Human Resources

What are the Benefits of Internal Hiring?

Employees are the most important asset in any business. It’s your employees that make you great, and hiring from within can help to build an engaged and committed workforce.

We’ve recently promoted one of our senior managers, Bruce Moran, to Operations Director. As well as taking the lead for our finance, HR, and business support offering across Greater Manchester, he now sits on our company board. Bruce has been instrumental in developing the company’s offering and reputation across the North West. His promotion was a natural progression. His experience, reputation, and passion to drive the growth of the business made him an obvious choice.

At Howarth Morris we pride ourselves on looking after the talent we have, and promoting from within helps us to retain high-performing talent. With that in mind I decided to write this post. I wanted to reflect on the benefits of promoting from within, to explore some of the common challenges, and to offer some tips for promoting from within the business.


Companies that hire from within

Richard Branson, founder of the infamous Virgin Group is a strong proponent of promoting from within. When asked about his talent strategy he says, “We don’t often go outside. Yes, selecting from a company’s existing talent pool means that some boxes remain unchecked, but it also means you’re never exposed to a candidate with glaring, unforeseen weaknesses. Perhaps more importantly, it’s a morale play. The whole company will be pleased that you employ from within; they all have the chance to one day get the top job.”

Another company committed to promoting from within is online image sharing company, Imgur. Their Director of People Operations, Jill Kelly says “We focus on filling positions by promoting from within whenever possible. We encourage the attendance of conferences and tech events, provide opportunities for employees around the organisation to showcase their expertise through meet-ups, create mentorships, and give an annual stipend of $500 to each employee to spend on something they love.” It is this holistic commitment that really helps to build loyalty and encourage development. Are you doing enough to develop your employees?


Benefits of promoting from within

If you’re unconvinced about the benefits of hiring from within, here are a few that really hit home for me.

Firstly, hiring from within is without doubt one of the best ways of retaining your high performing talent. In an age of regular job hopping, your top talent is never far from jumping ship. Consider this; when an employee leaves, it’s probably not to change industry. Do you want their expertise and knowledge to go to your competitors? Hiring from within is good for morale and lets your employees know that they’re valued. People want to work for companies where they have a chance to develop and grow. If your talent doesn’t have an opportunity to move up, why would they stay?

Another important thing to note is that your current talent understands your company. They get your culture and already have a sense of what you’re looking for. They have highly developed relationships with their co-workers, helping them to inspire and influence with equal measure. They understand your pain points, your challenges and your strengths. A recent study by Matthew Bidwell, assistant professor at Wharton highlighted that it takes on average two years for an external hire to catch up to the performance review scores of internal promotes. Can you afford to wait that long?


Common challenges

Whilst the benefits of promoting from within are clear, this tactic doesn’t come without it’s risks, and as with any talent decision, hiring from within should only be done when it’s the right hire.

One of the most common challenges is when moving an experienced or talented employee into a managerial position. Not all employees are good at management, and just because they’re your top performer, doesn’t mean that they’ll make a good manager. To truly get the most out of internal hiring, you’ll need a top-class internal development programme to help your staff reach their full potential. By nurturing your talent you’ll have a steady stream of committed and skilled employees to choose from. Admittedly, this approach can take a significant investment of resources, but in the long run, it’ll be worth it.

The other side of the coin is that sometimes you need to hire external to bring in new ideas. External hires can bring in new ways of thinking and offer much-needed ‘disruption’. In times of stagnation, an external hire can be the fresh blood your company needs.


Tips for promoting within the business

There are many reasons to hire from within, but to do it well, you’ll need to find the right employees to promote. Whilst there are endless examples of reasons to promote someone, there are some that really shine through. To help you find the right employees to promote, ask yourself the following questions.

Do they naturally take on responsibility without being asked? Are they solutions focused? Do they actively go out of their way to support their co-workers? Do they handle stress well or do they buckle under the pressure? Are they respected by their co-workers?

If you get a ‘yes’ to all these questions, you’ve probably found yourself a good candidate for promoting from within.


Written by Paul Howarth, Director at Howarth Morris, the North West’s leading independent Accountancy & HR recruiter, operating from offices in Manchester, Liverpool, Warrington and Bolton.