Leadership Solutions: Promote from Within or Go Outside? Get the Best of Both Hiring Strategies

When filling an important managerial position, a typical response from business leaders goes something like this:

  1. We need someone right away who can hit the ground running.
  2. I don’t have time to bring a new manager up to speed.
  3. We’d love to promote someone from within but there’s no one who could make an immediate impact.

Sound familiar? Everyone wants to hire someone who will take over a role and make an immediate impact with minimal oversight or training. Even when they’re ready for the next level, developing and coaching emerging leaders takes time. The time that busy business leaders feel they don’t have, can prompt companies to look outside for suitable candidates.

With the unemployment rate at historically low levels, however, finding and recruiting these hit-the-ground-running managers is becoming harder and harder to do. In the manufacturing sector many of the most talented and experienced operations leaders are inching toward retirement. Those who are available justly demand compensation levels at the high end of the pay scale.

That said, finding and hiring new managers at all levels has never been easy. More than half of new managers underperform in their first two years after being promoted, according to the Corporate Executive Board. Reasons why new managers don’t succeed include slow decision making, micromanagement, bad hiring decisions, weak problem-solving capabilities, poor people management skills, and the list goes on. (We should note that all of these leadership practices can be improved with a good coaching and mentorship program.)

“More than half of new managers underperform in their first two years”

External hires can fail because it takes time to get to know people, to learn how a new organization functions and how work actually gets done. For senior managers and executives who relocate, spouses or children who don’t adjust to the new location can trigger an early exit.

Hiring from within mitigates some of these cultural hiring issues. Other well-known benefits of hiring from within include:

  • In-depth knowledge of current employees’ past job performance, personality and, most importantly, work attitude.
  • The ability to fill open positions quickly. • Better morale because employees see that high performance and loyalty are rewarded.
  • Improved retention rates because talented people have clear advancement opportunities. Younger, high potential employees in particular expect career growth opportunities or they will move on.
  • Lower salary costs compared to hiring from the outside. (External recruits tend to be paid 18-20% more than internal employees doing the same job.)
  • Avoiding recruitment fees, which typically cost 30% of a new hire’s salary.

Consider Novel Leadership Solutions to Improve the Success Rates of Your Emerging Leaders

When there’s no succession plan or immediate internal candidates, one solution is to promote people with potential who may not be completely ready for a given role but who can be trained and coached. Of course, this approach is almost the opposite of finding and hiring someone who can hit the ground running. Still, we’ve worked with several clients recently who have promoted emerging internal leaders and asked us to help with their training and development. Our advisors have provided technical expertise and leadership coaching while helping with urgent improvement projects. This has given the managers some breathing room while they grow into their new roles, further improving the probability that they will succeed.

This tactic allowed one client, which also needed a quick performance turnaround, to fill an unexpected opening and not lose six months of forward momentum trying to find and hire the perfect candidate. Another client used this approach to develop a high-potential manager in a somewhat remote location where the exact skills and experience for the particular management role are scarce.

The next time your company has a difficult-to-fill management opening consider this hiring tactic. After all, experienced business leaders often say that attitude is the single best indicator of performance potential. With adequate support people can learn new skills and leadership capabilities, but their inherent attitude and work ethic is difficult or impossible to change.