Performance Ignited

Should You Always Promote From Within Your Company?

If you don’t have excellent people in the correct roles, it’s nearly impossible to develop a great offering and serve your customers well. That’s why it’s critical to establish a culture of advancement and give top performers the opportunity to succeed.

Take Procter & Gamble, for example. The consumer-goods company made development part of its company culture, mentoring employees across all levels of the company through formal and informal training.

This commitment to development allowed P&G to create a leadership funnel, which has led it to fill many management positions with internal candidates. It’s also landed the company at the top of Chief Executive Magazine’s list of the best overall companies for leadership development for the past three years.

Related: Here's the Right Way to Screen Potential Job Candidates

The advantages of hiring from within 

P&G understands that investing in leadership development benefits its employees, its customers and the company as a whole. Establishing a formal development model helps attract and retain top talent because bright people want to work for a company with clear growth opportunities.

A culture of advancement also encourages team members to work harder, which boosts productivity, fosters innovation, cultivates loyalty and keeps employees focused on business goals. In addition, numerous studies show that internal promotions have a lower failure rate than external hires.

Finally, investing in professional development for employees impresses customers and encourages your team to deliver better service.

When you need an outside hire 

Promoting from within is a great way to strengthen your company, but the day may come when you outgrow your current pool of talent. In these cases, hiring from within may not be possible, and it’s far better to hire externally than promote someone who isn’t qualified.

Related: How to Hire the Best Talent and Avoid the Most Common Pitfalls

For most companies, the best solution is to strike a balance between internal promotions and strategic outside hires. While fresh hires may require some time to adjust to your company’s unique culture, these hires have several advantages.

Bringing people in from outside the company ensures you’re hiring someone with the right skill set for the position. These hires can offer a fresh perspective, mentor existing employees and help your team develop crucial skills.

Hiring externally can also motivate top performers to work harder because it sends the message that there are no guarantees for promotion.

How to maintain a culture of advancement 

Regardless of how you fill a position, you should still actively invest in your employees to establish a culture of advancement. That way, employees will have a clear view of their own career path and won’t feel threatened by external hires.

Here are four steps for creating opportunities for existing employees (and encouraging more internal promotions):

  • Talk about development early and often. Talk about advancement opportunities with employees during the hiring and onboarding process. Create formal career development plans, and review these with employees at least twice a year.
  • Develop leaders across all levels. Don’t just focus your training efforts on those departments that bring in money. You should be developing leaders throughout your organization -- from administrative staff to human resources to sales.
  • Don’t make guarantees. Communicate your company’s commitment to promoting from within on a regular basis, but don’t ever promise that you’ll hire exclusively from inside the organization.
  • Hold employees accountable. Those with the initiative to succeed will take advantage of training and other educational opportunities, so give them the tools to shape their professional lives, and let them get to work.

The biggest mistake you can make as a leader isn’t hiring the wrong person -- it’s failing to give employees the opportunity to succeed. Leaders will often promote “good workers,” but those people fail in leadership positions, because they haven’t been given any training on leading.

Championing a culture of advancement through mentorship, education and a clear career plan can yield extraordinary benefits for your company, but it’s smart to balance internal promotions with strategic outside hires. As you’re looking for candidates to fill top positions at your company, set your sights on growth opportunities -- both for your employees and your company’s human capital.

Related: How to Hire the Best Talent and Avoid the Most Common Pitfalls