Dear Workforce How Do We Decide Which Is Better Internal Promotion or Hiring Outside the Organization

By Staff Report

Nov. 18, 2005

Dear Weighing:

Decisions regardinginternal promotion vs.external hiring are becoming more important to an organization’s success. As the economy improves, unemployment falls and baby boomers retire, competition for top performers intensifies. Employers need a strategic plan–one that includes both internal promotion and external hiring–to maintain a workforce with the required skills and knowledge to meet and exceed expectations.

Some combination of promotion and outside hiring is always necessary. Still, the advantages of providing promotion and personal growth opportunities far outweigh those of external hiring for both employees and the organization.

An organization’s workforce performs at a higher level when there’s a strong internal-promotion process. In contrast, when employees perceive that promotion policies are being ignored in favor of external hiring, their loyalty and personal motivation decrease. When little or no upward mobility is possible, employees feel disenfranchised. This places insurmountable hurdles before any company trying to achieve business results.

Many employers face this risk. Mellon’s employee-satisfaction benchmark studies found:

  • 78 percent of employees indicate that, for accelerated career progression, it is better to be hired than groomed.
  • 69 percent are unaware of the career-progression systems within their organizations.
  • 64 percent would be willing to leave their jobs to follow a good mentor–suggesting that mentoring is not a strong suit for many companies.

There are times when external hiring is necessary. Advantages include the following:

  • It adds new job skills or knowledge to the organization’s workforce.
  • Those eligible for promotion don’t have a previous working relationship with managers, removing the specter of favoritism.
  • Management perceives that employees have grown too insular or lack a sense of urgency, prompting them to bring in people who can change things.

SOURCE: Tom Casey, principal, human resources management, Mellon’s Human Resources & Investor Solutions, Boston, February 2, 2005.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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