The Great Debate: Promote Internally or Hire From Outside

Your business is growing and you anticipate reaching the revenue and profitability targets you set not that long ago, sooner than expected. At the same time, everyone around you is busier than ever and the pace is relentless. You realize it’s time to bring on a “senior” person or people to provide leadership for your growing team. You may be wondering if this is the time, and how do you approach the situation. You have a couple of bright stars on your team – is it time to promote one of them? Or should you continue to develop them and bring in the expertise from outside?

One good test for determining whether to go with outside experience versus internal promotion is to figure out whether you value inside knowledge or outside knowledge for the position. Typically, for more technical roles like engineering, where comprehensive knowledge of your products and their development may be more difficult to recruit from outside, you may well value the knowledge of your rising stars more than that of the outside world.

However, in the case of hiring someone to sell your product to an expanding marketplace, the opposite is true. Knowing your target customers and how to expand your reach globally is likely more valuable in this case than knowing the intimate details of your company’s product and culture. This is why, when a technical resource gets promoted internally to a technical team lead or manager role, the move is often successful; but when the leading sales person gets promoted, it’s likely with mixed success. Just because a member of the sales team is delivering outstanding results, doesn’t mean they have the ability to lead a team, deliver on strategy, or pilot new initiatives beyond where the company is today.

The real reason to hire from outside is to acquire knowledge and experience in a specific area that doesn’t exist within your current team. Hiring someone who has already done what you are trying to do can radically speed up your time to success.

When considering an internal promotion, look past current performance and identify employees with the potential to move into future leadership roles. It’s likely that those with the potential to go far might not be the best performers, but rather, those with great communication skills, who can handle high-pressure situations or have a real passion to take on more responsibility.

Here are four key areas for assessment when it comes to evaluating those who may be promotable and where efforts should be focused to help them strengthen what they have to offer.

Results – Usually the first thing managers ask about as an indicator of a great employee. However, KPI and target metrics only measure an employee’s success to date and not their ability to meet the company’s future objectives.

Behaviour – The ‘how’ behind performance and results. Any promotional decisions should take into consideration the employee’s personality, communication skills, and ability to motivate others.

Potential – Reflects an employee’s performance in navigating through situations they haven’t been in before, and the likelihood that they will suit the business in different roles in future. Potential is a forward measure; it’s important to remember that not all high performers have high potential.

Motivation/aspiration – Do individual employees actually desire promotion and leadership development? There is no point forcing an employee into roles they don’t want, and if performing well in their current role, they may be best left where they are.

While growth is the goal of many small to mid-size enterprises, it can be a real challenge when it comes to identifying the right talent to drive ongoing success. Bringing in the right kind of experience at the right time can mean the difference between strategic success and catastrophic failure. But if you want to grow and achieve the levels of success you never thought possible, you have to take risks and win your race against time. Both decisions, to promote from within and hire externally, bring benefits to your organization when they happen at the right time in the right context.