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Internal promotion is a strategic management idea accepted widely. And it is already utilized by many companies in the world . Comparing with external recruitment, internal promotion has some advantages in company's growth stage especially. It is more economic and essential and is conducive to keep companies developing orderly. In this essay, I will discuss the reasons why internal promotion is superior by analyzing and comparing Microsoft , Sodexo company, General Electric and some other international companies in their development. And I will conclude that internal promotion should be widely spread in companies in their initial stages to make them grow well.
"We believe that internal promotion is also a good way to build a sense of loyalty, create incentives for employees' innovation at work and more easily to find a good person for the new job vacancy. Therefore, our tradition of internal promotions can guarantee anyone who joins in Sodexo a bright future of constant career development." (Sodexo concept)When candidates read these sentences, I am sure that they will have confidence in this company and the employees who already work in this company also like to share what they have known and do their work with passion.
When a company was settled, it is not mature because many systems, culture and even the goal have not been confirmed. What drives the workers to devote themselves to the unsure future is their motivation and passion. They even consist the history of a company. During this stage, to develop it, HR need to pay more attention on initial employees and give them the priority to be promoted. As the employees recognize their achievement is always concerned and the responsibility is great at this stage. They can also take part in the growth of company and get the advancement opportunity. (Michael Adam)What mentioned all can motivate an employee
Microsoft adopted the internal promotion strategy at the beginning and the result proved to be successful. When Bill Gates started Microsoft, he already had the concept that his employees are his most valuable asset, and he gave the conclusion that without them, Microsoft would become negligible. There is a strategy in Microsoft called 'n minus 1' which shows that the number of employed people is less than the position need----then all employees have the chance to be promoted. When Microsoft expanded later, it was nearly all early employees being promoted. And to encourage them and keep them, they even got the stock options as reward. They all play an important part in the development of later. "The key to supporting the motivation of your employee is understanding what motivates each of them."( McNamara). There is a number of excellent people working for Microsoft. What these workers need is to achieve thier self-actualization As Microsoft give great opportunities, workers are all willing to work hard to make company better. Under these strategies, when Microsoft stepped into the next stage and expand itself, it already owed its own systems, culture and the clear goal.
From 2009 to 2010, it is about 11.5% management positions in Sodexo company are filled through internal promotion. And it is over 79% employees believe that Sodexo provides them an opportunity to learn and develop. (Sodexo China figure)
An extreme example of GE (General Electric), it is nearly 80% of the company's senior positions generated by the internal promotion. The leaders in GE spent almost all their career. "Our principle is to tap internal talent, human resources manager of GE" (William Conaty). "Unless forced to, we do not want to rely on outsiders." He said.
Many international enterprises in Europe have formed the internal selection system in their early stage. From cultivating employees and appointment of employing strategies to mechanisms, these enterprises have a mature procedures For example, General Electric, Motorola, Procter & Gamble, Ford Motor Company, Boeing, 3M Company and other famous companies, in their operating time adding to 1700 years, only four CEOs hired from the outside, and only two companies before. Good to great (Jim .Collins ,2009) says that celebrity who is brought in from outside the company as a new leader, often lead a negative effect on the company. Among 11 international companies, there are 10 companies' CEO appointed from the company's internal promotion.
According to a survey to more than 200 foreign investments in China from people.com, when a company faces a situation that there an empty position turns up, they prefer internal promotion than external, and the original department has the priority. It shows that 67% companies adopt internal promotions on management position , and 2% will recruit from labor marketing, and 1% will be appointed by the government.55% companies adopt internal promotion on skill positions, 45% of them will search new employees from labor marketing.(people.com)
When a vacancy occurs in the enterprise positions, the modern human resource management's common practice is internal-promotion -oriented, especially in small companies at their initial stage.
II: Comparison of internal promotion and external recruitment
Improving the promoted employee's morale
Judging the staff's capacity more accurately
Saving costs in some areas
(time/money recruiting /training)
Mobilizing employees' working enthusiasm
Contributing to the continuous improvement
Reinforcing a company's internal career ladder
Retaining leaving staff
Reducing induction training period
Reducing the risk of selecting an inappropriate candidate
"Inbreeding"(narrowing the view of the enterprise)
Reducing morale of un-promoted employee
Demanding a systematic managing and training plan
"Fresh blood" broadening company's horizons
Cheap and fast in professionals' training
A small group of political supporters having not been formed
A form of advertising
Improving the skills in judging external employees
Not recruiting suitable candidates
Impacting the morale of internal un-selected candidates
Longer adjustment period need by new employees
Not fitting with new company's culture
(Strategic Approach to Human Resource Management Page153-165 author¼šTapomoy Deb)
It is said that people who join in a company at its initial stage promote the company excellent. While people who join it later depend on the company's excellence.( Jamie Zawinski,2010) . Internal promotion belongs to a company's incentive system, and it is a basic system to make a company attractive and influential. There are many different theories about the internal promotion. "Race theory" (Lazear and Rosen, 1981), or career models in the organization(Gibbons and Waldman, 1999). These various models provide various explanitations of internal promotion (Greenwald, 1979; Chen, 1996; Fairburn and Malcomson, 2001) and its consequences (Prendergrast, 1993). To brief, if you want to encourage your employees ,what you need do firstly is to make them escape from problems which bother them by company and treat all employees equal. When you make this true, it means the company offer its employees chance to make achievements and grow.
