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Why You Should Promote From Within Your Company

Laura Spawn
Updated Jan 23, 2023

Why is it beneficial for employers to promote from within the company, and what internal promotion options are available? There are ways for business owners to make the most of these situations.

Whether you’re filling a vacancy for an existing position or creating a new role due to organization expansion, recruiting for a job opening is an exciting time for a company. Before hiring externally, though, you should examine the merits of internal recruitment and how this approach can benefit your business as well as your employees.

Types of internal recruitment

When promoting from within your company, you have several options for internal recruitment strategies to match your business style and hiring goals.

Open job posting

In this type of internal recruiting, your human resources department or upper management announces a vacancy to which any qualified candidate may apply. The job can be posted on a business communication platform like Slack, through a company email, or to an internal job board.

Manager referral or nomination

Some businesses prefer a subdued approach to internal recruitment. Rather than making an open job posting, you may seek manager referrals or promotion nominations of top-performing employees from department supervisors. This form of internal recruitment could also include department transfers (i.e., an employee from Department A could move to Department B while earning a promotion).

Part-time employee or freelancer to full-time employee

A part-time employee or an independent contractor already working with your company could transition to a full-time employee role if their work is exemplary.

Succession planning

Succession planning is a business practice for recognizing and training new leaders to replace former employees who move on to other organizations, retire from the company, or leave the workforce altogether. With this type of internal recruitment, managers are trained to understand and develop potential within their team members. When a promotion opportunity arises, you can immediately consult those managers about which employee is most qualified for the job.

Boomerang employee: A hybrid recruit

In addition to the four types of internal recruitment, companies can look to boomerang employees for promotions. The boomerang employee strategy is a hybrid hiring model combining elements of internal and external recruitment.

A boomerang employee is a worker who took a job with another company but then returned to work for their former employer. Upon their return, a boomerang employee brings fresh job experience and often earns a promotion. Meanwhile, your business can relish the dual benefits of working with an employee already familiar with your values, culture, and structure while also utilizing the new industry knowledge and experience they gained while working for another employer.

Business benefits of promoting from within

Internal recruiting is an efficient hiring tactic with both obvious and subtle business benefits. These six considerations make the case for promoting from within rather than hiring externally.

1. In-house candidates are a low risk.

There is a built-in level of security when the talent pool already works for the hiring company. When you’re already sure of the candidates’ quality, the recruiting focus is homed to finding the right fit for the vacancy. You also have direct access to all applicants’ work histories, personnel files and references.

2. Trust is already established.

Expanding on the low-risk nature of promoting from within, internal recruiting is a reminder of the mutual trust established between a current employee and their colleagues. They already have cultivated relationships and understand your business’s mission, objectives, and challenges, as well as how their own career goals align with the company values and culture.

3. Hiring from within saves money.

Internal recruiting saves your business the costs associated with external hiring, like advertising the job posting, subscribing to applicant resume databases, and paying for background checks. Additionally, the vacancy will likely be filled more quickly than with external hiring, leading to fewer interrupted workflows and greater business continuity.

4. Internal recruitment keeps company morale high.

The potential of upward mobility within the workplace fosters an engaged company culture and reduces employee turnover. An employee who feels seen and valued is inspired to complete their best work every day.

5. Hiring from within is a cyclical investment.

Imagine internal hiring as an investment circle that promotes employee loyalty and thereby reduces turnover. When you hire someone new, you spend time onboarding and training them, which is a form of investment that will hopefully lead to high productivity and quality workflow returns. If the investment is successful and the employee earns a promotion, you will then build on the knowledge, skills, and training already imparted to the employee, while also inspiring the employee to reinvest in the company by not seeking out another employer.

6. The learning curve is shorter.

Transitioning an in-house employee to a new role, especially one within their own department, takes much less time and far fewer resources than onboarding an external hire. Internal hiring is a particularly useful strategy when you must suddenly fill an unexpected vacancy due to occurrences like resignation, a change in health status, or death. When time is of the essence, the company knowledge already possessed by a current employee is invaluable.

