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Promote from Within or Hire from the Outside?

June 30, 2014

You have an open leadership position – what do you do? Promote from within or hire from the outside? As with many organizational questions, the answer is – it depends. Let’s look at each option and think about the factors that might lead you to one over the other.

Promoting from within seems like the most natural approach for filling leadership positions within an organization. And many times, it works out for the best.  There are quite a few benefits to looking within your current workforce for the next leader. A few benefits of promoting from within are:

  1. training and development 3-1

    Current employees know your business. Individuals who have been working for you know the organizational landscape. They know who to go to and how to get things done within your organization without a long learning curve. Additionally, current employees are likely to have the technical and product knowledge that is needed.

  2. It gives current employees advancement opportunities. Individuals who have career leadership aspirations need to feel like they have opportunities to grow and develop within their current organization. If they don’t, they are likely to jump ship and take their talents elsewhere.

  3. You know what you’re getting.  With current employees, you have knowledge of their attitude and job performance. You know how well they work with others and if they are dependable and reliable. With outside hires, there is a greater risk of getting someone different than you thought. Additionally, many current employees can be slow to warm up to new leaders or even actively resist them. These perceived risks lead many organizations to promote from within even if the person isn’t the best choice. 

Hire From the Outside 

These sound like pretty good reasons to promote from within – so why wouldn’t you want to do so? Below are a couple of reasons to consider hiring from the outside:

  1. Current workforce lacks the skills. One of the most common mistakes made by organizations is promoting strong individual contributors into leadership positions. It feels less risky to take someone from within and promote them. But remember, if you promote individuals who fail to possess the essential leadership skills, they may become dissatisfied and their performance may suffer. You could end up losing great individual contributors and have poor performing leaders. It is important to evaluate your current workforce for the leadership skills that are needed to be successful in the open leadership position. If none of your individual contributors have the skills, you’ll need to hire from the outside or develop the skills in one of your employees.

  2. Your organization is committed to a cultural change. If your organization is trying to “shake things up” and change organization culture and behavior, then bringing in a leader from the outside may be a good way to accomplish this. Organizational culture can be strong and pervasive. If a previous leader has created a context of negativity and mistrust, hiring from within may not break your employees out of this behavioral pattern. When new ideas or technologies are being introduced, a leader with a fresh perspective and relevant experience may be more effective than someone from within.

Finding The Right Leader

Regardless of where the leader comes from, what is most important is identifying the individual with the right skills. Make sure that you have analyzed the open leadership position and identified the competencies that are necessary for success. Will this leader be responsible for coaching and setting goals? Influencing higher level leaders? Setting a vision for the future? Once the underlying competencies have been identified, create a selection or promotion system that evaluates each candidate on these factors. Online leadership assessments can be very helpful with this step. Make an informed decision based on the skills needed for the job. If that means you promote from within or hire from the outside, at least you know that you have the person with the right leader profile. Good Luck!

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Amie Lawrence, Ph.D. Amie Lawrence, Ph.D. is the Director of Global Innovation at PSI and an expert in the design, development, and validation of psychological assessment tools. She runs an innovation lab that is responsible for establishing PSI’s assessment technology roadmap and strategy. An integral member of PSI since 2000, Amie has led the development of numerous global assessments, including personality, situational judgment, cognitive, and interactive work simulations.