Manager recruitment: Internal promotion or external hiring?

Sometimes, the solution is clear: a managerial position opens up and you’ve got someone within your company who has already proven themselves and you’ve just been waiting for the right moment to move them up the ladder. Or perhaps it’s clear without too much thought that there is nobody within your ranks that could possibly come close to taking on the responsibility that’s needed to fill that new post.

In the vast majority of cases, however, your decision isn’t going to be so easy. Daniel is a good employee, but does he really have the people skills to be a manager? Natalie is a great candidate on paper, but she doesn’t seem to get the culture of your company you aren’t confident she’ll get it even after working with you for a while. So, what’s the better option? The answer is that there is no definite answer. But we can take a closer look at both to help you get a better understanding of what might be right for your company.

Internal promotion

There are a number of significant benefits to internal promotion, which can be summed up as getting an eager, loyal, happy manager who already fits the DNA of your company and knows people he or she will be working with for a fraction of the investment required to hire externally.

In more detail, we can state unequivocally that internal promotion increases motivation and employee well being throughout your organization, showing everyone that hard work will be rewarded. This approach is also likely to reduce overall turnover rates as employees will look for ways to move up internally rather than externally. Recruitment costs are also slashed by internal promotion.

Another important factor to take into consideration is employer branding. Generally speaking, employer branding is about making your company attractive as a place of employment to potential candidates from outside your organization. But, depending on the character or your business, it may actually boost your employer branding to promote employees internally. This might be the case if, for example, your brand values are to help employees grow, learn and move forward within your company.

But perhaps the most important benefit you get by internal promotion is a manager who already understands what your company is all about and is familiar with the people he or she will be working with. On the downside, any open position is an opportunity to bring in new blood and infuse your entire organization with valuable new ideas. Someone who has already been with you for a while might not be able to offer the same.

External hiring

This brings us to another available option to you: recruiting someone from the outside. In many ways, this may seem a bit more daunting than internal promotion, and certainly involves more effort on your part, but the results are often well worth it.

This method expands your horizon, presenting you with a much bigger pool of candidates. Internal promotion generally gives you a choice between a few individuals at best while external hiring essentially lays the entire market of candidates at your feet. You may find someone who is more qualified and better personally suited to the position. You may even discover someone with a surprising set of skills and talents that you hadn’t even considered you might want in a manager.

External hiring also reduces the likelihood of internal conflict due to competition and/or feelings of resentment. But this factor is situational and requires that you or your HR manager be familiar with employees and the characters and aspirations.

In the end, each position in each company will always require a slightly different solution. Odds are it’s not a good idea to stick with either internal promotion or external hiring 100% of the time. Filling important managerial positions requires rather that you look carefully at each, study the situation and make a choice based on a nuanced understanding of your business, your employees and exactly what you’re looking for in your new manager.