When it’s time to fill a top position in a company, employers typically have two options: hire fresh blood from outside the organization or promote a high achiever from within the company. There are pros and cons to both approaches. Here are a few considerations to make before deciding on the best route.

Institutional Knowledge vs. Fresh Perspectives

When someone is promoted within a company, he or she likely already knows a lot about the inner workings of the organization. By drawing from this institutional knowledge, a company can cut down on the time it takes to train a new employee. Being in-step with the company’s goals and culture can make an internal hire better-equipped for a leadership role, but it could also prevent the company from innovating.

Alternatively, a new hire from outside the company can bring fresh new ideas to a company that has stagnated. An outsider may be able to bring new skills and knowledge that no one else in the company has. Still, these new employees will need to be trained, and it may turn out that they don’t fit in with the company.

Employee Morale

The willingness to promote from within shows employees that there are opportunities for advancement within the company, improving morale. Employees who feel they have the potential for career advancement in their current job are less likely to leave and more likely to work hard. However, companies that don’t have a clear system for evaluating performance can make promotions seem arbitrary, increasing competition and causing resentment among employees. Hiring from the outside too often can also make internal employees feel they’ve stagnated.

Cost and Speed of Hiring

For companies that have a clear system in place, internal hiring can often be faster and more cost-effective than recruiting. Employees promoted from within can also start faster by skipping the onboarding and training process.

Still, an internal hire will leave the position of the promoted employee open. Even if an employer continues to promote other employees to fill an open spot, eventually there will be a vacancy that needs to be filled from the outside. Employers should evaluate each position carefully to decide which part of the organization stands to benefit most from an external hire rather than always backfilling the lowest position in the food chain.

Whether you’re planning to make an internal hire or to launch a job search, LBMC Employment Partners can help. Contact us today to learn more about our services.