Inner Strength?

Promoting from within isn't always your best bet.

Growth in revenue usually brings with it a critical need for additional employees. As new positions are created, the question to think about is this: Should you fill senior-level jobs from within? Or should you hire outside talent?

Katherine Hammer, CEO and co-founder of Austin, Texas-based Evolutionary Technologies International Inc. (ETI), faced that decision as her high-tech business kept recording nonstop growth. Before the growth spurt, the company had been leanly staffed. "It's a mistake to hire too much high-powered talent too early," says Hammer. "They're expensive, and the fact is, when you're small, you don't have full-time jobs for them yet. They sit around twiddling their thumbs."

But as ETI--which provides sophisticated data management tools to clients in banking, health-care, insurance and other industries--grew, so did its need for top-level executives. So Hammer promoted a number of people from within the company to fill jobs that carried substantial responsibility.

A wise move? Not according to Hammer. In the past year, she has replaced three executives with outsiders, mainly because, she says, "As we grew, we hit a level of complexity where the people who had been our managers could no longer do the job. They could not scale up with our growth. The three senior managers I have on board now joined us knowing how to take us to the next level. Every morning when I come in and see them, I breathe a sigh of relief. They're doing an infinitely better job than their predecessors."

Hammer now regrets her delay. "If I had made the decision to bring in outsiders sooner, our company's bottom line would be better off," she says. "Delay, and you'll pay for it."

Robert McGarvey writes on business, psychology and management topics for several national publications. To reach him online with your questions or comments,

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This article was originally published in the August 1998 print edition of Entrepreneur with the headline: Inner Strength?.

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