Consider Hiring Outsiders, In Addition To Promoting Within

When you are trying to fill an empty position in your company, where do you start? Do you look among internal prospects, or do you begin to look for outside candidates?

Most companies attempt some combination of both, depending on the position they’re looking to fill. Each approach has its advantages and drawbacks. Depending on your own needs, you’ll need to decide how to evaluate each type of new hire.

Benefits of Hiring from Within

Over the past few decades, as workers have become more mobile and less likely to stay with the same company for many years, companies have also increasingly opted for outside hires to fill open positions.

However, as highlighted in the Wall Street Journal, a study by Matthew Bidwell of University of Pennsylvania’s Wharton School, “external hires get paid 18% to 20% more than internal employees do for the same job, but they get lower marks in performance reviews during their first two years on the job.” Outside hires were also much more likely to be laid off or fired than internal hires in similar positions.

The article explains:

“External hires tended to have more education and experience than internal workers, but those credentials didn’t always result in strong performance—especially in a new company culture, he said. By contrast, workers promoted from within have valuable firm-specific skills that can translate into better performance reviews.”

Promoting from within can also boost employee morale, because your current employees are much more likely to recognize their own potential for advancement within the company.

Benefits of External Hires

If you rely too heavily on internal hiring, you risk a stale culture that’s too set in its ways. New hires bring new experiences and fresh ideas into your workplace to give it an edge.

Perhaps even more importantly, many small businesses simply don’t have the appropriate resources or skills within their existing workforce for positions they are trying to fill, that will let them expand into new areas.

As Paul Spiegelman, chief culture officer for Stericycle, writes in Inc.:

“New roles will develop and there’s a better than good chance that you don’t have the person in the building to fill that fresh position. We’ve tried quite often to take folks internally and give them a shot at a new role, only to realize that they didn’t have the skills necessary to succeed. It was not their fault. But we need to make sure we know what we’re looking for, and find it in the best place, even if that turns out to be on the street.”

A Similar Hiring Strategy?

Whether you’re moving an existing employee into an open position or filling an open spot with an outside hire, you need to have a clear idea of your benchmarks for success so you can make sure to look for them in the hiring process.

Lou Adler, author of The Essential Guide for Hiring and Getting Hired, suggests using similar metrics for external hiring that you would for internal hiring. With internal hires, you already have a lot of information on past performance to draw from. With external hires, you just have to do the extra work to gather that information.

Adler suggests looking for the following basic prerequisites before considering either an external or an internal hire:

• They possess the basic skill sets required for the job
• They have a successful track record performing the type of work they’ll be expected to do (this is the most important factor in the assessment process)
• They have demonstrated an upward trend of growth, taking on more or bigger projects over time
• They possess an “achiever pattern”, pursuing superior work
• They are a good cultural fit for their manager, team, and overall company
• They are personally motivated to do the job

A candidate that clearly demonstrates all those requirements, whether internal or external, will give you the best odds of success.

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Photo credit: Steve Jurvetson / CC BY 2.0