Why successful firms first look within when hiring


While some entities favour external staffing, others heavily prefer promoting almost exclusively from within. FILE PHOTO | SHUTTERSTOCK

What does it take to find an excellent employee? They surely must possess applicable skills. Their industry networks and contacts also prove useful.

But many firms often overlook the organisational culture fit with that person’s background and demeanour.

Many of us may relate to working on a well-gelled work team. The group had reached the performance stage along the team development process.

People knew what to expect from each other, and how to work with one another, and frequently went above and beyond to support everyone.

The department stuck up for each other, bonded together, and people generally enjoyed their work-life.

But then, people got a sinking feeling when a job advertisement appeared in the newspapers for two positions in your department yet you all knew some of your team were qualified and would make a good fit instead.

Why recruit externally? Shocked that no one internally was approached regarding the positions, several department members applied anyway following the steps outlined in the newspaper.

However, to everyone’s dismay, no one got promoted from within and both recruits were external hires.

Then when the new employees came in, the team felt like they hit a stone wall.

The individuals perhaps held no intention of learning or supporting the team or accentuating the strong positive culture you all worked so hard to develop. The group sank back down into the storming phase.

In essence, we all know that employees generally have two routes to obtain work in a firm: either from external recruitment or from internal promotion.

While some entities favour external staffing, others heavily prefer promoting almost exclusively from within, even blocking new externally recruited employees from voting for or sitting on staff councils, or serving as an ombudsman.

Matthew Bidwell’s fascinating research delves into which type of employee is the most successful within firms.

He highlights that internal worker promotions, lateral transfers, or combined promotions and transfers from within an internal robust labour market prove, on average, to hold higher levels of company-specific skills.

Internal staff mobility within and between departments boosts firm productivity and profits.

Interestingly, external hires show lower performance than their internal organisational compatriots for two whole years until their performance starts to even out and match those already within the firm. But during that time, many quit voluntarily or involuntarily.

Further, Bidwell finds that hiring and promoting first from within also reduces wage expenses by lowering uncertainty around whether recruits really are a good fit for positions.

Promoting from within reduces the incomplete information gap of whether a worker will succeed in and contribute towards company success.

In short, when hiring from outside, you pay them on average 18 percent more in higher salaries than what internal candidates would get but you get less out of them due to their dismal performance.

Despite costing the company more money, remember that external hires perform worse on average and quit far more often.

Finding successful organisational culture that fits along with the learned knowledge of how a firm operates proves more difficult to find and procure than department managers and human resources executives often realise.

Organisational psychologist Adam Grant points out that elevating from within energises individual growth and collective team success.

If there are never strong internal candidates, then the entity failed at leadership and skill development.

So, employees across Kenya, discreetly cut this column out of the Business Daily and leave it on your boss’s desk.

It may be high time for you to get promoted instead of your organisation recruiting someone from the outside.

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Note: The results are not exact but very close to the actual.