bring a new perspective, rather than a current employee who has grown accustomed to the same way of doing things.

However, those external applicants often command a higher salary and take longer to learn the ropes at the new company, according to a 2012 study from the University of Pennsylvania. Matthew Bidwell, assistant professor at UPenn’s Wharton School, found outsiders make 18 to 20 percent more than inside hires but receive lower grades on performance reviews after their first two years.

The best bet for most companies is to open the position to all and choose the best qualified person for the job. Applicant tracking software can streamline the process, remove any biases that may exist, and rule out unqualified applicants early while also advancing the candidates who appear the most qualified. In doing so, HR professionals will identify the best possible candidate—whether he or she is already working there or not.

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