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Internal Hire

Promoting from within can save a company big bucks as an alternative to hiring from the outside.

By Tony LoPinto | Updated on June 05, 2012

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Internal Hire For large corporations, recruiting expenses are enormous, and yet in most cases, the process of hiring internally is secondary to going outside to recruit talent. Research suggests that promoting from within can deliver more benefits for companies than hiring outside talent. I came upon a recent study from the University of Pennsylvania’s Wharton School that found that external hires were paid approximately 18% more than internal employees in equivalent roles, but fared worse in performance reviews during their first two years on the job. Even more interesting was a recent Wall Street Journal article that reported on a study by Booze & Co., which found that chief executives hired from outside a company are twice as likely to be forced out as those promoted from within: “Between 2009 and 2011, companies dismissed 35% of ‘outsider’ CEOs, compared with just 19% of ‘insider’ CEOs during that same period.” These statistics support the fact that companies should invest more in succession planning, a process which, if managed well, will save significant recruiting dollars and produce considerably better performance and organizational stability.

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