Should You Promote from Within or Hire from Outside?

Finding the right person to fill a vacant management position is vital to the health of your business

Written by Advisory Board

Welcome to Advisory Board, a weekly department in which a panel of experts—made up of entrepreneurs and professionals—answer questions you have about how to run your business better.

This week, a reader asks:

“A senior manager at my company recently retired. One of my current employees is lobbying for the role, but he has no leadership experience. Should I promote from within, or hire from outside?”

Here’s what the experts have to say.

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“Nurturing your current—and eager—workforce is extremely important, not just those looking to advance but also as a positive reinforcement for the rest of the team. Internal advancement can be a fantastic motivator. If your employee embodies your brand values and understands the business, then it may be worth challenging him with a project that requires leadership and then mentor him from there. Staff resources can always be reallocated during the transition if you are properly forecasting workflow.”
—Christine Faulhaber, president and CEO, Faulhaber Communications, Toronto

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“Consider what kind of philosophy or policy your company will be supporting and visibly demonstrating with this decision: longer-term commitment to consistently developing and promoting from within; or strategic commitment to a more general position of promoting based on the best qualifications to meet the needs of the business, regardless of whether talent is sourced internally or externally. In my experience, how you handle this will send a very strong message to the rest of the organization about how promotional decisions are made.

“The high road here for you is to clearly identify the competencies and capabilities required to fulfill the role being vacated (or rethink and retool the role to meet today’s needs). You can then depersonalize the situation somewhat with respect to the current employee by establishing that he will have a fair shot at the role based on comprehensive (perhaps professionally assisted), objective assessment against the job criteria, but that you are retaining the option to search outside based on the same criteria. In the end, the position will be filled based on candidates’ best fit.

“In any event, if you value the lobbying employee as a human resource asset in the firm, you should bridge the assessment results into a joint personal development planning exercise with this person including a roadmap for building his leadership capabilities for the future—a win for everyone.”
—Einar Westerlund€Ž, director, project development, Queen’s School of Business, Kingston, Ont.

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“I always say that past experience is an indication of what a person was capable of, but aren’t we all interested in what a person is capable of next? I would ask you to tell me if you think the person is capable of leading, not wether or not they have experience leading. A lot of people have experience leading and they are mediocre leaders, which is probably not what you are looking for. You should be looking for future potential more than past performance.”
Kelsey Ramsden, business guide and founder, SparkPlay Inc., London, Ont.

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“If turn-over has been an issue or, you have gone through a lot of change then settling down your culture and creating some stability and consistency will be critical. In this regard, making this promotion and providing training is best. If, on the other hand you aren’t dealing with other disruptions then you have to ask yourself how critical this role is.

“I would personally let your internal candidate apply but also do an external search and interview all potential candidates. I would choose the best candidate for the job. If it happens to be your internal colleague you will have confidence in making a great decision and investing in their professional development.”
Shannon Bowen-Smed, president and CEO, BOWEN, Calgary

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“I love hiring from within as it can be amazing for company culture, employee retention and pride, and I never shy away from training people if they lack experience. That being said, we never fail to post the job both internally and externally to make sure that we hire the very best candidate for the job regardless of whether they work for us or not.”
—Mandy Farmer, President and CEO, Accent Inns and Hotel Zed, Victoria

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Originally appeared on PROFITguide.com