The Pros and Cons of Hiring Internally vs. Hiring Externally

If you’re looking to fill positions at your company, should you promote or recruit? Learn some advantages and disadvantages of both.

First of all, I must give credit where credit is due. The rest of this post has been written and put together by Darnell George of bluefirePR. Without further ado:

Gauging talent for an organization can be a straightforward task — if you find the perfect internal candidate who will bring the talents needed to succeed at the next level. Unfortunately, things aren’t always so simple.

Conventional wisdom and research can unearth key strategies in promoting internally or looking for external hires. Is succession planning always the best choice, or is it better to source fresh talent on the outside? Here are some of the pros and cons of each option.

Promoting from Within

Succession management plans have directed many organizations to the benefits of hiring internally. There are several factors which make current employees a solid choice for new openings; for instance, organizational understanding is already present with a person that has been with a company long enough to understand how it functions.

In addition to the presence of company knowledge, internal promotions can be great for employee morale. It’s a way of recognizing outstanding achievement, and can inspire others in the company.

In a recent report, the findings of Wharton management professor Matthew Bidwell shed light on the deeper strengths of internal promotions:

  • External hires received significantly lower performance evaluations in their first two years on the job. Bidwell’s explanation is that it takes two years to “navigate and build relationships in a new organization.”
  • A much higher rate of exit was found among outside hires. Bidwell’s research showed that there was a 61 percent higher rate of terminations/layoffs and a 21 percent higher rate of voluntary exits for externally sourced employees.

However, not all of Bidwell’s findings were negative. External hires had higher experience and education, and received higher wages than internal candidates.

The Benefits of Looking Outside the Box

According to Human Capital Director Emily Douglas, there are three notable dynamics to consider when interviewing external job candidates.

  • New Blood: Stagnancy can drain an organization. The new energy and perspective gained from an outside hire can be exciting and motivational.
  • Fill a Void: Efficiency can play a role in deciding whether to hire externally or promote. Due to the changes within the organization, the former may be more efficient than the process of training an existing employee and filling their current spot.
  • Initiate Change: Bringing in an outsider is a great way to encourage rethinking goals, processes and the inner workings of the company.

A Difficult Decision

Perhaps your organization is in need of a big change, or maybe you don’t have to look far for candidates that could easily build leadership skills with a promotion and appropriate training.

As Douglas notes, the health of the culture, organizational vision and the need for expertise are factors that may influence your hiring decisions. These and other individual circumstances can justify an internal hire or motivate you to find the ideal external candidate.

About the Author: Darnell George grew up in New York and has an appreciation for gourmet cuisine. He loves writing almost as much as he loves eating.


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