What are the advantages of promoting employees?

When your organization has a management position to fill, you may not have to look far to find the ideal candidate for the job. Promoting from within is an affordable solution and can also save time and resources. “By offering promotional roles to internal candidates, employers foster a sense of loyalty, engagement and long-term satisfaction by allowing growth from within [1].” While there are many great reasons to promote from within for managerial vacancies, there are also some disadvantages. Keep these pros and cons in mind if you are thinking of promoting from within your organization:

Table of Contents Show

It’s less expensive to promote employees
Proven loyalty to the organization
Seamless transition to new duties when promoting within
Synergistic fit for team culture
Advantages Of Businesses Promoting Employees From Within
1. Increase Retention Rates to Prevent Post-Pandemic Turnover
2. Increase Employee Satisfaction and Workplace Morale
3. Internal Employees Are Already a Good Fit
4. Greater Adaptability
5. Improve Employer Brand
Employee Development Ideas to Boost Your Internal Promotion Model
Start With Cascading Goals
Pay Close Attention To Employee Engagement
The Bottom Line: You Can’t Manage What You Don’t Measure

Pro: Seamless Transitions
Transitions can be a challenge when you’re bringing a person into a job. The time spent bringing an outside person up to speed about your corporate culture, policies, and day-to-day operations is considerable. A current employee is already familiar with what is required for success in your organization and understands the company’s goals, mission, and vision.

Pro: Proven Fit and Loyalty
An employee who has been in your organization long enough to be considered for promotion is proven to be loyal. The fact that the employee wants to stay rather than taking his or her skills elsewhere is a testament to the quality of the work environment. The employee is also known to be a good fit for your company and will likely have many strong working relationships within your organization and with your business partners and clients.

Con: Negative Emotions of Other Workers
When former coworkers see the employee moving up the ladder, these coworkers may feel jealous. Some may even become hostile and actively make the situation difficult. If more than one employee applied for the position, the candidates who did not get the job may feel disillusioned and unwilling to work with the person who was promoted. If the promoted employee will be managing his or her former coworkers, relationships could become tense and difficult.

Con: Same Skill Set
When retaining the same employee, your organization is not gaining any new skills, knowledge, or experience. If the management position requires a skill that your otherwise highly qualified employee is only moderately competent at, you could be missing out on an outside person who is well-developed in that particular area of expertise. As The Society for Human Resource Management explains, bringing in skilled external workers to meet the demands of a strategy shift or difficult corporate turnaround can be especially beneficial [2].

[1] https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/recruitinginternallyandexternally.aspx

[2] http://www.careerprofiles.com/blog/hiring-innovative-talent/internal-vs-external-recruiting-knowing-when-to-search-for-outside-talent/

When it comes to business growth, having the ability to create new assignments and expand on current roles within your company is vital to its overall success. When this happens, a business is forced to start recruiting new talent or promoting within. This can be a tough choice, particularly when you have highly skilled and dedicated employees competing for rank in your organization. And yet, there’s still undiscovered talent that is out there in need of a chance on the job market.

Succession planning is the practice of educating, mentoring, and promoting current employees so that they can increase productivity and growth for a business. In many cases, this method can be far more efficient than hiring new staff.

We’re here to help you decide if you should focus your team building efforts from the inside out, or if you should start a proactive recruitment campaign. Keep reading to find out the main benefits of promoting instead of hiring.

It’s less expensive to promote employees

In general, it is far less costly to promote employees from within vs. hiring outside candidates. Some experts estimate that it costs as much as a half-year’s salary to recruit just one employee. Before you hire anyone, you have to account for the cost of advertising, training, interview, and new hire orientation. Plus, it can be months before any productivity is enjoyed from an outside recruit. With an internal promotion there is little if any additional cost to the company.

Proven loyalty to the organization

Your current employees have already demonstrated that they are loyal to your company’s cause and mission. Therefore, it only makes sense that you choose promoting within, instead of taking a chance on a new hire who may decide not to stick around. Loyalty is a valuable commodity today, with so many professionals jumping ship for other opportunities on a frequent basis. Show how loyal you are to your hard working staff by offering internal promotions and employee development.

