A job opening or new position within a company is always an exciting, but stressful time for executives and human resources teams. This time comes with multiple decisions such as salary offerings, definition of duties or forming new teams, and of course whether or not to hire an external candidate or promote from within. A recent study found that businesses hire external candidates 18 percent more often than promoting an internal employee. While this may be true, there are benefits and pitfalls to both decisions.
Internal candidates are often already well versed in company information and may require less training, while external candidates bring fresh ideas and can spark much needed change in an organization. In order to make the most informed decision, executives must first understand the different pros and cons of each option and choose which is the best scenario for their individual business. Here are some of the specific pros and cons for internal vs. external hiring.
Promoting an internal employee
There are numerous advantages that come along with promoting an internal employee to fill a position compared to looking for an external hire. For example, internal employees are already up to date on company policies and procedures and time is not spent searching through a list of applicants. All of these factors will typically lead to increased productivity and a healthier bottom line. In fact, external hires are 61 percent more likely to be fired from their jobs than those who were promoted internally, while also scoring significantly lower on performance reviews. Internal employees can also save an organization money on training. External hires can take up to two years to fully understand and operate effectively within a business. This excess need for training can quickly become expensive for organizations especially when you consider that a business can spend anywhere between $1,075 and $1,886 on training per employee.
Despite these facts, there is one major downside to promoting employees internally instead of hiring a new candidate. Occasionally, employees experience burnout which dramatically affects their productivity. This can also lead to a loss of creativity and therefore, no change is experienced across a business.
Making an external hire
On the flipside, the second option is to post a position and search for an external hire. External hires often bring with them a fresh sense of creativity and excitement for new opportunities. This perspective can be beneficial for a team or even the entire organization. When old habits are broken and policies are switched up an organization can experience much needed change and potentially upskill an outdated workforce, systems, and overall processes.
However, external hires can also cause animosity in an organization. Maybe an existing employee thought they would receive the new position, or the team is having a hard time adjusting to their new leader who they don’t know. No matter the concern, these are important possibilities to prepare for.
Hiring is always a challenge and sometimes the decision on whether or not to bring in an outside candidate or utilize an already existing employee is even more complex. However, considering the pros and cons of both situations can lead to a more informed decision.
To learn more about today’s hiring landscape check out our blog on how to attract top talent with record low unemployment!
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