Hiring Externally vs. Promoting Internally
Introduction
When I ask owners or managers whether or not they should hire from the outside or promote from the inside, I usually have a very passionate response. "We never hire from the outside. We only promote internally." Or the response swings to the other side to only hiring from the outside. Seldom do I find someone who lands somewhere in the middle. It almost seems as if they believe there are two camps, and they have to pick one.
When you dig in, this polarity is often because they had a bad experience along the way. For years they had been promoting internally (…or hiring family). One day they are forced to hire somebody from outside the organization, and for some reason, the person just didn't work. They didn't fit in or get our way of doing things. Very often, they try again, and yet again, the outside hire still doesn't work out. And just like that, they found their "camp." They decided that hiring from the outside is a waste of time, and they're better off promoting the people they already have.
Or they have an entirely opposite perspective. They fear that if they promote internally, they give too much responsibility to someone who hasn't proven themselves. They've tried to promote someone already on the team to manage the team, but they've never managed before. When that person fails, it only solidifies the perspective.
The Problem
Both of these "camps" come with their downsides.
When we only promote internally, we miss out on quality external employees and a healthy dose of outside perspective. We leave talent on the table, and our ability to grow is governed by the pace of leadership development within our pre-existing team.
When we hire only externally, we fail to invest deeply in the people we already have. And with no path for promotion, we can stifle their motivation. High-quality internal employees will see moving on to another company as their only path forward. We hope that other organizations have taken the risk and made the investment in talent so we can somehow swoop in and convince them to leave that organization to join ours. When we do persuade them to join our organization, we have to help them unlearn some of what they picked up at other companies and understand what makes our company unique.
Most owners choose a camp because they have had several bad experiences, but maybe there is a better solution than just switching to the other "camp."
The Solution
The reality is that both of these can succeed, both hiring externally or promoting internally. Both can be successful, and both can coexist. In fact, they should coexist.
The way these coexist is a simple pathway for promotion. A path for advancement outlines the moves from entry-level to management. It lists each step and outlines the skills necessary to succeed at each level.
This is an extremely healthy exercise for an owner for two reasons:
It forces you to think through what you expect from each type of employee. Everyone is better off when this is clear.
It forces you to identify the necessary skills at every leg of the journey. And when you know what skills are required, you have the option to either train or hire to those skills.
When you hire somebody at the entry level of your organization, there are a handful of skills they need to acquire to succeed at that level. A whole other skill set is required to be promoted to the next position. A different skill set is necessary to manage a team or lead a location. And if we have that pathway, when you promote to a path, it doesn't matter where they came from. It doesn't matter if they're internal or external.
In your organization, the first thing you need to do is lay out a path.
Take every position in your organization or even every job you hope to have and lay them out in a path. It's okay if that path has forks. It doesn't have to be linear.
Next, think about what skills are required in every position. So you may, for example, only have three basic positions in your business. That's okay. Take those basic roles, and break each into three levels. Think amateur, novice, pro.
Next, apply compensation to each level. You can also add job benefits, bonuses, and all kinds of stuff. But that pathway needs to exist. You can't apply compensation or bonuses at random.
When a pathway is complete, it doesn't matter if you start somebody off at the bottom or hire somebody externally with the skill sets required for a role halfway down your pathway. The solution isn't only internal or external; the key is knowing what you need from every position and their next step.