, rather than take a chance on a new hire who may decide not to stick around. Loyalty is a valuable commodity today, with so many professionals jumping ship for other opportunities on a frequent basis. Show how loyal you are to your hard working staff by offering internal promotions and employee development.

Seamless transition to new duties when promoting within

It’s often difficult and time consuming to bring a new hire into the flock. You’ll have to set aside time for training, mentoring, etc. This is a huge loss of productivity and time spent on trying to transition someone into new tasks. However, promoting within means s/he is already familiar with your company’s goals and tasks associated with success.

Synergistic fit for team culture

A group of employees may take months, even years, to get comfortable working with each other in a team setting. To more effectively staff for higher positions in the company, you must honor the company culture and how well each employee fits into the greater scheme of things. Only through planned team building and proper job matching, will your company be able to grow and flourish. Choosing hires from the outside can upset the corporate culture, leading to breakdowns in team cohesion and efficiency. Therefore, internal promotions are a better way to develop your teams within the corporate culture.

As you build your company and add new roles to handle additional tasks and projects, keep in mind all the advantages of succession planning by promoting from within. Take a careful inventory of the employees you have now, their skill sets and gifts, so that you can design a plan that helps honor the people who work hard for your success every day.

About the Author: Steven Burrell has been writing about technology and business solutions for nearly a decade. Visit this page for more information about cognitive ability testing for employees and students.

Your organization is growing quickly and you have an opening in a leadership position in your company. When you know it's time to hire another employee, how can you determine whether it's better to promote from within and hire someone new for an entry-level position or to fill the leadership role with an external hire?

The answer to that question largely depends on your business's specific needs at the moment, the employees who are currently working for you, and the applicant pool for external hires. When deciding whether to promote from within or hire externally, consider the following...

Advantages Of Businesses Promoting Employees From Within

1. Increase Retention Rates to Prevent Post-Pandemic Turnover

Microsoft's 2021 Work Trend Index looked at 30,000 people in 31 countries and found more than 40% of employees in the global workforce were seriously considering leaving their jobs this year [1]. This post-pandemic turnover surge has been coined "The Great Resignation," and it's something that every employer needs to take very seriously.

Read More: More Than You Think: The Cost Of Employee Turnover

Employee turnover is extremely expensive- and small businesses feel it the most. Why? Most of their employees run on tribal knowledge – when a member of the tribe leaves, so, too, does the knowledge.

Replacing a high-level employee can actually cost about 150% of the employee's salary! Turnover results in the direct costs of hiring a new employee in addition to the indirect costs of lost internal expertise, customer continuity, customer satisfaction, and production lags. [2]

At potentially 41%, turnover-related costs could be high enough to cripple cash flow and put many businesses out of business. When you promote from within, you open up new opportunities for your employees and you'll save money, too, because the cost of hiring to fill entry-level positions will also be much lower.

2. Increase Employee Satisfaction and Workplace Morale

Feeling dissatisfied with their jobs is one of the primary reasons why employees are quitting in unprecedentedly large numbers.

To keep employees happy and increase workplace morale, you need to make sure you're meeting all of your employees' needs so that you're helping to give them the opportunity to lead happy and fulfilling lives. In the modern workplace, this means not only paying a fair and livable wage so that they can have their basic needs (food, housing, and clothing) met, but also providing benefits that can meet higher needs.

Read More: Lower Turnover & Boost Profits By Honoring Maslow’s Hierarchy Of Needs

Promoting from within is a great way to satisfy the top of your employees' hierarchy of needs, self-actualization, by offering opportunities for self-improvement, career development, creativity, and professional opportunities inside your workplace.

3. Internal Employees Are Already a Good Fit

Hiring outside of your company introduces the element of a wildcard. Sure, you'll ask for a resume and you'll conduct interviews, but you won't actually know whether a new hire is a good fit for your company culture until they start.

