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Blog/Trends/Promoting Managers From Within vs. Hiring Externally: Which is Better?

Promoting Managers From Within vs. Hiring Externally: Which is Better?

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Highlights

  • Nearly two-thirds of employees believe promoting within beats hiring externally.
  • 71% of employees believed hiring from within is better for scaling a business.
  • Over 1 in 5 employees quit, or considered quitting, after being passed over for a promotion for a peer.
  • 1 in 4 employees support hiring managers from the outside when it comes time to pivot.
  • 56% of employees believed promoting from within is better for morale.

Introduction

We can all agree that work looks very different in the midst of a global health pandemic. After months of getting used to working from home, a full calendar of Zoom calls, and no definite plan for getting back to the old “normal,” your job may feel completely different than it did a year ago, even if your title or position hasn’t changed.

Of course, the new normal doesn’t mean you shouldn’t be thinking about your next promotion. Even if your company is restructuring or making changes in an effort to respond to the pandemic, you might be in a good position to take on new responsibilities and possibly even more pay. The transition from employee to manager can make a sizable difference in your compensation, no matter what industry you work in.

But what does it look like when companies make the decision to bring someone in from the outside versus hiring from within? To find out, we surveyed 1,000 working Americans about their perspective on boss preferences. Let’s take a closer look as we explore when employees prefer bringing in proven outside talent rather than promoting internally and how these opinions change based on manager and company size.

Leadership Preferences

In a time of uncertainty and a changing professional landscape, the relationships employees have with their bosses may be more important than ever. More than impacting the way they feel about the work they do, building quality relationships with leaders who support them helps employees feel better about their life and builds trust in their professional experiences.

employee-preference-for-managers

Among the 1,000 people surveyed, 66% reported a preference to be managed by someone who was promoted internally within their company rather than someone hired from the outside (34%). Overwhelmingly, 71% of respondents believed promoting candidates internally is better for scaling a business. Employees working in large companies (250 employees or more) felt even stronger about the importance of hiring from within (nearly 78%) while those from small (58%) or medium businesses (56%) were slightly more inclined to prefer managers with proven talent to be brought in externally.

How Employees Feel About Hiring Managers From Within

While 44% of employees said they’d never considered leaving their job because they were passed over for a promotion, we found 35% of respondents had quit or contemplated doing so after an outside hire was brought in. About 21% employees admitted they had thought about it or done so after they were passed over for a promotion in favor of a peer.

internal-vs-external-hires

The cost of turnover when tenured members decide to leave their current teams in favor of future professional growth can be substantial, but that isn’t the only consideration companies should keep in mind when deciding when to hire from within and when to look for outside talent. Employees surveyed were 15 percentage points more likely to report high levels of productivity when their managers were promoted internally, 5 percentage points more likely to consider themselves highly loyal to their organization, and 12 percentage points more likely to have a good relationship with their managers. Employees with internally promoted managers were also less likely to feel envious of their co-workers or report high levels of stress, and they boasted higher overall morale. Hiring a female manager externally led to the most envious employees but also led to more productive teams, compared to those with externally hired male managers.

When an Outside Hire Makes Sense

Employees we surveyed generally indicated favoring internal promotions for their managers rather than bringing in external candidates, but they also identified certain scenarios where they supported the need for an outside hire.

recruiting-external-managers

Most commonly, when current employees weren’t a good fit for the role (57%), when existing leadership lacked in experience (53%), when changes or new perspectives were needed (44%), and after losing essential employees (37%), employees agreed an outside hire might be the best fit.

In contrast, employees were largely opposed to outside manager hires when they presented a poor culture fit (46%) and created animosity among employees wanting to apply for the role themselves (42%). Further, the lengthy training process (38%) and existence of a poor onboarding process and poor leadership (34%) were other reasons employees were hesitant. Being a good “cultural” fit may not seem as important as having the right job history or experience, but bad bosses and toxic workplaces can create traumatic experiences for employees.

Why Climbing the Ladder Works

When asked why they supported promoting employees from within the organization rather than outside, the most common reasons included better overall employee morale (56%), creating managers already aware of policies and procedures (56%), needing less ramp up time (55%), and increasing employee loyalty (53%). Building high morale among team members isn’t just about making sure they’re happy at work, it can help bolster retention rates, increase productivity, inspire creativity and innovation, and improve their physical and mental health.

advantages-and-drawbacks-internal-promotions

In cases where promotions from the inside might not be the best fit, many employees agreed that they may not currently have internal employees that fit the role (53%); qualified employees might not want the added responsibilities (38%); internal hires could be less likely to add perspective or creativity to the office (36%); and current co-workers may not bring enough innovation to the table (35%).

The Internal Candidate Factor

Among the managers surveyed, we found 6 in 10 were promoted from within their current company, and 4 in 10 were hired from outside.

managers-preferneces-internal-vs-external

Managers promoted internally were more likely to report feeling supported by their teams (81%), finding it easier to lead (77%), and feeling they had a highly productive team (85%). In contrast, managers hired externally were more likely to indicate finding it easy to gain the respect of their team (78%), compared to managers promoted internally who might be leading former peers (75%).

Managers promoted from within their existing organizations also reported earning higher annual salaries on average, over $59,000 compared to just under $57,000 for externally hired managers.

Brighter Days Ahead

According to the people they manage, employees prefer when their bosses have been internally promoted rather than brought in from the outside. Instead of creating jealousy or animosity, internally promoted managers are more likely to create workplace productivity, loyalty, higher morale, and lower stress – all crucial elements of success in 2021. And while there might be some scenarios where employees feel an outside hire is the better fit, managers who make their way up the ladder are potentially more likely to have a better experience.

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Methodology and Limitations

This study uses data from a survey of 1,000 people located in the U.S. The average age of respondents was 38 years old. 46.1% of respondents identified as women, while 53.6% identified as men, and less than 1% identified as nonbinary. An attention-check question was used to identify and disqualify respondents who failed to read questions in their entirety.

The main limitation of this survey is the reliance on self-report, which is faced with several issues including, but not limited to, the following: attribution, exaggeration, telescoping, and recency bias.

Fair Use Statement

The ins and outs of our country’s current workplace culture are interesting to dissect, and we’d love for you to share our discoveries for any noncommercial use. All we ask is that you include a link back to this page to credit the study’s contributors for their work.

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