71% of employees believe hiring from within is better for scaling a business. Among employees working in larger companies (with 250+ employees), 78% felt it was important to promote from within. 56% of those from medium businesses and 58% from small businesses were more likely to prefer internal promotions as well.
Almost two thirds of employees feel it’s better to promote from within than to hire externally. Plus, they’re twice as likely to say they preferred someone promoted internally as a manager.
Why is this?
Well, when you promote from within it has a huge impact on your company culture.
It’s a way to reward hard work and employee loyalty, all while reducing hiring and training costs. These can quickly add up to six figures when you’re recruiting for more senior roles.
I’ve worked in places where there were no opportunities for advancement, and I had two types of coworkers. Those who didn’t care about career progression and were there for the benefits, and those who didn’t stay for long. Because no one was invested in the work, things moved slowly. Ultimately, nobody was motivated to get anything done.
Taking steps to promote from within boosts retention because employees don’t have to leave to advance in their careers. It makes work more interesting and motivating for everyone because they get to see what’s possible in terms of moving up (or around) the ladder. Extra points if you show that they don’t just have to fulfill a traditional managerial role to progress. They could pursue alternate pathways like becoming a principal or taking on an advisor role instead.
Let’s take a look at why you should promote from within to boost employee retention:
Retain internal knowledge
Every business has little quirks or ways of doing things that only a handful of people understand. It’s important to have a plan in place to ensure things don’t fall apart when someone leaves. At the same time, you should take steps to try to keep them from leaving in the first place. This will protect your business and your employees.
I’ve joined companies before where the previous marketer didn’t pass over social media logins. It made it a nightmare for me to get in and so much as post on a business page, let alone access analytics.
Having somewhere new hires can find the information they need should be the bare minimum. Beyond that though, you also need to ensure that you retain as much internal knowledge as possible. If you promote from within, the information employees hold stays within your organization. You never know what important knowledge will die out when someone leaves.
Improve employee morale
Over half of employees believe if you promote from within it’s better for morale. Which makes sense. It shows them that they don’t have to keep doing the same thing day in, day out, for the rest of their lives. If someone else within the business can progress, they can, too.
However, over 20% of employees quit or consider quitting after they lose out on a promotion to a peer.
If they’re passed over for an outsider, they’re 15% more likely to quit or consider quitting. That’s compared against those passed over for an internal hire. So you need to find a balance and put safeguards in place so you don’t lose people when you promote from within.
I’ve known people who applied for internal roles and got rejected, received no feedback, but stayed for various reasons (e.g. location, finances, etc.).
Not getting the role without knowing why caused them to become disengaged and disenchanted with work, and therefore less productive.
If you don’t choose to promote from within and pass over someone on your team, it’s important they understand why. Otherwise, they may blame internal politics or simply assume that the hiring process was a popularity contest rather than a skills assessment. So why bother trying if they can’t advance?
Increase team productivity
When managers are promoted from within, they’re 10% more likely than external hires to feel that they have a highly productive team.
On top of that, employees who have internally promoted managers report lower stress levels.
Stressed-out employees can have a ripple effect within your organization. The more you can do to lessen employee stress, the more you’ll get from every employee who works for you.
Employees whose managers climbed the ladder through efforts to promote from within have higher morale. Likely because hiring from within shows an internal culture of supporting each other. Plus, they get to celebrate each other’s successes.
Accelerate onboarding
Managing is hard enough already. Having to then learn new policies and procedures as well as managing a team, understanding a new product or service, and getting to know the rest of their colleagues makes the job even more difficult.
The onboarding process is time-consuming and it takes months for someone to reach their full potential. When you promote from within, you eliminate a lot of this mental load. The person already knows the ins and outs of your organization, so there’s less to take in.
Reducing much of what someone needs to learn during the onboarding process sets them, and the rest of their team, up for a higher level of success.
Strengthen company culture
Never underestimate the power of someone understanding how to navigate your company culture and internal politics.
Learning how to navigate company culture is an extra step in onboarding. Not everyone considers it, but it can add further stress.
Someone who already knows how to navigate it can be a better leader because they’re not there to disrupt things. They already have an existing relationship with other people in the organization.
Culture add is essential when hiring. Some people just don’t gel with your way of doing things no matter how good their skills are on paper.
In fact, 46% of employees are against bringing in outside managers if they present a poor culture fit. A poor fit could create an unwelcoming or uncomfortable atmosphere for your new hire. This will affect the length of their tenure and their whole team’s productivity. Costing you money in the short- and long-term.
On the flip side, when you promote from within, 81% of managers say they feel supported by their teams, 77% find it easier to lead, and 85% feel they have a highly productive team.
Conclusion
When you promote from within, it can be a powerful motivational tool that shows your employees they have the opportunity to progress within your organization if they put the work in.
It also means you retain more internal knowledge. For older organizations, this can provide crucial insights into past products or tools, strategies, and even long-lost login credentials.
If you’d like to help your newly promoted employees, why not try a tool like Workrowd? Use it to organize your employee initiatives including groups, programs, and events. Plus, with automated feedback surveys, you can support your employees, find out what they really think, and get the most from them. Get in touch today to book your free demo.
