When you hear the phrase “internal promotion,” you might experience thoughts of a raise in salary, improved job perks, and an important-sounding job title. Or, if you’ve been a manager promoting someone below you, you might have a slightly different reaction. Although internal promotions can bring many benefits for both individuals and organizations, they do not come without their drawbacks.
There are many benefits to promoting from within. According to research conducted by Professor Matthew Bidwell, employees promoted internally have higher performance evaluations in their first two years following the promotion, are less likely to leave the organization, and are paid 18 to 20% less than their colleagues who were hired externally. The reasons for this are clear: internal candidates already have an established performance record with the company, they are accustomed to the organizational culture, they have a well-developed network of contacts within the company, they require little orientation, and promoting high-performing employees from within may reduce the possibility that they will look for a job elsewhere.
On the other hand, there may be hidden drawbacks associated with promoting from within. Internal promotions can cause tension within a workplace, particularly where multiple people from the same department apply for the same role. Even more challenging can be when that chosen candidate must now lead their former colleagues.
Making use of internal promotions can offer your company significant benefits, both from a financial and human resources perspective. When used properly, promotions can inspire top performers to achieve their best and can drive your workforce to improve their knowledge and skills. Taken as part of a complete HR strategy, internal promotion can be a handy tool in your toolbox. Internal promotions require thorough planning and careful attention to detail in the execution phase. With the right mix of preparation, communication, and skill at navigating through the process, you can promote internally in a way that will help your company maintain its competitive edge.
Source: University of Pennsylvania, “Why External Hires Get Paid More, and Perform Worse, than Internal Staff,” Mar. 28, 2012, http://knowledge.wharton.upenn.edu/article/why-external-hires-get-paid-more-and-perform-worse-than-internal-staff/
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