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Albert Camus once stated, "Life is a sum of all your choices," and the choice between two equally qualified candidates, one internal and one external, to fill an important managerial position can be difficult. However, the choice can be made easier by assessing one's future goals for the position at stake and the expected impact on the organization involved. Both internal promotion and external recruitment have advantages and disadvantages to be considered. External hiring may provide some new perspective to a stagnant situation and offer a new, creative approach. Internal promotion boasts continued, strong loyalty to an organization and can generate improved morale. While both internal promotion and external recruitment have pros and cons associated with them, according to recent research, internal promotion may involve less risks and often times proves to have more successful outcomes.
There is an assortment of literature available on the advantages and disadvantages of hiring internally or externally. In many cases, the decision is made based on the current or future needs of the organization and the direction this organization aspires to travel. Many Human Resource departments consider recruitment and retention a major priority and have therefore researched the subject the extensively. The results have been most helpful in determining which candidate is best for a given position and circumstance.
Internal promotion is a very common and widely accepted practice, and for a multitude of reasons. Employers tend to benefit financially from hiring within by "[f]illing the vacancy with someone who already works in the organization [they] realize savings in the training costs associated with the company-specific functions."1 This is an important concept to consider when debating whether or not hiring externally is appropriate for a particular situation. External recruitment can be an extremely costly venture, yielding disappointing results and even failure. It has been estimated that those costs can be "â€¦as high as $275,000, not including indirect costs, [as a result of] derailment [which includes] search firm fees, interviews, and assessment costs, signing bonuses, relocation, training, salary, and severance packages."2 Also, being on the losing end of an external recruitment failure can hurt the company's progress and can cause a general lack of morale for those members within the organization who were overlooked for the promotion that was ultimately given to an 'outsider' who failed them. Although this kind of result is possible (and likely) many companies still choose to external talent to fill their management positions. In fact, some companies "hire external candidatesâ€¦13 percent more often than they hire internal candidates even though internal candidates stay in positions and are more successful than external candidates."2 The lure of finding new, creative ideas and leadership continues to cause many to take expensive risks. However, even if the company finds the talent they are so desperately seeking, they may ultimately still end up being displeased. External hires sometimes carry with them to new positions and companies their 'baggage' from previous employment. Instead of purchasing 'know-how' from previous employment and experience, this baggage hinders the external hire's ability to exceed at their new position. Moreover, some simply cannot get past their 'old' way of doing things and this may interfere with their new employer's views and values of the company. "Indeed, despite the common assumption that prior related experience will improve performance, past research findings have been mixed about the effect of work experience on performance."3 One of the benefits from hiring within is of course that "â€¦internal candidates are usually well accustomed to the organizational culture, and have well developed networks."2 The internal candidate is already comfortable with the company and may even share a sense of pride or duty with implementing the vision of the company as opposed to trying to change or rebuke that vision.
Andrew Carnegie, a successful entrepreneur, once observed, "The older I get the less I listen to what people say and the more I look at what they do." Another attractive feature about an internal candidate is that they are less likely to "â€¦repeat mistakes that others have made before,"4 because they are familiar with the history and inner workings of the company. This is a definite advantage over the external candidate who might unintentionally succumb to a previous mistake. Also, the company or organization has previous experience with the interanl candidate and has more knowledge about the candidate's character and prior work performance. This information can be extremely helpful in determining the candidate's inherent flaws and whether or not the candidate will be the best fit for a position. When an organization "promotes from within to fill management positions [it] certainly [provides] a career path for its employees."4 Internal promotion also encourages employees to aspire to future leadership positions and the company also benefits from the investment of time and training involved. "Internal candidates can be guided through a series of customized development experiences that will ensure success in their future positions."2 Their orientation usually takes less time and is also less expensive. Futhermore, hiring an internal candidate improves morale among employees amd sends the message that advancement is possible and that leadership can be found within those working for the organization.
It's not surprising that internal promotions are on the rise. Recent data suggests that "internal transfers and promotions accounted for an average 51% of all full-time positions filled in 2009, up from 39% in 2008 and 34% in 2007."5 Whether this is due to a worrisome economy and a decrease in risk-taking or because internal promotion is gaining popularity remains unknown, but what is certain is that "between 40% and 60% of external hires are unsuccessful compared to only about 25% for people who are internal."6 In a time of such uncertainity for many businesses plagued with doubt about the future, internal promotion is appealing for obvious reasons. Many businesses simply cannot afford to make poor decisions regarding the leadership of their company. However, this also means that organizations must increase their efforts to foster and produce the kind of internal leadership that is so desirable and vital to their future. That being said, external recruitment can sometimes be useful in situations where an organization seeks new perspective, or different skills not available internally, or seeks new direction. However, "organizations who rely on external candidates to fill middle-management positions have alomost double the turnover of organizations who rely on internal promotions,"2 and so external candidates should therefore be hired sparingly and with much consideration about the desired outcome.
Ralph Waldo Emerson once said, "Our chief want is someone who will inspire us to be what we know we could be." It is the opinion of the author that given the choice between two equally qualified candidates for one position whose only difference was whether they originated from inside or outside an organization, one should give the internal candidate a chance to succeed. However, if one wishes to take an organization a new, drastically different direction and seeks skills that are currenlty unavailable within the organization, they should seek an external candidate. Nonetheless, in most situations, internal promotion offers an array of valuable benefits to the organization, its' candidates are often more successful, and it encourages those who are the organization to become its leaders.