The Unexpected Benefits of Promoting From Within

2 min read
Jul 20, 2016

Climbing the corporate ladderIt’s a fact that promoting from within — on the whole — is smarter than hiring externally. A study by the University of Pennsylvania found that although external hires are paid 20% more, they consistently receive lower performance reviews and are 61% more likely to be fired. Workers promoted from within have “valuable firm-specific skills,” according to the report.

Hiring internal candidates also shows your team that good work and loyalty is rewarded. In the long term, it can improve employee retention by providing a career path to strong performers. Consider these benefits for promoting employees already working for your company.


1. Less expensive

Experts estimate that it costs $4,000 to recruit, hire, and train a new employee, according to Entrepreneur magazine. Not to mention the uncertainty that comes with bringing in someone new — who knows if six months later you’ll have to shell out another four grand to hire someone else. Not to mention the loss in terms of institutional knowledge. Promoting from within the organization costs less both financially and in terms of risk.


2. Knowledge of leadership


An employee who you’ve been grooming for months will have a highly developed sense of what leadership is looking for. They understand how to take feedback well and what will be expected of them in their new role. Their understanding of the organization will pay dividends in the long term.


3. Relationships with coworkers

While a new person will spend time adjusting to being with their colleagues, hiring internally skips that entire process. Existing employees fit into the company culture. Not only do you bypass the expensive onboarding process, but you also guarantee that the position will be filled by someone who fits your company’s values.


4. Understanding of responsibility

A promotion within provides you an opportunity for mentorship. The employee currently doing the job can train the new employee in a natural way. Also, an existing employee knows how the job is done.

One study found that employers underestimate how long it will take for a new employee to adjust, according to Forbes. The success of employees is often dependent on a network of contacts in the business, which a new employee is less likely to have. Promoting current employees will result in a smooth transition for the whole team.


5. Providing inspiration


The rest of your team will see exactly what it takes to move up within the company. Hiring from within demonstrates how two-way loyalty works — those who provide strong contributions to the company will earn rewards. This in turn will make your team more engaged and willing to put in extra effort.

In some cases, hiring a new employee will be necessary, such as when a special set of skills is needed. But often your best resources are already part of your company. Don’t pass up the excellent people who already work for you.



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