PROMOTE OR HIRE?

If you’re growing your business / team and need to fill positions quickly, chances are you’ve debated whether you should promote internally or hire externally. No doubt you want to allow your current team to grow and develop further, but when is it better to hire from elsewhere? Deciding whether to grow talent from within or hire externally will often feel like a leap of faith. 

Internal or External? The question is undoubtedly important, but it may not be the most critical one in determining if a person in a new position thrives or fails. The key to determining whether it is best to “build” or “buy” occurs long before a hiring decision is made. The first step involves taking a diligent approach to workforce planning.

The decision to hire internally or externally can vary based on a number of factors such as the nature of the role, internal supply of talent, the organisation’s people strategy and changes occurring in the marketplace. In a highly evolved business where succession planning and development plans happen regularly, transparency of hiring practices is the norm. Thus, looking to internal talent first is a natural plan of attack.

However, in corporate cultures where those processes are not fully in place or are inconsistent or misunderstood, the opposite may be true. Then, the first step is to look externally because there is no way to know who might be the best person in the business for a role. The assumption is that they don’t exist, or it’s just easier to look outside. This is a common area where we push back on companies and suggest they work through “hidden talent” already within the team or wider business.

When deciding to build or buy it’s imperative to understand the goal of the position that you’re trying to fill.

Start with succession planning – get a clear understanding of the talent that is currently available inside the organisation.

Recognise biases – are you looking to hire internally because you are under pressure to do so?” Does it feel safer to hire someone you know, rather than take on an external person? Always hire the BEST overall person for the role – you’re only human but try to avoid your built-in bias!

Define the role clearly – write job descriptions that are extremely rigorous and define exactly what skills and competencies are required. The description should clearly and comprehensively state what a person needs to do to be successful in the role.

The late human capital pioneer and Nobel Prize-winning economist Gary Becker used the term “firm-specific” to distinguish between general skills and the unique skills required to thrive in an individual organisation. Research suggests that the more firm specific the required skills are, the more difficult it is for external hires, even superstars, to replicate their previous levels of performance. 

Understand what is unique about the role and your business – separate research conducted concludes that, while organisation specific skill requirements pose a major challenge for external hires, unique and strong organisational cultures pose similar challenges.

When interviewing external candidates it’s critical that you assess each one on the following:

• How quickly can they assess and integrate into a new business and new environment?
• How effectively can they build healthy relationships and amass the social capital necessary to get things done.

Commit to integration – whether a new hire is stepping into a role from another company or from another area of the same business, pay attention to integration. For many organisations, that means expanding onboarding efforts well beyond assigning desks and laptops, delivering employee handbooks, and reviewing benefits.

Develop internal training and development programme – you should be developing employees at all times. Training and development and stretch within a role can be a key retention mechanism and will always be valued by ‘top talent’. With the proper training and development in place, you should be able to better assess what skills an individual is missing in order to give them a development pathway to a promotion.

As search & recruitment partners we hear more and more each day that cultural fit is the most important factor when considering an external hire. When you promote people internally, one of the biggest advantages is that they (and you) already know “how to work” in the environment.

Internal candidates have a strong knowledge of the culture, processes and methodologies and have established relationships through the company. On the other hand, an external hire delivers a number of advantages that include injecting fresh thinking or ideas and new skill sets into a business / team. It also allows the hiring manager to draw from a larger and quite often more diverse supply of talent than an internal appointment.

I believe that an appropriate balance of both promoting from within and recruiting externally creates an essential ingredient for desired retention levels and the growth, innovation and overall sustainability of any business.

That being said it’s not always the only solution and it’s not whether you “build” or “buy”, it’s figuring out under what conditions you do it. Many companies throw a ton of effort into finding the right person, negotiating and getting to the finish line. But that’s not the finish line it’s just the beginning…