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Promoting From Within vs. Hiring From the Outside

If you are in a leadership role, you’re almost certainly going to have to deal with hiring people.

It’s therefore inevitable that you will wrestle with the decision to promote from within or hire from the outside.

I have a reasonable amount of experience with both (getting it right and wrong!) and wanted to share some of the pro’s and con’s, aswell which strategy is most appropriate for different situations.

I went through a phase of almost exclusively promoting from within. The fact that someone (thank you Constant and Andrew!) gave me a shot early in my career at something I was entirely unproven at, definitely played a big part in that. I wanted to be able to do the same for others too.

Promoting from within

There are some very strong advantages promoting from within.

For a start, you can normally fill the role more quickly. This is because the recruitment process can be streamlined and you can move things around quickly internally (if you choose to make that trade off) to get them in the new role ASAP.

They also tend to get off to a quicker start than an external candidate. They already know how the company works (culture, politics, processes, who is who etc.) and most people in the company are already familiar with them too. It’s also easier and more natural for the hiring manager to work with someone they know. It makes it 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 when you promote from within. It highlights that there are opportunities for career progression, something which is often very important to people. This can have a big influence on 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 as I was learning the basics of leadership myself).

If you misjudge peoples potential to be able to perform in the short term and most importantly, to be able to grow into the role at the pace the business needs them to, it can be disastrous. A huge amount of effort and time is wasted, focus and execution suffers, relationships can be ruined and 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 is not always available and sometimes they’ve just had enough of you!). And because they are usually promoted because they were very good at their previous role, you’ve just lost a really good person.

I’ve definitely been successful in getting the individual back into their old role (or another suitable role), but sometimes the relationship and their work is never quite 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 up front, 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? You need to feel comfortable that the person can handle it. Have an open conversation with them about this and be honest with each other about how it could pan out. There is no shame in it not quite 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 this to them.

Sometimes giving the person the role on 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. This type of set up this 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 in line with that view or you don’t.

Promoting from within can be tricky and if you get it wrong a couple of times, it’s easy to be tempted to play it safe and have a preference to 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, 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 very experienced people.

Having a fresh set of eyes on something can be very 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 quite a big impact in their first 3 months. They can see things you can’t.

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. Also, purely 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 though.

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 bring them on board. Slick 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 how things will pan out (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 to only find that some of my leadership team picked up on things I didn’t and it then led to a decision not to hire.

You should also do your own homework and search out people who have worked with the individual before and ask some direct and discreet questions. If you can find someone in your company who has worked with them before, this is the best option. 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 and 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 (or at least neutral) way 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. This is normally the case with very senior roles where the gap for internal people to jump is just too big.

The other time is when the role is to part of an entirely new function for the business. Often the skill set here can be quite 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 the outside will normally work better here. I’ve seen this happen really well 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 now.

As I mentioned above, it all comes down to your judgement on their potential and their ability to grow into the role inline with your expectations and how the business will move. Also, your commitment to provide the right coaching and support.

If I have a role and have a few good external candidates and a promising internal candidate that has the right attitude, is eager to prove themselves and has a solid view of where they sit now and where they need to get to in the next 6 months, I’m much more likely to give them the shot. The positives I mentioned for promoting from within outweigh the unknown for me.

The closing point I want to make is that building a culture that develops internal talent and regularly promotes from within isn’t easy. It requires the company to make it a conscious priority and to 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 new 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 can really help. They can often provide a lot of the forward thinking and structure. However, I think it’s important that it’s seen as the responsibility of leaders in the organisation to think about this and make it happen. They should be thinking about this and having the right conversation with people, using the L&D function for support.

Basically, it’s about identifying what the businesses future needs will be and then being very conscious and organised in how people can and will move around the company in the future to fulfil these. It’s also about doing everything you can to prepare them for it. There is some good stuff on this here.

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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  • mattblumberg

    Hard to know how to comment on this other than to say “I couldn’t have written this better myself.” Very well articulated. We have that exact same though process and think about it situationally as well. The only thing I can add to it is that I think as companies get bigger, this dilemma might get a bit easier because the talent pool internally is larger and by definition has already added some more senior “outside” hires (who might be mid-level in a big company) who over time become “inside” and ready for promotion easier, into larger roles. If that makes any sense.

    • http://www.danielclough.com/ Daniel Clough

      Thanks Matt and that’s a good point. It’s definately easier when you have a bigger pool of talent to pick from. I guess it all comes down to the quality of the hires and the potential that lies within that talent pool.

  • matt@myblumberg.com

    Hard to know how to comment on this other than to say “I couldn’t have written this better myself.” Very well articulated. We have that exact same though process and think about it situationally as well. The only thing I can add to it is that I think as companies get bigger, this dilemma might get a bit easier because the talent pool internally is larger and by definition has already added some more senior “outside” hires (who might be mid-level in a big company) who over time become “inside” and ready for promotion easier, into larger roles. If that makes any sense.

    • http://www.danielclough.com/ cloughie@gmail.com

      Thanks Matt and that’s a good point. It’s definately easier when you have a bigger pool of talent to pick from. I guess it all comes down to the quality of the hires and the potential that lies within that talent pool.

  • http://www.danielclough.com/ Daniel Clough

    Thanks Matt and that’s a good point. It’s certainly easier when you have a bigger pool of talent to pick from. I guess it all comes down to the quality of the hires and the potential that lies within that talent pool.

  • http://www.danielclough.com/ cloughie@gmail.com

    Thanks Matt and that’s a good point. It’s certainly easier when you have a bigger pool of talent to pick from. I guess it all comes down to the quality of the hires and the potential that lies within that talent pool.

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