Recruitment: Three good reasons to favor internal promotion

Wharton professor of management Mathew Bidwell is adamant that, although on average better paid, external recruits do not perform as well as internal employees promoted to equivalent positions. What are the goals of HR managers looking to tap the internal talent pipeline?

1. Limit adjustment time: External recruits need about two years to reach cruising speed in a job post versus just a few months for internal promotions. The difference is due to the time that is required to get one’s bearings in a new organization, particularly in terms of constructing an effective internal professional network.
2. Reduce turnover: The probability of having to part ways with an external recruit is higher than with an internal promotion, because it is difficult to know the full extent of a candidate’s skills before hiring them. The risk of the external candidate leaving of his own accord is also higher because, unlike an internal candidate, his knowledge of what the post will entail is more limited.
3. Offer appropriate remuneration: Employees recruited from outside generally have more experience and qualifications than candidates promoted internally. Given the difficulty of accurately evaluating the skills of external candidates, it is no wonder that recruiters tend to more demanding about the quality of their CVs. Result: an unnecessary jump in pay that varies from 10 to 20%!

Find the article

“Why External Hires Get Paid More, and Perform Worse, than Internal Staff” (Knowledge@Wharton, March 2012).

Go further

“Paying More to Get Less: The Effects of External Hiring versus Internal Mobility,” by Matthew Bidwell (Administrative Science Quarterly, September 2011).

“Internal Versus External Recruitment – Which Is Best?,” by Tim Williams (Article Snatch, 2010).

“How To Hire People – The Jack Welch MBA’s,” by Jack Welch (Addictive Networks, October 2010).