Why You Should Promote From Within Your Company

Business benefits of promoting from within

Internal recruiting is an efficient hiring tactic with both evident and subtle business benefits. For example, existing employees who have already undergone the onboarding process and training can save the company time and money. Plus, when your staff sees that you’re open to internal promotions, you can improve employee engagement among other ambitious team members. 

Shaylae Duprís, an HR consultant and founder of Blu Prospects Consulting, said internal promotions can help improve representation throughout the organization. “Leadership should be reflective of the very workforce or the candidates that the organization wants to retain or attract,” Duprís said.

Consider the following business benefits of promoting from within instead of hiring externally.

In-house candidates are low-risk.

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

You already trust in-house candidates.

Happy, well-established and respected employees already enjoy mutual trust with managers, company leaders and colleagues. They can immediately step into a position with a high level of autonomy and confidence because they’re trusted and empowered to do their job. 

These individuals have already cultivated relationships and understand your business’s mission statement, short- and long-term objectives, and challenges. The hiring team already understands these candidates’ career goals and can see how they align with the company’s values and culture. 

Hiring from within saves money.

Internal recruitment eliminates the costs associated with external hiring, such as advertising the job posting, subscribing to applicant resume databases and paying for criminal background checks. 

Internal recruitment can reduce employee turnover.

The potential for upward mobility within the workplace fosters an engaged company culture and increased workplace morale, which helps reduce employee turnover. Employees who feel seen and valued are inspired to work at a higher level of engagement and productivity, knowing they have a future and a career path within the organization.

Hiring from within is a cyclical investment.

Imagine internal hiring as an investment circle that promotes employee loyalty and reduces turnover. When you hire someone new, you spend time onboarding and training them — a form of investment that will hopefully lead to high productivity and quality workflow returns. 

Suppose the investment is booming, and the employee earns a promotion. In that case, you will build on the knowledge, skills and training already imparted to the employee while inspiring them to reinvest in the company and not seek another employer.

The learning curve is shorter for internally promoted employees.

Transitioning an in-house employee to a new role, especially within their department, takes much less time and far fewer resources than onboarding an external hire. Internal hiring is a particularly beneficial strategy when you must suddenly fill an unexpected vacancy due to a resignation, a change in health status or another unexpected departure. 

When time is of the essence, a current employee’s company knowledge is invaluable.

When to promote from within vs. hiring externally

Promoting from within can strengthen your company culture and foster employee loyalty. However, there are also times when hiring externally makes good business sense. Consider the following circumstances. 

When to promote from within

• You have a limited budget. Internal promotions save money on recruitment, agency fees, advertising costs, salary negotiations and more. Current employees are already vetted, and there will be more trust and open communication regarding employee compensation. 
• You need a seamless cultural fit. Recruiting the right external candidate can take significant time, and interviews often aren’t enough to determine whether the candidate fits your company culture. However, when you promote from within, you already know the candidate is an excellent fit, cooperates with teams, and understands the business’s day-to-day processes. If not, you wouldn’t be considering them.
• You prioritize employee retention. Companies that value and support their workers often have internal promotion policies. They prioritize professional development opportunities and know that providing a career path will keep employees for the long term. When professionals look for employment, they’ll likely opt for an organization known to promote from within and commit to growing their careers there. 

When to hire externally

• The business needs to diversify. Although promoting internally can boost a company’s reputation, there are times when diversification is crucial. Perhaps you need specific technical or business skills or want to improve workplace diversity and inclusion. External recruits can bring unique talents and perspectives that can elevate your organization.
• Your workforce has become indifferent. Not all workforces are full of advancement-worthy employees. You may consider an external hire if productivity has become stagnant and no leaders have emerged among your current team. Outside talent can help reinvigorate your workforce by encouraging employees to compete for promotions, flush out underperforming workers, and gain a fresh perspective on current business processes.
• You must avoid multiple vacancies. An external hire makes sense if promoting someone will cause a snowball effect of open positions and the need to rearrange talent. This move may cause internal chaos and lower productivity. In contrast, finding and integrating an ideal external hire can be less taxing and more efficient. 

Types of internal recruitment

You have several options for internal recruitment strategies to match your business style and hiring goals.

Open job posting

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

Manager referral or nomination

Some businesses prefer a subdued approach to internal recruitment. Instead of posting an open job, 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 and promotions.

Part-time employee or freelancer to full-time employee

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

Succession planning

Succession planning is a business practice that recognizes and trains new leaders to replace employees who move on to other organizations, retire or leave the workforce. With this type of internal recruitment, managers are trained to understand and develop their team members’ potential. When a promotion opportunity arises, you can immediately consult those managers about the most qualified employee.

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 that combines elements of internal and external recruitment.

A boomerang employee is a worker who takes a job with another company but returns to work for their former employer. Your business can relish the dual benefits of working with an employee who’s already familiar with your values, culture and structure while utilizing the new industry knowledge and experience they gained while working for another employer.

