When you next need to fill an open position in your company, will you focus on outside candidates, or look for an existing employee to promote? A study from the Wharton School of the University of Pennsylvania uncovers some unexpected benefits of “hiring” from within.
Comparing External and Internal Job Candidates
The study found that people promoted from inside the company show a significantly higher level of short-term productivity and success than external candidates. It can take up to two years for an external hire to come up to the level of an internal promotion, measured by comparing employee reviews. But external hires are given starting salaries averaging 18% more than internal promotions, and are far more likely to leave within two years, meaning they never reach a true level of proficiency in their job before they’re gone. Given the cost in both time and money of identifying and interviewing external candidates, this picture makes hiring from outside look like a very risky undertaking.
Getting Behind the Data
There are good reasons for this picture of internal vs. external candidate success. Part of learning a new job is learning about the people and culture of an organisation, and this can be a much bigger task than simply getting to grips with basic job responsibilities. Someone who is promoted from inside has a huge head start in this area over someone who is brand new to the company.
On the other hand, there are good reasons for hiring external candidates in some cases. Bringing in someone new may be necessary to bridge a gap in experience or education, and it can also bring fresh new ideas which will help the company thrive. The data also shows that when external candidates remain on the job for longer than two years, they tend to be promoted faster and show high levels of success.
So there are strong arguments to be made on either side. Choosing the right option when there’s an open position can help a company save time and costs while getting the best people to move the organisation forward.
The Benefits of Skill Matching
This is where great HR software can help. Ceequel®’s Human Resource management module includes a skill matching function which can assist you in both analysing upcoming staffing needs and identifying existing employees who have the right skills and experience to move up into an open position.
Providing opportunities for employees to develop their skills and take on new challenges is key to employee satisfaction and retention. It can also help HR departments remove some of the burden of the hiring process, enabling HR staff to focus on filling positions which truly do need a new face and voice from outside the company.
For more information about Ceequel®’s Human Resource benefits, including skill matching, please contact us!