Do you often find yourself at a crossroads- trying to decide whether to hire a candidate from within or look to the outside? This is a common dilemma for hiring department heads and managers.
While there are pros and cons to both options- This article will inform you why hiring from within will create the greatest benefits for your company.
1. Less Training
When you hire internally, you already have capable employees who understand the ins and outs of your company structure. They have a grasp on your goals and visions overall. Therefore, less training is required to bring them up to speed on your inner-workings. Paul Slezak, the CEO of Recruit Loop says,
The average organization spends over $1,000 a year on training for each employee; a cost that includes the time spent by managers and experienced co-workers in teaching and demonstrating the requirements of the job.
Hopefully, your company already has training and development programs in place to help your employees improve their professional skills! This will make it easier to transition to a new position higher in the company as they complete certain training. Laying out a career pathway with employees so that they can see where their training will take them within your company can be helpful to retention rates as well.
2. Save Money on Recruiting Process
When you look within your company to hire for new positions, you save a lot of money. There are many expenses that add up and promoting internally will create a low-cost hiring strategy for your company. Steven Burrell is a writer for Aabaco Small Business, he points out, “From the cost of advertising and training to the time it takes to screen, interview and take the new hire through their orientation, it can be months before any productivity is enjoyed from an outside recruit.”
Traliant's Chief Learning Officer Andrew Rawson warns that when hiring externally, you run the risk of having to repeat the recruiting process (and recurring more hiring costs) if your new hires quit shortly after being hired. These risks and costs can be avoided by hiring internally. Andrew says,
Advertising, interviewing, and pre-screening all require significant resources. With hiring internally you can circumvent those steps, this is especially important if your company has a high turnover rate. In addition, when you hire an internal candidate you are less likely to lose them because they already work for you.
The entire recruiting process will cost your company money, not to mention the salary paid out for time and energy spent by recruiters and managers to make the decisions on hiring. Hire internally and save your money!
3. Save Valuable time on External Recruitment
When considering the cost of new hires, you also have to include the time where you have an empty position in your company and work is not being done. It takes time searching for great employees, when you may have the people you need under your roof. Beyond just finding and interviewing capable employees, the training needed after the hire will take up a lot of valuable time. Robin from MFG Jobs says,
The longer it takes companies to fill and actually hire a new staff member, the more the company is paying in time, money and resources. Most of the time, internal candidates don’t have to go through the original background screening process or reference process that can take weeks.
Because employees are already employed at the company, a more flexible transition is often able to take place. In regards to the training needed after hire, Robin also states, "Internal candidates bring the institutional knowledge they’ve already gained into a new role. While they’ll need to get up to speed on the expectations of their new position, they won’t need to be oriented to the company processes and procedures the way an external candidate would."
Glassdoor estimates the average time it takes to fill a position in the USA is about 23.8 days but can range up to 30+ days depending on the state. This time cost and delay is something that can be mitigated by hiring within.
4. Improves Loyalty
When employees believe that there is a good opportunity for growth, they will want to work hard to stay with your company. Recruit Loops says, “People are always looking to better themselves, so if you offer them the opportunity to do so within the organization, they are less likely to look elsewhere and you avoid a costly ‘brain drain’ on your manpower resources.”
Showing employees that you are loyal to them will increase the likelihood of them being loyal to you. Petal Bovell-Proffitt, Founder of DISC Bodhi says,
Hiring internally demonstrates to your employees that you value them and that opportunities are available for them to develop their careers in your organization. When you consistently hire externally, employees... will believe that they are stuck, have no growth opportunities, and eventually they will leave.
If you want employees to stay and be loyal, be willing to invest in their growth. Talk to them about their personal career goals and provide resources to help them achieve those goals. Show that you truly want them around for the long-term by improving their quality and ability to work and giving them a chance to grow!
5. Enhances Overall Leadership Development
When you take the time to teach and grow employees, they will become the best they can be within your company. Take Procter & Gamble for example, “This commitment to development allowed P&G to create a leadership funnel, which has led it to fill many management positions with internal candidates. It’s also landed the company at the top of Chief Executive Magazine’s list of the best overall companies for leadership development for the past three years.”
Alex Robinson from Teambuilding Hero shares his personal experience with hiring internally,
A few years ago we hired a remote customer service rep to join our NYC based team. Since then, she grew into a leadership role and now runs the marketing team. We’ve invested in her training and skill development, and she has been a strong, positive team member throughout.
As you hire employees into higher positions, you give them opportunities to learn qualities of leadership that will be invaluable to your company. They will already be familiar with the people and teams that they have worked with making it easier for them to step up and take command.