Co-ordination between the employee and the organization is important. "Project staff working more effectively, their overall goals and team goals rather than individual goals "(Christopher - Brown) reported by a recent study in the Journal of Applied Psychology. Maslow's hierarchy of needs can also explain this question. Self-realization is a top level of self-gratification.( Maslow ,1943) "Provide the opportunity to grow, be creative and get the training challenging task and push forward" (Daft 530).is regarded as an effective method.
Just as what has mentioned above in the table, the HRM take the responsibility to shape a company's organizational culture, the core concept , a completed system etc. Especially in small companies, the number of employees is limited, and the bonds between workers are strong. According to Dunbar's number theory(Dunbar,1992) , if a department's worker number under a certain level(150-250), the organizational culture just begins to shape. Everyone personality and group practice play an important role in the operation. The leader in shaping corporate culture is vital, which means if this company promote a new leader, it is easy for the entire companies shift the attention away from its original growth direction which may still operate potentially. Under this reason, the internal promotion is necessary in small companies.( Bidwell, 2011,ibid)
That promoting internal middle managers or high managers not only take advantage of their talent ,also can encourage other root managers and employees competitive. Because this company illustrate its attitude to its workers that it provides great tunnels for them making progress.
If a manager who was selected as a sub-promoting member, it may launch that this person's work style, communication style and his attitude is accepted or committed by people. These will help this sub-leader lead the team work effectively and united.
Reward system gives the information of a company's value to judge the employees (Robbins, Bergman & Stagg 84).A company can use many ways to motivate its employees to work. Satisfaction and growth in a company are two important factors. (Frederick Herzberg ,1959).The internal promotion is just a suitable method to meet employees' need.
It is worth noting that internal promotion is not only chosen as an inciting way in management position, but also in skill management. Training technical staff, companies need to consume a certain amount of human and financial capitals. If the staff control sophisticated technology, they can make amount of benefits for a company. But if the company failed to attract employees to continue to work effectively and stay in the enterprise, then it is not only the effectiveness of the company's loss, but also provides an opportunity for potential competitors.
Due to the small size of the company, organizational productivity is influenced by every employee in it. It has been improved that entrepreneurs are unwilling to give up control, because they believe that standardized management enterprise beyond their abilities (McMahon and Murphy, 1999).
IV: How to adopt internal promotion effectively (HR WORLD,2011,ibid)
To a small company, the way to select and appoint an middle or high manager should be base on its real surroundings. Even though the human resource department can not guarantee to make a right choice, considering the disadvantages both internal promotion and external recruitment is necessary. Minimizing the risk should take into concern. The risk is the uncertainty of future expectations. Comparing internal and external way, there are three aspects that external way higher than internal way. First, an outside manager can only prove how was successful in the past work, but can not prove how suitable himself or herself to this work. Second, in a small company, its organization culture is in shape, a new leader outside may not adjust to its culture or want to bring other companies culture in. It is another unknown thing. Third, if the human resource department appoint an unsuitable manager, it is not just about a waste of a position. The whole team will face an uncertain loss. Even the new manager can adopt to the new environment well. The adopting time is uncontrolled.
Obviously, the external recruitment takes risk, meanwhile we can not avoid the risk of internal promotion. A company knows its employee better than outside, but this employee still will face a new occupation when get promoted. At the same time, because of many "politic issues", there may lead to some contradictions among different departments.
Cost is a significant issue to take into accounting. It seems that choosing a worker from original department or company is the economical way. Because the company does not waste too much money or time in hiring a manager. Is it true? To realize this internal promotion system, another system named training system should be operated. When a company faces a need of manager, this system can supply a fixed person in time. Building such a perfect system requires much cost before. External recruitment demonstrates its superiority. However , if a company can not build a training system when it was settled, it can not supply the growth space for employees, which means employees who want to pursue their progress must leave this company sooner or later. What will cost is beyond the cost of training system.
Despite the cost and risk , as a company, it should care about income. No matter internal or external way , if the new manager can make profits for the company , and make the whole manager level balance, both of them can be considered.
We can not conclude that internal promotion is better than external recruitment free-minded. The conclusion need depend on the industry and maturity of a company, as well as specific occupation.
A small company has its own characteristics. It is stepping in a developing road. It is too frangible to bear risk. If someone do not have any experience in a small company , it is really hard for this person integrate into a small company easily. And it may make some troubles for a small company's operation based on some experiences in the big one. The new manager also need more patience. Whoever works in a developing company as a manager all under pressure.
With the help of training system , an employee who has full motivation for their company and also made some achievements, understanding their organization culture in deep and having potential to be a leader can become a new manager. There is no doubt that , this type of internal employee is stronger than external candidates.