If you’re looking to fill a position in your company, you may be struggling with whether you should look inside or outside the organization for your best candidates. According to the Society for Human Resource Managers’ 2013 Human Capital Benchmarking Database, companies are 2.5 times more likely to hire from the outside. But research indicates that external hires can be more expensive and less successful than internal ones.
Advantages and disadvantages of external hires
Looking outside your team for new blood can help you:
- Bring in extra experience
- Add new skills to your team
- Search from a larger pool of possible candidates
- Fill entry level positions
However, you might run into these problems:
- Higher recruiting and salary costs
- Lower new hire retention rates
- Need to train new hires in corporate culture and process
- Lower performance evaluations in the first few years
Advantages and disadvantages of internal hires
Drawing from your current talent pool means you can:
- Select a candidate with company knowledge and cultural fit
- Retain your employee longer
- Improve employee morale overall
- Save money in recruiting and salary costs
But internal hires present other challenges:
- Training existing employees in needed skills
- Possible resentment from colleagues who are not promoted
- Need to backfill the position left by the internal hire
If you look strictly at advantages and disadvantages, it’s not obvious that one approach is universally better than the other even though many business consultants advocate internal hires as a way to continuously develop your workforce and keep excellent employees.
The best approach for you
For your upcoming hire, the best approach depends on your situation and priorities. These circumstances tend to favor external hires:
- You’re going into a new business or marketplace where the company has little expertise and you are looking for someone to bring that expertise to you.
- You’re making major shifts in corporate strategy.
- You’re looking for people with different ideas and background to shake things up.
- You have processes to help outsiders fit in quickly.
- You are looking to expand entry-level ranks.
It may be difficult to find internal candidates for entry-level positions. So you can take the opportunity to bring in new ideas and diverse backgrounds on the bottom floor. Plus, it’s often less expensive to recruit and hire for lower-level jobs.
On the other hand, these conditions would be good for an internal hire:
- The job requires a good understanding of the company culture.
- The job requires knowledge of workflow and processes unique to the company.
- It’s relatively easy to fill the position left vacant.
- You’re looking to expand management and leadership ranks.
Filling management roles from inside can help you keep your best people and provide a career path to motivate others. New managers will already understand corporate values and culture, which helps them become effective more quickly.
Some additional considerations
Regardless of whether you decide to look inside or outside the company or both, keep in mind a few additional points that can help you make a success of any new hire.
How’s your onboarding?
If you don’t provide a lot of support for new hires, then that expensive superstar you just brought in may bail out fast. Even people with great, relevant experience need help adjusting to a new culture, work processes, and expectations. If your onboarding sucks, fix it up before filling your position from the outside.
And if you’re hiring internally for a leadership position, consider “inboarding,” providing mentoring or coaching to help your recently promoted colleague adjust and succeed.
Looking for perfection?
Most job descriptions today read like a resume for a combination of neuroscientist/astronaut/cyber-whiz. Companies pile on so many requirements that they virtually eliminate the probability of finding someone who meets them all. The “perfect candidate” is a common recruiting myth.
If you have very specific skill needs, it makes more sense to hire for cultural fit and train where necessary or train existing employees who already fit the culture and are more likely to stay and give you a good return on your investment.
Are you training today for tomorrow’s jobs?
Chad Rabello, Director of People Operations at NakedWines.com, is continually developing the leaders in his company so when they need to fill a position, there’s a strong set of internal candidates to choose from.
He writes, “It cultivates future leaders and creative problem-solvers so you don’t have to go out and search blindly for those people outside your walls, usually by using arbitrary criteria and clumsy recruitment tools.” Even if you don’t need to fill executive positions right away, it might be worth preparing your employees for the role today and having the people you need tomorrow.
Where training fits in
Regardless of where your next new hire comes from, don’t forget the importance of training to help them succeed. You may be training existing people in leadership skills or new technology, but you’ll also need to train external hires in your corporate culture, priorities, and processes. Otherwise, you may be back on the job boards looking for someone to fill the same position sooner than you’d like.
At Pract.us, we’re dedicated to helping you provide the individualized, work-based training that will help anyone succeed in their new position. Learn more.