Business woman worried about angry coworkerWhat is the first thought that comes to your mind when a critical staff member suddenly leaves? Normally, it’s call a recruiter/HR or anyone that can action a job posting and start searching for a replacement, right? It’s a knee-jerk reaction, often born out of panic, but sometimes coming from a pure lack of imagination of doing anything else, and perhaps even a fear of promoting someone internally to fill the post. But, why would employers be reluctant to promote from within? It’s an understandable fear, really, because unless you have a fully primed, “number two” or layer of potential “number twos,” there is a perceived risk of promoting good employees into positions where they may fail.

But, there isn’t a huge amount of foundation behind this particular fear as internally promoted employees are lower risk than external hires to similar positions. Yes, a Wharton study found that external hires perform worse and get paid 18-20 percent more than internal hires, and also have shorter tenures on average. So, really, internally promoted employees are the lower risk, higher returning investment option than an external hire – and internal promotions should be embraced. And if anything is to be feared, it’s external hires who may not reach their former glories anyway, due to the material handicap of operating in a new, alien environment.

However, this is not the only reason that employers may be reluctant to promote employees. It doesn’t always take an employee to leave to create a gap for potential promotion. It can simply be that due to structural changes, increased head counts, and new products or clients, for example, opportunities arise for current employees to extend themselves and take on higher responsibilities. Yet, there can often be an apprehension with assigning greater responsibility as a pay rise may be requested, which you don’t yet have the budget to pay for. This can lead to current managers or even yourself being overloaded as no one is picking up the slack.

But, this fear of staff requesting a pay rise for additional responsibilities can be somewhat mitigated by the fact that, according to a DDI study, only 10 percent of those surveyed said that money was the prime motivating factor when taking on a new position. Their study showed that 54 percent of workers were taking on new roles without a compensation increase as a kind of loss leading strategy where they gain greater experience, confidence, respect, trust and reputation while losing financially in the short term. But they would gain greater promotability and access to better opportunities in the long term. As long as you don’t exploit employees and make sure the return on investment deal is clear, you will be able to get ambitious employees to take on stretch assignments without paying them more.

A final reason that managers may be afraid to hand out promotions is fear that they may be usurped by a precocious underling. This fear along with a lack of trust can be a key reason why managers micromanage and don’t allow their staff to take on more responsibility and grow. But, there really is no reason to fear proteges as this HBR study shows that employees who nurture proteges, and perhaps give them their first opportunity, will develop future allies who will help them with their career, meaning they are 11 percent more satisfied with their career than those who don’t support proteges.

So, as you can see, in the current climate, with so many staff leaving due to lack of career opportunities, there is really no reason to fear internal promotions and every reason to embrace them to the benefit of staff, managers and the business.

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in Personnel Management]