Tips for promoting from within 

Consider the following tips and best practices to ensure your internal promotions are a win-win for your employees and organization:

• Follow the law. 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.
• Choose an internal recruitment strategy. Select the internal recruitment strategy that best suits 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.
• Don’t mislead internal candidates. Do not make a company-wide job-opening announcement if you already have a top-performing employee in mind for the promotion.
• Create a culture of employee appreciation. Internal promotions shouldn’t be the only way employees are rewarded for their work ethic, talents or accomplishments. Make employees feel appreciated through recognition programs and other rewards.
• Avoid personal bias and favoritism toward applicants. Naturally, some employees and managers have closer relationships than others. Still, personal opinions should not overshadow objective data or skills assessments that demonstrate which in-house candidate is suitable for the promotion.
• Develop a thorough job description. Your job description should be as detailed as it would be for an open, public job posting. Yes, internal job candidates have company experience and knowledge, but they should be just as informed about the job’s responsibilities and requirements as any outside candidate.
• Track internal promotion applicants. To streamline future hiring campaigns, create a system to track applicants who have applied for promotions. This resource will allow you and your company’s managers to quickly access resumes and cover letters, previous applications, and these leadership-minded employees’ top skills and qualifications.
• Be transparent in the internal promotion process. Business transparency is crucial to internal promotions. Conduct transparent internal hiring. This includes being prepared to constructively explain to an employee why they were not chosen for the promotion and how they can improve their chances of being selected for future opportunities.
• Mentor and guide promising employees. Actively nurture promising employees so they’ll be ready when a promotion opportunity arises. “It’s vital to create an atmosphere of coaching, mentorship and sponsorship within the workplace for mobility and advancement,” Duprís said.

Potential drawbacks of internal promotions and how to mitigate them

Internal recruitment and promotion can also create challenges. “Promoting from within can be especially difficult if there is a lack of trust between the workforce and leaders within the organization,” Duprís noted.

However, these hurdles can be overcome. Consider the following potential drawbacks of internal recruitment and how to mitigate them. 

A limited applicant pool

When you promote from within, you may not have access to the diverse selection of applicants you’d encounter via an external search process. Internal job candidates may not be ideal for contributing outside-the-box thinking to the vacant position. 

Solution: Although you can’t avoid a limited applicant pool when promoting from within, you can expand your options as much as possible. Consider these tactics:

• Explore cross-departmental hiring.
• Search for in-house applicants with previous professional experience in a similar role. 
• Open the position to remote workers. 
• Implement upskilling initiatives to deepen your internal talent pool.
• Use job rotation programs to expose workers to new roles, experiences and ideas.

Stagnant perspectives

A significant benefit of external hiring is that it provides an instant burst of new ideas and perspectives within your organization. However, promoting internally risks the continuation of stagnant perspectives. 

Solution: There are many ways to encourage broader perspectives and discover more about your employees:

• Prioritize engagement and interactivity among team members to broaden employees’ perspectives beyond their departments and roles. 
• Keep lines of communication open and encourage team members to express their opinions year-round. 
• Check in with employees regularly about what works and what could be improved, and implement their feedback to show you’re listening. 
• Foster a culture of innovation that encourages employees to think beyond their roles and rewards them for doing so.
• Encourage cross-departmental collaboration so employees are continually exposed to new perspectives. 

Budgetary concerns

Hiring from within can create budgetary issues if the money allocated for the position doesn’t match the current pay scale for the promotion. Although some companies hire externally to start the employee at a lower pay scale, this isn’t a great idea. In fact, it can lead to employee resentment and a lack of loyal leadership. 

You should also avoid the trap of “quiet hiring” — filling vacant positions by requiring existing employees to take on more responsibilities. Quiet hiring is a recipe for turnover, employee burnout and a toxic company culture.

Solution: Set transparent guidelines for internal promotions, using salary ranges or performance targets to ensure internal candidates are paid fairly.

Resentment among nonpromoted employees

Employees who weren’t chosen for the internal promotion may feel overlooked and undervalued, thus breeding jealousy and friction in the workplace and hurting the promoted employee’s chances of success. 

Solution: Transparency in the internal hiring process is the key to avoiding resentment. Keep these best practices in mind:

• Consider scheduling individual meetings with employees to discuss their concerns, answer questions and address why another team member was selected for the promotion.
• Let them know they still have opportunities for promotion and career growth within the organization.
• Provide constructive feedback about why they didn’t get the promotion.
• Give employees the guidance, resources and professional development opportunities to increase their likelihood of earning a future promotion.

A new vacancy in the existing workforce

When an in-house employee is promoted, their upward move will naturally leave a gap in their former role. You don’t want to overload team members and cause resentment. 

Solution: Work with management to decide how to deal with the promoted employee’s former role. Answer these questions:

• Can the duties be redistributed across the department? You must ensure that no one is overloaded and that everyone’s responsibilities are clearly defined.
• Can the position be dissolved? Evaluate whether the role is still essential or if it can be combined with other roles. 
• Do you need to fill the role? If so, consider another internal promotion or look to outside hiring to onboard external talent.

Internal promotions can benefit everyone

Promoting from within your company can be an excellent decision. Businesses profit from 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 consider filling the role internally before hiring external candidates. 

Julie Thompson contributed to this article.