Promoting From Within Vs. Hiring New Employees – Which Is Best?


As you run your business, you’ll come across situations where new positions arise, or you need to fill a vacant role. When this happens, you have two separate approaches to consider: 

  • Promote an existing employee to the new role
  • Hire a brand new person externally

There’s always been a great debate over which of these options is the best one. Truthfully, there are so many different caveats and considerations that can make either option perfect for your business. It depends on the specific role, what your financial situation is like, the experience of your existing employees – and much more. 

Nobody can tell you which option is better – other than yourself. To do this, you’ve got to see the pros and cons of promoting from within or hiring new employees. So, here are the main things to think about with regards to either idea:

Promoting From Within

Let’s start by looking at the concept of promoting your employees. Here, you look at your existing talent pool and select people that you think have the potential to fulfill a new role. It often requires additional training, which can prove to be beneficial. What are the main considerations here?

Saves a lot of money

Promoting from within can save your business a lot of money when compared to hiring externally. You don’t need to pay to advertise the job, which will automatically save lots of cash. There’s also no need to pay for any agencies to help interview candidates, and you’re also not adding a new salary to your payroll. Yes, training costs money, but you’ll likely need to train brand new employees anyway. Overall, it’s definitely the more cost-effective of the two options. If you have a small business with limited resources, then it could be a better idea for you. 

Improves employee retention

Secondly, promoting your current crop of employees can help you improve retention rates. It’s no secret that many small businesses struggle with employee retention. People work for you for a while before leaving to find a better job. A promotion provides them with a better job, but at your company! When employees are aware that there’s room to grow within an organisation, they’re more likely to stick around and see how far they can go. So, you basically improve employee retention in two ways. You actually retain employees that may have left for a better job by promoting them, and you give hope to other employees that they could also be promoted at some stage, encouraging them to stay. 

Encourages better performance

Similarly, the thought of promotion can improve employee performance throughout your organisation. It’s a simple case of giving your team something to strive towards. People work a lot harder and more efficiently when they know it’s potentially for a reason. Why would someone bother putting all their effort into a job that’s leading nowhere? If someone knows they might be promoted and earn a better salary, then they’re definitely keen to work harder every day to show you that they’re excellent at their job. As a result, your business will thrive as all of your employees are working to their full potential!

Less time consuming

As mentioned in the point about saving money, hiring from within will also use up less time. It can take months for you to hire someone externally, which means you’re stuck without a key member of your team for all of that time. This leads to massive productivity issues, and then you have to allow for the new hire to become accustomed to your business and get up to speed. A promoted employee negates a lot of this. They already know your business, so there’s no transition period. All you have to do is spend a bit of time training them, and that’s it! You can promote the talented individual and carry on as usual with minimal time-wasting. 

Hiring New Employees 

As you can see, promoting from within has plenty of benefits. However, it may have a few drawbacks as well. To understand them, you should look at what hiring new employees can offer instead:

Get fresh perspectives

A key advantage of bringing new employees to your business is that you bring in new ideas. There’s a great interview with a successful executive called Jozef Opdeweegh, where he talks about how training your employees is essential, but you can’t undervalue the importance of bringing fresh perspectives to the table. External hires may have new ways of thinking that can enhance your business and open up new opportunities. If you promote from within, then you often get more of the same, and you never introduce anything new to your company. 

Can access a more experienced talent pool

External hires can also be more experienced than the people you have working for you. Promoting from within is great, but it means that you’re moving someone into a role that they’ve never done before. With a new employee, you could hire someone that’s got decades of experience in that specific role. Therefore, they may be able to offer more than your promoted employee. Similarly, outsourcing is technically a way of making external hires. The difference is that you’re outsourcing a role to a company, rather than one person. Thus, you gain access to an experienced team that can help your business achieve more than you could if you promoted one person. 

Gain new networking opportunities

This blends into the idea of bringing people with more experience to your business. As well as having experience in performing the role, they also come with lots of industry experience. What this means is that they might have a massive list of contacts within your industry that can be put to great use. They might know suppliers or other businesses that you can partner with, which opens up loads of networking opportunities for you. Thanks to their resources and contacts, you might be able to grow your business or identify new ideas to make more money. With an internal promotion, you don’t get this benefit at all. 

May create a more positive work environment

It can also be argued that hiring externally is better for the overall morale in your company. Yes, promotions improve employee retention and give people something to work towards. However, when employees know that there are promotions on offer, it can lead to aggressive competition. Some competition is good, but it may reach a point where one of your team members resents the person who got promoted as they felt like they didn’t deserve it. An external hire can diffuse instances like this and may promote a more positive work environment that’s free from internal disputes and arguments. 

Which Is Best?

You’ve seen some arguments for and against each option, so which one is best? 

As mentioned in the introduction, this all depends on your business. Think about everything that’s been outlined in the article above. Take all of it into consideration, along with the specific role you’re hiring for. In some cases, it makes way more sense to promote from within. In others, an external hire is the best option. 

Overall, the answer is that both options are best! That seems like a cop-out, but it’s the truth. A successful company will use both hiring options to get the best out of its current employees while bringing in new perspectives and expanding the talent pool. The key is understanding when it makes sense to promote, and when you’re better off hiring someone from outside your business. Get this right, and you’ll be successful. 

Promoting From Within Vs. Hiring New Employees - Which Is Best?

Wendy Tomlinson

Hi, I'm Wendy, your online life and business coach - I'm a qualified law of attraction practitioner, EFT master practitioner and life skills coach. After years of private coaching, I now follow my real passion for blogging and creating content that will help you create a life and business you love. Please feel free to ask questions, I love hearing from my readers.

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