Your business is expanding, and that means you need to start hiring to fill new management and senior levels positions. This raises an important question – do you hire from outside the company or do you look to promote from within?
For most, the answer will end up being to look to the wider world. Businesses believe that to grow; they need to improve their pool of talent and to do that, they need an outsider who is supremely qualified for whatever vacancy is available.
That means that promotion is a frequently overlooked strategy, even though studies have shown that promotion is often more successful than an appointment.
Here are four reasons why you should be promoting from within.
It costs less to promote from within
Let’s get the costing side of the argument out of the way early doors. Put simply; it costs less to promote from within your own business than it does to go out there and hire somebody new, both from a money and a productivity point of view. According to a study last year from the Society for Human Resource Management, the average cost to hire an employee is $4,129, and it takes around 42 days to fill a position.
In reality, the financial cost is much more. That figure covers merely the process of advertising the job, whittling down the candidates, carrying out the interviews and the necessary checks and then making an appointment. That is only the beginning. Any new starter has to be trained in the way the business operates, and that can mean it takes many months before you see any productivity from your new employee. As a result, some estimates put the cost of hiring at as much as a half-year’s salary.
Compare that to promotion. The employee stepping up will already know how the company works, they’ll be familiar with the job role and ethos and perhaps most important of all, you won’t spend 42 days with a vacant position because of the hiring process, nor have to wait six months for the new appointment to start delivering.
One of the major arguments against promoting from within comes when the new role will involve relocation for the employee. Some business owners argue that it is simply not worth it or that the person in question won’t want to move. If they love their job, they’re up for the challenge, and you throw in a generous relocation package, there is no reason for them to turn it down. To find out more about relocation management, click here.
You can have a seamless transition to new duties
We’ve already touched upon it when talking about the costs, but an internal promotion can offer a much more seamless transition and help avoid any unnecessary disruption to the services that your business provides.
Sure, the promoted party might need a little bit of training to cope with the rigors of their new role, but you’ll also have an advantage here in that you will have trained them before. You’ll know what sort of techniques they respond to and the best way to get results out of them. By appointing somebody you have a close relationship with, they won’t be afraid to ask for help or guidance either as there will already be mutual trust there.
Most important of all though is that the promoted employee knows what is expected of them, knows how the business works and can start making a difference in a much shorter timeframe. Given that time is money, that can be worth its weight in gold.
There is proven loyalty to the organization
If the hiring process is lengthy and costly, then the price of getting it wrong is even more so. An astonishing one in four new hires quits before they’ve managed 90 days in the job and if that happens to your business, then you’ve got to go through the same palaver of hiring all over again.
That’s in stark contrast to a promotion from within. Presumably, the employee you are considering for promotion has shown loyalty to the company’s cause and mission by still being there. That means you can be pretty certain that the promotion will be a success and that they won’t cut and run within three months of the job.
Loyalty, of course, works both ways. Your employees are loyal to you, and by offering an internal promotion, you are showing your workforce that you are loyal to them too. If employees can see that there is a chance for progression within the business should they work hard and deliver results, then it can have a real boost on their productivity, which is further good news for you.
They’ll already be a part of the team
One of the biggest factors driving the success of your business is a good team spirit among your workers. If those in your employment get on, then they will be more willing to work hard for the business and each other and in turn, deliver results. That’s probably why a lot of businesses view team building as one of the most important investments that they can make.
It can take months and even years to get the right balance among your workforce, to put together a team that gels and is comfortable working with each other. Everybody has to buy into a similar way of working, similar goals and a similar outlook. One wrong exterior appointment and the entire dynamic of the office can come crashing down. Bring in an outsider who doesn’t have the correct personality to get the best out of those working alongside him or somebody who upsets the apple cart, and it could be an extremely costly mistake.
That’s why an outside appointment is often a risk. With an internal promotion, you will have concrete proof that the employee you are promoting gets on with the team. You’ll know if they are liked and respected and will be able to lead effectively. An internal appointment is just about as safe a bet as you can make when it comes to hiring.