Ask Addi P.: When Should I Hire Internally vs. Externally?

It's Addi P!

Dear Addi P.,

I need to fill a new position to meet the needs of my growing clientele. Should I focus on talent development within my company or bring in outside expertise? If I do make an external hire, how do I smooth things over with an employee who feels overlooked for a promotion?

— Talent Seeker in Tallahassee

Dear Talent Seeker,

The decision of whether to promote an employee for a new position or hire external talent depends on what the job requires, how ready current staffers are to take it on and how much of an asset or a challenge it would be to hire an outsider.

Identifying the Best Fit for the Job

Each approach has its pros and cons. Insiders already know the organization and its culture. They have established relationships with co-workers and clients. That institutional knowledge probably translates to a shorter onboarding process for a current staffer than a newbie would require.

On the other hand, if that familiarity has bred complacency and stalled innovation, it might be time to consider injecting some fresh ideas from the outside, as well as finding new ways to motivate your current workforce. An external hire may also be the best solution when a sudden change in your business strategy calls for skill sets your current staff may be lacking.

Another key consideration is how quickly you need to fill the position. Do you have time to work on the talent development of an existing employee to update their skills in advance of the hire, or do you need the expertise right away?

Also take a look at labor market conditions and the resources you have for recruitment. How available are workers with the skills you need for your post, and how much would it cost you to hire them? These costs could outweigh the costs of training a current employee.

Valuing the Talent On Hand

If you opt to hire externally, be sensitive to the disappointment of employees who were up for the job (or had an interest) but didn't get it. A transparent hiring and communication process, with the job requirements clearly defined, will help guard against resentment from employees who think they didn't get a fair shot.

Have the manager explain why the passed-over employee wasn't quite the right fit for this job. Let them know that the company is always ready to assist them in their career development. Help them develop a plan for identifying a career path, improving their skills and reaching their goals. Consider setting up a mentoring program, if you don't already have one. This can be a great way to help employees acquire skills and show an interest in their development.

Whether an outside hire or inside promotion is your best option in a particular case, internal talent development should be integral part of your long-range business plan. Employees who view your company as a place where they can grow professionally are likely to be more engaged and productive. In turn, you'll be more likely to retain your most valued employees, so they can help steer your business to even greater success.

Addi P. is a digital character who represents the human expertise of ADP. The questions and challenges come from professionals who manage people at companies of all sizes. The advice comes from ADP experts who have a deep understanding of the issues and a passion for helping leaders create a better workplace. If you have a challenge you'd like to pose for Addi P, complete this simple form.

The information provided here is for general informational purposes only and not legal, accounting or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of a professional who can better address your specific concern and situation. Any information provided here is by nature subject to revision and may not be the most current information available on the subject matter discussed.