"The growth and development of people is the highest calling of leadership." ~Harvey S. Firestone

"Ninety-nine percent of failures come from people who have the habit of making excuses." ~George W. Carver

A debate that constantly rages within the walls of HR and Leadership is whether to promote from within or promote from outside. The answer to this question will tell you quite accurately about the health and inner workings of the company in question. The reason is that it gives insight into how they deal with the tough questions and limited resources.

To cut right to the chase, promoting from the outside is often a necessity bred out of laziness and faulty priorities. Too harsh? Consider the following two reasons that capture most of the argument for going outside the walls:

Ideas – The most commonly cited benefit of bringing someone in from the outside is that they have a fresh perspective on things and will bring diversity and new ideas. This is all true, and a diverse background in staff is something I encourage everyone to leverage. But is it really necessary to “outsource” new idea creation? I would argue that if better effort was spent listening to customers and front-line employees you would access far more ideas, and ideas that are extraordinarily practical. The problem, it’s difficult to put processes in to gather this feedback and it is often painful to listen to. Easier to just bring someone in and “hope” they bring some new ideas with them.

Talent – The second reason cited for bringing someone in from the outside is that they don’t have qualified enough people within the organization to promote. I am shocked that this big waving red flag doesn’t set off more alarm bells in companies. Leadership is a teachable skill. There should be mechanisms in place to help all leaders manage their team (reviews, training, progressive discipline, etc.). And succession planning is becoming increasingly important in this era of job-hopping. These are all things that everyone “knows” but is too busy to do anything about in most companies. Every department has one or two employees who could step up into leadership with the right training and guidance from the organization. Sadly, most companies don’t get nearly enough out of those resources and end up wasting them.

Both of these can be addressed with internal programs and systems. But because most organizations are too busy working to invest in their innovation and employees, they are trapped into looking outside. While they can still maintain control over their team composition through hiring the right person, they aren’t in nearly as much control as if they promoted internally. They also pass up on five benefits of promoting from within:

Motivating to the team – People want to see a payoff for hard work, and when people who put time and effort into the organization get a chance to make more significant contributions it lifts the morale of everyone. When hard work pays off you’re likely to see more of it.

Loyalty – When people are given opportunities to grow within the organization, they don’t need to look elsewhere for that growth. One thing that promoting internally also does is prove through actions that the company cares about their employees and their employee’s success. A company that cares and helps you grow is a company that is going to retain more of its workforce. This also plays into the next point as it saves the company money if they don’t need to hire and train as many employees due to turnover.

Save money – One of the often overlooked aspects of hiring internally is that it is cheaper, even when factoring the internal development costs of the team. Posting jobs on external job boards, spending the hours of interviewing, the cost of background checks and drug tests all add up quickly. And when you do select a candidate there are weeks of training to put them through and often months of time where they are coming up to speed when you aren’t getting maximum productivity. And the last one is an interesting one; internal candidates are cheaper. External candidates are paid at market rates and often have negotiating power which drives up their cost. Internal candidates often receive a 20% raise on their current salary and are off and running.

Less risk - Regardless of how good your hiring process is, there is always a risk of bringing someone in from the outside. They might have exaggerated their skillset, they might not fit with the company culture, or they simply might not like the job. While these aren’t eliminated by promoting internally, they are mitigated as the current employee is a far more “known” person.

Fosters career development and succession planning – Focusing on promoting internally forces departments and leaders within the company to do two things that they always should be doing, but that often get shifted to the “back-burner” of priorities. Career development isn’t just about getting promoted, it’s very often about getting better at current skills and learning new skillsets. Both of which create a more skilled workforce. Succession planning helps with this, and also reduces the risk in the organization of having a “hole” in leadership that goes unfilled in the event of someone’s departure.

So the leader who looks externally for promotable individuals is basically saying:

“I will look outside and forego all of the benefits of promoting internally because I failed to develop my team and come up with ideas on my own.”

Doesn’t sound like a leader or an organization that taking charge of their future success does it?

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