8 ways to make the most of an internal promotion

Despite the many business benefits of promoting from within, you should take additional steps to give your internal hiring plans the best chance of success. These eight suggestions can serve as that internal recruitment firewall:

  1. Abide by all federal and state laws regarding hiring discrimination based on race or color, national origin, age, citizenship, military service, religion, sex, sexual orientation, pregnancy, genetic information, or disability.
  2. Select the internal recruiting strategy that makes the most sense for your business’s goals and needs. The four styles of internal recruiting discussed above, as well as the boomerang employee option, are all viable starting points.
  3. Do not make a companywide job opening announcement if you already have a top-performing employee in mind for the promotion.
  4. Ensure that internal promotions are not the only ways employees are validated for their work ethics and talents or celebrated for their accomplishments.
  5. Avoid personal bias and favoritism toward applicants. It’s natural that some employees and managers will have closer relationships than others, but personal opinions should not overshadow objective data or skills assessments that demonstrate which in-house candidate is right for the job.
  6. Develop a thorough job description as detailed as it would be for an open, public job posting. Yes, internal job candidates have company experience and knowledge, but they want to be just as informed about the job’s responsibilities and requirements as any outside candidate would be.
  7. Create a human resources spreadsheet, document, or file system to track applicants with the initiative to apply for promotions and streamline future hiring campaigns. This resource should allow you and your company’s managers to easily access resumes and cover letters, previous applications, and the top skills and qualifications of these leadership-minded employees.
  8. Conduct transparent internal hiring, and be prepared to constructively explain to an employee why they were not chosen for the promotion and how they can improve their hireability in the future if they ask.

Potential drawbacks to internal promotions and how to mitigate them

Although developing a hiring strategy is an individualized process that depends on your business’s HR needs, financial well-being, and immediate as well as long-term objectives, internal recruitment may create challenges that apply to all hiring scenarios. The good news is these potential drawbacks to internal promotions have clear solutions.

Limited applicant pool

One of the most obvious potential drawbacks to promoting from within is that you will not have access to the diverse selection of applicants you would encounter with public hiring. Although internal job candidates are known to their managers and may not have to complete a formal interview, these potential hirees will not necessarily contribute outside-the-box thinking to the vacant position. However, any possible negative impacts from a limited hiring pool can be lessened by exploring cross-department hiring, including opening the position to remote workers, and searching for in-house applicants who have previous professional experience in a similar role.  

Stagnant perspectives

A major benefit of external hiring is that it provides an instant burst of new ideas and perspectives within your organization. To avoid reinforcing the status quo within your company, prioritize engagement among team members. It is vital to keep lines of communication open and encourage team members to express their opinions, not only during periods of internal recruiting but year-round. Regularly check in with employees about what works within the organization and what could improve. Collect feedback through surveys, team and one-on-one meetings, performance reviews, and exit interviews.

Resentment among non-promoted employees

“Why not me?” is an understandable question employees may ask of themselves, or directly to managers, when a co-worker is selected for a promotion instead of them. Employees feeling overlooked or undervalued can breed jealousy and friction within the workplace, but this challenge of internal recruiting can be minimized with care and clarity.

If you or team managers notice shifts in team cohesiveness after an internal promotion, you can schedule individual meetings with employees to discuss concerns, answer questions, and address why another team member was selected for the promotion. In addition, you could provide employees with guidance, resources, and professional development opportunities to increase their likelihood of earning a future promotion.

Another vacancy in the existing workforce

When an in-house employee is promoted, their upward move will naturally leave a gap in their former role. Work with your team managers to decide if the promotee’s former position can be absorbed into adjusted duties across the department, dissolved altogether or filled by a new hire. If recruiting a new team member is the best solution, the internal hiring process begins again, or you can consider outside hiring to onboard external talent.

Promoting from within is good for everyone involved. Businesses profit from factors like lower hiring costs, uninterrupted productivity, and reduced employee turnover, while employees benefit from high company morale, professional validation, and a culture of upward mobility. Any business with current or upcoming vacancies should feel encouraged to look first toward internal recruiting before hiring external candidates. After all, the grass is not always greener on the other side; sometimes, it’s just a mirage.

Image Credit: fizkes / Getty Images
Laura Spawn
Laura Spawn is the CEO and co-founder of Virtual Vocations. Alongside her brother, Laura founded Virtual Vocations in February 2007 with one goal in mind: connecting jobseekers with legitimate telecommute job openings. Laura has nearly two decades of experience working from home and spends her days overseeing Virtual Vocations' team of more than 50 remote employees and contractors, who together have helped more than two million jobseekers over the last 12 years. Laura holds a bachelor's degree in public agency service management from Northern Arizona University. She lives in Oregon with her husband, three children, and two dogs, Ivy and Jilly.