Businesses are constantly debating the pros and cons of promoting existing employees or hiring outside the company. Which is the best path for a business to take? When the time comes to hire upper level employees, should you hire from outside the company or within?
Hire From Outside the Company
With big risk comes big reward, right? We often attribute this phrase to entrepreneurs and venture capitalists, but businesses have this ingrained in their philosophies too. Bringing on new hires to fill big roles is risky, but often times the reward is worth it. Here are a few reasons why companies take hiring risks:
- New Roles Require New People
Businesses are constantly developing new roles. Filling these roles with people who have had experience executing related tasks at other firms is a great way to ensure the new endeavour will be successful.
- Reenergize the Workplace
New hires also bring fresh energy to a company. They have ideas and special knowledge that may enhance the current way of thinking.
- Avoid Transition Failure
Sometimes, the risk of hiring an outsider trumps the risk of promoting an insider. Think about it this way: what would you do if an employee who was an excellent worker struggles in a high level position?
Companies often weigh risks and rewards when it comes to hiring. Hiring from outside the company may carry a greater risk, but if the right person is chosen for the job, it can reawaken and advance the workplace.
Hire From Within
Hiring from within a company may be seen as the “safe route,” but it is also considered a more cost-effective option. In fact, hiring internally is said to be about 1.7 times less expensive than recruiting an outsider. Promoting an existing employee takes less time than onboarding a new hire, and according to an article in TIME, hiring from within just seems to work better.
Like hiring from outside the company, promoting from within the company has risks and rewards. The best way to negate the risks and ensure rewards is to have a balanced hiring strategy. Kurt Weyerhauser works for an executive search firm in Los Angeles. He claims the most appropriate hiring ratio is “35-per cent external to 65-per cent internal.”
Most companies spend a lot of time thinking about whether they should hire from outside the company or within. While there may be many opinions on the matter, there is no correct answer. Getting the best person into a position only happens after carefully considering the candidate on a case by case basis.
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