6 min read

The Many Benefits of Internal Promotion

Most executives believe that internal promotion is beneficial for the company. In fact, the Deloitte Human Capital Trends report for 2019 reported that 76% of C-level leaders deem internal mobility to be an important issue for their businesses. Additionally, one out of every five C-suite respondents rated internal mobility to be among their company’s three most critical challenges. 

Yet, as a 2019 study from Gartner found, companies still experience numerous obstacles to their commitment to internal mobility:

  • Employees aren’t familiar with open positions for which they may be qualified. 
  • Management and HR leaders may not be aware of an employee’s full set of skills and experience. 
  • Managers and team leaders may engage in talent hoarding to keep a valued employee on their own teams. 

Now, when the war for top talent is being waged across multiple sectors at an intense pitch, it’s important to establish your company’s credibility and competitiveness as an employer. To create a stronger culture of talent mobility within your organization, focus on reaping the benefits of internal promotion. 

Internal Promotion Eliminates the risk of the unknowable

The higher a position’s profile, the more resources the hiring process for that role requires—all for an unknown result. Will your new hire work out? It might seem like a game of chance at times. In fact, one 2018 survey suggests that a surprising 30% of new hires will ultimately leave that position within three months of their first day on the job. 

Hiring from within lessens the risks and costs caused by a new hire’s rapid departure. Your company already knows who the candidate is, how they fit into your culture, and their range and skill sets. Your new hire is also familiar with your company and its corporate culture. They know what to expect, so they’re more likely to stay in that position for a longer period of time. 

Speeds up hiring

Hiring a new candidate from outside your current workforce is a costly process, both in terms of money and time. That’s increasingly true for positions higher up on the organizational chart. Background checks, rounds of interviews, psychological and skills tests, and negotiations all prolong the hiring cycle for key positions. 

Promoting from within slashes the time it takes to get a qualified candidate established in that position and produce quality work. Internal candidates require less vetting and evaluation. 

Saves money

Hiring a new employee is also a costly process, especially for key and executive positions. When the search continues to drag out, month after month, those costs grow. Hiring from within helps cut those costs—sometimes dramatically. 

Employee attrition bears both direct and indirect costs, such as the cost of lost productivity and damaged client relationships. These associated costs aren’t insignificant, either. One study from SHRM found that the average cost of replacing a salaried employee is approximately equal to that position’s salary for six to nine months. It’s also been estimated that when an employee earning a $130,000 annual salary leaves the company, the cost to the employer is about $110,000.

Increases employee engagement 

One question many candidates have during the hiring process is whether there’s room to advance within the company. You can tell new hires that the company practices internal promotion. But nothing makes the point better than actually promoting from your current employee base. It sends a strong message to entry-level hires that their hard work will be rewarded. This increases employee engagement and loyalty. 

Increases retention rate

If you want to keep your top talent happy, promote from within. In a recent survey conducted by Career Addict, an astonishing 82% of respondents said they would leave their current employment over a lack of upward mobility within the company. And according to a 2020 internal mobility survey conducted by LinkedIn, employees stay at companies with high internal hiring rates 41 % longer than at companies that hire primarily from outside their current workforces.  

If an employee doesn’t find suitable learning and development opportunities, sooner or later they’ll seek those opportunities elsewhere. Even unintentional talent hoarding will ultimately lower the company’s retention rate. A commitment to internal mobility overcomes the tendency to hoard talent by empowering employees to tackle bigger challenges. 

Improved performance and productivity

Starting a new job is stressful for most people. With so much to learn and master in a wholly new environment, new hires typically start out with a lower degree of job performance and productivity. An employee who is already familiar with the environment, the company’s policies, and the rest of the workforce can start out at a higher level of performance and grow from there. 

According to a seminal study in the area conducted by professor Matthew Bidwell, there’s a link between internal promotion policies and improved performance. Bidwell’s study found that promoted workers actually perform better than external hires in the first two years. After that, performance levels out.  In the 2020 LinkedIn study on internal mobility, 69% of respondents also stated that internal hiring brings people in new roles to a productive state more quickly. 

Expand your pool of qualified candidates

To improve your talent acquisition strategy, include your biggest potential pool of experienced, well-trained candidates who’ve already proven they work well within your corporate culture: your current employees.

Further Reading

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