6. You Know What Your Candidate is all About
You understand their strengths and weaknesses and know how to work with them. You know how their skills can align with the new position. Less risk is involved on your end. Tim Wiedman from Doane College says,
Current employees almost always have easily verified "track records." Their performance evaluations are on file, their attendance records are easily checked, their ability to complete assignments correctly and "on time" are known to their supervisors, and their loyalty, cultural "fit" with organizational philosophy, and performance in a team environment are generally known as well. So these folks are known quantities.
This is backed up by James Pollard from The Advisor Coach who states,
Perhaps the biggest benefit with hiring internally is that you know what you're getting. It's a safe bet. I've found that business success isn't so much about making grand-slam decisions once in awhile as it is about making above-average decisions consistently. Hiring internally assures a company that they can make an above-average hire.
Why risk your company's success on a longshot gamble? Bet on the hard-working and high-performing employees you know by giving them new challenges that will help both you and your company in the long run.
7. Seamless Fit with Company Culture- Improved Teamwork
People want to work for a company that has a great workplace culture. Company culture is a driving force behind progressing as a group. Each culture is unique to the company and the employees in that company. It isn’t anything that can be taught right away, but it can be learned through experience and time spent in one environment.
Courtney Barbee from The Bookkeeper LLC says,
We've found that the hardest part of onboarding any new hire is not training them on the specific job skills, but in training them on our company. When you promote from within, the employee already understands your policies and your culture, and only needs direction on their changing job duties. Hiring from the outside means starting all of that from scratch.
Levi from G2 Crowd supports this saying,
It's hard to teach company knowledge and culture. Bringing in outside hires means you risk having a poor culture fit. Also, general knowledge of how a company works, all the ins-and-outs of each department and what they do, and having connections to other departments is a quality that makes an employee one of the most valuable members of a company.
When you hire within, your candidate already understands and embraces the goals and beliefs of your company. This can improve teamwork and morale because it will be evident to your employees that you care about their growth and development. As you improve the company culture, your employees will be less likely to leave somewhere they are comfortable in.
8. Less Likelihood of Bidding War
When you break the status quo and hire externally, it creates room for negotiations and possibly a bidding war. New recruits may believe they are worth more than you can provide. While you may find some superstar talent by looking outside of your company walls, it could eat up valuable time and money to negotiate the details of the position.
By hiring within, your employees will appreciate the opportunity to grow and be more willing to work with you through the process. Deborah Sweeney from MyCorporation shares her experience saying,
I have always believed in giving hard-working employees the chance to grow upward within our company. If there is a job opening within our business, and we have another employee who may actually be an even better fit, we are happy to discuss having them make the switch and move on to that role. We have actually done this a few times here and it has always worked out great because we are already familiar with the employee's work ethic and style.
When you hire from the outside, chances are that the candidates that you like will also be targeted by other companies that they applied to. You may need to increase your offer significantly to fight off your competitors. Avoid the candidate "auction" altogether by promoting and raising the salary of an existing employee.
9. Allows for New Hires to Begin at Entry Level
As you promote within, open positions at lower levels will result in external hiring. This process shapes the overall movement of the company upward. Showing employees that your company is a place to stay and grow within will be a huge asset to you. Show them that hard work and dedication will be noticed and appreciated. Dr. John Sullivan discusses this method and its benefits:
Promoting from within allows us to do almost all of our external hiring at the "entry level". Entry-level jobs are cheaper to fill, have a larger candidate pool and it gives us more time to train and assess those that aspire to reach higher level positions.
Entry-level positions not only have lower salaries but usually require less technical skills as well. This will allow you to expand the recruiting qualifications and broaden your candidate pool. Your new hires will also be more malleable and flexible to be trained the way your company needs them to through your development programs.
10. Bolsters your Company Image
If your company is known for rewarding employees for long-term dedication, you will have a favorable view and improve morale. A great company image will attract the best talent out there. Applicants will do their research on a company before committing to them. When you are transparent and back up your company values, you will bring out the best in your employees.
Investing in your employees will keep you competitive in the job market. Marielle Smith from GoodHire states,
We’ve already invested in our current employees -- they’ve been through our learning and development programs, and know the company and product very well. It’s extremely motivating for coworkers to see their peers be promoted from within. It engages employees and promotes loyalty.
Now that you have heard ten reasons why hiring within will benefit YOU, check out the wide variety of succession planning tools that ProSky offers to help you hire internally. These features will take some of the stress of hiring and training off of you. Don’t waste any more of your valuable time, schedule a demo with ProSky today!