Although I’m a staffing firm owner who profits when our clients hire new employees from my firm, I feel compelled to say that many times businesses are better off if they promote from within.

Here’s why. Often internal or current employees can make the best available candidates because they are already familiar with your company and successful within your culture. The most common reason I hear for not promoting a current high-performing employee is that the employee does not have enough of the right experience and/or has a certain flaw or two. That leaves hiring managers with two choices:

1) Hire a proven quality employee who fits into your company culture but who has a couple of known flaws or gaps in his or her experience; or

2) Hire an unproven employee who interviews well but who may have a couple of flaws that you don’t yet know about.

I am surprised at how often hiring managers choose the latter. Not always, but in my experience more often than not, hiring managers would be better off investing time in closing the gaps in experience of the existing employees as they promote these people.

The baseball world offers a great example of the differences between investing in young talent versus bringing in “hired guns.” Consider the Red Sox’ development of Jonathan Papelbon and Jacoby Ellsbury, for example, versus the acquisitions of Eric Gagne and Matt Clement. Most would agree that the first pair of players, groomed by the team’s minor league system, has had far more success in the organization than the two brought in from the outside. Some franchises, like the Red Sox, realize it’s smarter to channel their payroll toward developing younger players and prospects instead of overpaying veterans for splashy, “quick fix” signings.

Benefits of promoting from within

In the business world, promoting from within can provide benefits in several areas:

• Recruiting - Being known as an employer who offers opportunities for career advancement is attractive to prospective hires. Interviewees are impressed when they meet employees who’ve steadily moved up the ranks.
• Retention - When new employees see that opportunities exist for them and that there’s a track record of hiring from within, they tend to stay longer with your company.
• Cost savings - The cost of recruiting, interviewing, and onboarding new employees can outweigh the cost of training current employees for certain new skills. It can take internal candidates much less time to become effective in a new position because they are already familiar with the company culture and its goals.
• Flexibility - Newly promoted staff can assist with training their replacements. They are available for questions and can occasionally fill in at their old position if needed in emergencies.
• Culture fit - Existing employees fit in with the company culture (or else I assume you would not be promoting them). Conversely, despite the most probing interview questions, you’re never positive about whether a new hire will be a good culture fit or not.

Making it part of your hiring strategy

To incorporate promoting from within as a part of your company’s hiring strategy, consider taking the following steps:

• Encourage a promoting-from-within culture - Promoting from within can take on a momentum of its own. Employees who’ve moved up the ranks are more likely to want to promote other internal candidates and this approach becomes part of your company culture. Empower employees who have been promoted to talk about “where they came from” and to encourage new employees to aspire to be promoted.
• Build a process to make promoting from within successful - Offer opportunities for training and development and mentor relationships. Make sure you regularly discuss performance and career goals and offer compensation that matches these goals.
• Educate managers on the benefits of promoting from within - Hiring managers may have the burden of helping the newly promoted employee learn new skills, or perhaps they will need to retain certain aspects of the job while the newly promoted employee comes up to speed. Accordingly, it pays to have managers bought into the hiring approach.
• Proactively identify prospects for promotion - Look at job performance as well as ambition, teamwork, and motivational skills.
• Consider internal candidates first - Start your job searches by considering internal candidates first, before you look outside your organization.
• Take a chance - Offering a promotion to a quality employee who may not have all of the right experience but who has proven him/herself in their current job is often a chance worth taking.

While promoting from within isn’t the answer 100 percent of the time, it tends to be underutilized as an effective solution for candidate shortages. Giving current employees more opportunities for advancement can be a win-win situation for everyone.