Have a managerial role to fill? A study explored in the Wall Street Journal suggests the best choice might be closer than you think.
The research was conducted by Matthew Bidwell, an assistant professor at the University of Pennsylvania's Wharton School. He pored over six years of data from a financial services firm, concerning more than 5,000 employees across a wide swath of different jobs, and supplemented this information with data from another bank and a publishing company.
Bidwell found that while salaries for external hires tended to be inflated, their actual value was anything but. In fact, even though they got paid 18 to 20 percent more on average for the same job, they got worse performance reviews for the first two years of the job.
In addition, they were anything but stable. They were 61 percent more likely to be laid off or fired from the job for which they were sought, and 21 percent more likely to quit.
This is likely in no small part due to the difficulty of finding a candidate who is likely to mesh well with an existing corporate environment. Even when they have the right qualifications, a new person might simply just not fit in very well, and perform poorly because of it.
Internal hires, however, have already proven that not only do they have the temperament needed to survive in a particular organization, they also have particular skills that are specifically valuable to the firm in question.
Another benefit of promoting in-house is the development of a strong corporate culture. When workers have a clear understanding of what is expected of them and how they can advance within the company, they're likely to be more invested and productive. Filling leadership roles with an employee who has been with the business for a long time is a strong way to signal to the other that their hard work does have benefits, and motivate them to continue to put the effort in.
Of course, before you can promote from within, it's critical to make sure your employees are prepared. That's where executive development comes in: being able to identify and train talented members of your staff, you can save time and money on an managerial search. If you are able to find the right candidate, the benefits could be incredible.
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