When you're hiring externally to fill a high-level position, that's a pretty big risk to take. Choosing the wrong person to fill a leadership position not only leads to productivity problems but can also lead to the fast spread of negativity throughout your workplace morale and culture.

When you promote internally, there will be some unknown factors to consider, but you will already know that the person you've chosen for the job is a perfect fit for your workplace culture and the continued cultivation of positive morale.

Read More: Maximize Your Business Profit With High Performing Teams

4. Greater Adaptability

In addition to fitting your culture, internal hires already know the ins and outs of your business. Of course, they'll have a few things to learn in order to be successful in a new position in your business, but they'll adapt quickly thanks to their existing familiarity with the position.

5. Improve Employer Brand

When you interview an applicant, one of the questions they'll likely ask you is whether you promote from within or hire externally because they want to know what kinds of opportunities for career advancement and development you offer.

Hiring internally creates opportunities for goal-setting with your employees in addition to increased stability in their lives when they know they could potentially remain with the same employer for the entirety of their careers.

When you not only offer a new hire an attractive job in the present but also opportunities for career growth in the future, you immediately become a much more attractive employer. As a result, you'll have the top talent in your industry competing for positions with your company.

Employee Development Ideas to Boost Your Internal Promotion Model

Creating an employee development program can help you better evaluate and measure your internal employees' potential for success in leadership positions and eagerness for promotion selection overall.

Plus, offering opportunities for career development will also increase your employees' job satisfaction, increasing retention rates, while also improving your brand as an employer, helping you attract external hires of higher quality.

Start With Cascading Goals

To help your employees develop their careers, start by creating cascading goals inside your company. Cascading goals include long-term goals that satisfy the big-picture plans for your business while also mapping out the path to short-term goals and benchmarks that will move your entire organization in the right direction toward success.

Read More: 10 Tips To Help Your Employees Set Better Goals

Once you know your long-term goals and have set short-term benchmarks to get there, identify the skill sets your employees need to achieve these goals and look for personal, career, and leadership development programs that can enhance employee satisfaction, while also boosting productivity, and increasing organization-wide alignment around common goals.

Pay Close Attention To Employee Engagement

The proof is in the numbers: companies with high employee engagement are 21% more profitable. [3] Why? Employee engagement increases productivity in the workplace, which shows up on your bottom line.

Let’s go back to the basics- we all remember learning about Maslow’s Hierarchy of Needs. What most people don’t know is the same principles apply to employee engagement in the workplace.

Following Maslow’s hierarchy, the basic principles state that a person cannot strive for higher needs until the more basic needs have been met. For example, a person must worry about obtaining shelter and food, before they can be concerned with belonging, feeling confident, or challenging themselves on a higher level.

Similarly, you can meet your employees' most basic needs by offering fair monetary compensation and benefits. To get the most out of employees, it’s important to foster their self-actualization through career development opportunities. This self-fulfillment will boost their productivity, and in turn, boost your bottom line.

If you are not offering your employees a career development plan to help achieve their “higher purpose”, they will look for it somewhere else.

The Bottom Line: You Can’t Manage What You Don’t Measure

Your people are your biggest asset. When you have a “people-first” strategy, you’ll get a group of people who are committed to helping the organization be better.

It starts by getting the right management reports and KPIs at your fingertips. Beyond tracking your turnover rate, you should identify and monitor additional employee-related metrics to ensure your organization is on track.

When your financial management and human capital management strategies are working hand-in-hand, you’ll begin to see an increase in employee engagement, improved retention rates, and an ROI that increases your bottom line.

[1] https://www.microsoft.com/en-us/worklab/work-trend-index/hybrid-work

[2] https://mnwi.usi.com/Resources/Resource-Library/Resource-Library-Article/ArtMID/666/ArticleID/782/Cost-of-employee-turnover#:~:text=The%20Society%20for%20Human%20Resource,in%20recruiting%20and%20training%20costs.

[3] https://blog.smarp.com/what-is-the-true-cost-of-poor-employee-communication