Promoting From Within vs. Hiring From the Outside

Note: This post was originally posted on my old blog. I’m republishing edited (improved) versions of the most popular posts, here on Medium.

If you are in a leadership role, you will have to deal with hiring people at some point.

And when you do, it’s inevitable that you will wrestle with the decision to promote from within – or hire from the outside.

I have a lot of experience with both (getting it right and wrong!) and wanted to share some of the pro’s and con’s of each.

Promoting from within

I went through a phase of almost exclusively promoting from within. I thin it was because , I was given a shot at something I was entirely unproven at (thank you Constant and Andrew!) early in my career. It played a big part in me wanting to do the same for others.

There are some strong benefits to promoting from within.

For a start, you normally fill the role more quickly. The recruitment process can be streamlined and you can re-organise internally to get people where you want ASAP.

They also tend to get off to a quicker start than external candidates. They already know how the company works (culture, processes, who is who etc.) and most people in the company are familiar with them. It’s also easier and more natural for the hiring manager to work with someone they know. It’s easier to set expectations, give feedback and establish how work should be delivered.

Lastly, it sends a fantastic signal to the rest of the company. It highlights the opportunities for career progression, which should never be under-estimated. It may well be the biggest factor in how long people stay at a company.

However, there are some risks to promoting from within and they have bitten me hard a few times. Particularly when I was learning the basics of leadership.

If you misjudge peoples potential to perform in the short term and most importantly, to be able to grow into the role at the pace the business needs – it can be disastrous. A huge amount of effort and time is wasted. Focus and execution suffers and relationships can be ruined. Everyone goes through a stressful and crappy time (particularly the over-promoted individual).

It can often result in the over-promoted individual leaving the business (their old role isn’t always available and sometimes they’ve just had enough). And because they were usually promoted due to being very good at their previous role, you’ve just lost a star.

I’ve definitely been successful in getting the individual back into their old role (or another suitable role), but often the relationship and their work is never the same.

Lastly, remember that signal you wanted to send to the rest of the company? It’s not a great sight for people watching to see someone struggling and ultimately fail. Even if you manage the situation fairly, it can be easy for people to assume you under supported or unfairly removed them.

There are a few things you can do to help mitigate the risks of promoting from within.

It’s really important to spend time thinking about your expectations for the role and person. What level do you need to them to perform at now and how will the role and your expectations evolve over the next 6–18 months? Are they a good fit for both?

You need to feel comfortable that the person can handle it. Have an open conversation with them and be honest with each other about how it could pan out. There is no shame in it not being the right time for them.

You should also identify what training and support they will need — both now and down the line. You need to be confident you are capable of giving it to them.

A 3 or 6 month trial can work well. Holding their old position as a fallback option can be a good idea too. This makes it easier to undo if things don’t work out. But only a little bit. Be careful. This type of set up can have it’s own unique problems and in my experience I think it’s probably best to go ‘all in’ or not at all. You either believe they can do it and will support them with that in mind – or you don’t.

Promoting from within can be wonderful when you get it right. But it can be tricky. If you get it wrong a couple of times, it’s easy to be tempted to play it safe and hire from the outside. This was certainly true for me at one point.

Hiring from the outside

Hiring from the outside has some big benefits also. The biggest being that you can bring someone in who’s been there and done that (probably several times before). In fact, often they will come in and open your eyes for how things need to be done. You can end up learning a lot from hiring senior / experienced people.

Having a fresh set of eyes on something can be powerful too. It’s surprising how blinkered you can become when you are in the weeds — or simply just used to your own environment. This is why new people tend to have a big impact in their first 3 months. They can see things you are overlooking.

Like promoting from within, it can also send a good signal to the rest of the company when you hire externally (assuming you manage the situation in the right way).

Hiring a very experienced external candidate shows your intent to assemble the best talent in the market. It’s a sign of ambition. The fact that a very experienced individual wants to join the company can help raise confidence on the outlook for the company.

As you would expect, there are some risks to hiring from the outside.

Unlike promoting from within, you don’t know who you are working with and generally only get to spend a few hours with the individual before making the decision to hire. Smooth talkers can exaggerate their previous achievements and sometimes what you get, isn’t quite what you thought you were getting.

Whether the individual can fit into the culture of the company is also a big question mark. Of course, you can get a feel of this throughout the interview process, but you can never be 100% sure (I’ve seen some people let go in their first week due to a complete misfit of values).

The best way I have found to mitigate the risks of hiring from the outside is to get several people into the assessment process. This is critical. I’ve felt pretty good about some individuals, only to find that some of my leadership team picked up on things I didn’t. It then led to a decision not to hire.

You should also do your homework and search out people who have worked with the individual before. Ask some direct and discreet questions. If you can find someone in your company who has worked with them before, this is best. You can check supplied references, but you should be sceptical of these as they will likely be biased.

I’ve also been bitten hard a couple of times when hiring from the outside and ultimately had to exit them from the business. If you find yourself in this situation, be fair to the individual. If you can, be generous in their exit package. Ultimately a decent amount of responsibility lies with you for hiring them in the first place and parting ways in a positive way (or at least neutral) is always best.

So, hire from within or hire from the outside?

I don’t think it’s quite as simple as one being better than the other.

There will be times when hiring from the outside is always the preferable option. For example, when the gap for internal people to jump is just too big.

The other time is when the role is part of an entirely new function for the business. Often the skill set here is specific and there won’t be any experience of it within the company itself. A good example of this is perhaps marketing, legal, finance etc.

Going out and getting people from outside will normally work better here. I’ve seen this work very effectively on many occasions.

I mentioned above that my preference swung to hiring from the outside due to a couple of internal promotions not going particularly well. I think this was a mistake and since then, my risk profile for promoting from within has shifted. I’m willing to take a few more risks with it.

As I mentioned above, it all comes down to your judgement on their potential. And their ability to grow into the role at the pace the business needs. Also, your commitment to provide the right coaching and support.

If I have a role with a few good external candidates and a promising internal candidate (right attitude, eager to prove themselves, self aware etc.), I’m much more likely to give them the shot. The positives for promoting from within outweigh the unknown with an external candidate for me.

The closing point I want to make is that building a culture that develops internal talent and regularly promotes from within is hard. It requires the company to consciously make it a priority and consistently work hard at it.

High potential individuals need to be flagged early and there needs to be conversations with them about their ambitions and any support they need as early as possible. These conversations need to be ongoing.

Considering what peoples future potential is at the recruitment stage is also very important. This will help people grow into their roles and subsequent roles in the future more easily.

Forecasting what types of roles you will be looking for in the future and doing succession planning for key people is very important too.

Having a great learning and development function really helps. They can often provide a lot of the forward thinking and structure. However, I think it’s important to note that it should be the responsibility of leaders in the organisation to think about this and make it happen. They should be thinking about it and having the right conversation with people, using the L&D function for support.

It’s about identifying what the business needs going forward. Then, being very conscious and organised in how people might move around the company in the future to fulfil these. It’s also about doing everything you can to prepare them.

Companies that do this well should be very proud. It isn’t easy and takes a ton of effort and some talented people to pull it off. But the rewards are massive if you get it right.

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