Why an External Hire Is Not Always Your Best Bet

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jengaMany companies jump immediately to outside hires to fill vacant management positions. Unfortunately, internal candidates are often overlooked in favor of new blood.

Including interested internal candidates in the sourcing process can pay off in major ways – including a manager who already knows your operation and can hit the ground running.

“There is a finite number of exceptional internal candidates and a potentially unlimited number of exceptional external candidates,” says Steve Hrop, vice president of organization development services at talent development solutions firm Caliper. “As a result, the assumption is that the ‘best’ candidate is likely to be an outsider.”

Hiring authorities are often aware of internal candidates’ flaws. That’s natural, considering these authorities have seen the candidate in action. However, instead of recognizing that nobody is perfect, hiring authorities tend to pursue elusive ideal candidates.

“Search committees adopt a wish-list mentality where they look for someone who walks on water while passing over excellent internal candidates,” Hrop says.

That’s not to say you’ll always strike gold by promoting internally. Sometimes, an external candidate may be needed to bring change to the operation.

“There are some situations where external hiring is warranted, especially at the senior executive ranks,” Hrop says. “When a floundering company needs to transform the organization, outsiders are better able to drive change since they carry no baggage in regard to past decisions and problems that preceded their arrival.”

Don’t Take Existing Workers for Granted

It’s easier to go with the outside hire. If you promote someone internally, you’ll need to make a new hire to replace them anyway, right? Why not skip a step and just make one external hire?

For one thing, your external hire is more likely to do a bad job than your internal hire would.

“Research clearly shows that a much higher percentage of external hires fail compared to internal promotions, especially at the executive levels,” Hrop says. “A big part of the difference in success rates is due to cultural fit. Too many senior executives who come in from the outside attempt to replicate what made them successful at their prior company without sufficient regard for how their new organization differs from the prior one.”

Hrop also notes that external hires tend to cost more than internal hires, and that external hires need a longer time to ramp up to full productivity.

Internally promoted executives, on the other hand, tend to be strong cultural fits. They also know how to get things done in the organization because they already have experience with the organization’s structure and processes. Finally, internal promotions foster greater loyalty by showing employees that the company rewards greatness.

Seek and You Shall Find

Of course, you can’t just grab the first Jane or Joe from the factory floor and congratulation them on their promotion to CEO. Just as an external hire involves close examination of applicants, vetting high-potential internal candidates takes some doing as well.

“Leaders need a clear set of criteria for identifying high-potential talent,” says Hrop. “In addition to obvious factors such as a strong drive for results, confidence, and good communication skills, attention needs to be given to less obvious factors, such as the ability to collaborate, coaching skills, and effectiveness in leveraging the diversity within teams. Succession planning processes need to cast a wide net to ensure that genuine high-potential candidates are not being overlooked.”

The good news is that you don’t need to wait for a position to open before screening existing employees for prospective promotions. HR should aim to create vetted lists of promotion candidates ahead of time. That way, when a position opens up, hiring authorities already have a short list to work with.

Finally, it’s important to note which of your employees you’re likely to unfairly overlook when handing out promotions:

  1. Field employees who work outside the office/headquarters
  2. Humble employees who shy away from self-promotion
  3. Workers in roles that offer limited exposure to executive staff
  4. Employees working under substandard managers – because the manager may feel threatened by the prospect of promotion

By Jason McDowell