How promoting from within could benefit your business

Hiring looks a lot different today than it used to — job creation is expanding faster than ever while unemployment has declined to remarkable lows. This creates a challenge for organizations looking to fill roles. In fact, the average time it takes to fill jobs across the U.S. has steadily climbed each year since 2009.

“It’s a very tight labor market right now,” explains Greg Chansler, senior manager of human resources for Kawasaki Motors Corporation, adding:

It’s difficult to find qualified employees.

To fill vacancies, hiring managers have two primary options: external hiring or internal mobility. While external candidates can usher in some fresh perspective, it’s clear the pool of qualified external job candidates is waning across industries. If you, like many, have found hiring at a standstill within your organization, it may be time to reevaluate the benefits of promoting from within.

We consulted Chansler’s HR expertise and scoured data on hiring, turnover and retention to uncover three of the most prominent advantages of internal mobility. Find out whether making an effort to promote from within could help your organization.

3 Ways businesses that promote from within can benefit

Internal promotions certainly go a long way toward boosting morale, but there are concrete benefits as well.

1. Promoting from within can save time and money

The external hiring process can get expensive. In fact, some estimates report that:

It costs a business an average of six to nine months’ salary every time they replace a salaried employee.

“This includes advertising for the position, sourcing candidates, interviewing and conducting background checks — all before finally hiring someone,” Chansler says. “Some positions are more difficult to recruit for and require use of an outside service, which adds even more to the overall cost.”

Much of the expense is tied to time — the price tag climbs each day a vacant position remains unfilled. Recent data suggests it can take up to two months to fill a vacant position in today’s labor market. That requires funneling money into recruitment efforts for 60 days. Additionally, the existing employees who may be called upon to cover duties until the vacant role is filled will need to sacrifice their time and productivity.

The mounting costs don’t cease once an external candidate is hired, either. Companies need to fund onboarding and training initiatives. On top of that external hires are initially paid more than promoted workers — about 18 percent more — yet their performance evaluations over the course of the first 24 months are typically worse. This is because new hires from outside the organization typically need about two years to get up to speed. Internal employees, conversely, already possess an intimate familiarity with their company and its culture.

2. Internal mobility can help with retention and motivation

Career advancement opportunities have become increasingly important to today’s employees. In fact, a lack of career growth is one of the most prominent reasons workers report leaving their jobs. According to a recent survey, one of the top reasons employees left a job was because there were no opportunities for advancement.

“When you promote from within, people see opportunity and become less likely to move around in their careers,” Chansler explains, elaborating:

It’s great for morale when employees can see an opportunity to grow within their organization. That ripple effect can be overwhelmingly positive.

The same national survey found that 77 percent of employees feel that developing their careers within their current company is solely on them. Chansler points out that good succession planning should involve ensuring that employees have ample opportunities for professional development so they’re continually learning and growing their skillsets. It can also offer employers a useful way to identify rising stars within the organization.

At Kawasaki, for example, Chansler and his team promote regular training opportunities, host internal classes for interested employees and encourage job shadowing and mentorship experiences. They even offer employee education benefits to further support growth and development.

“If employees are truly interested in an opportunity for advancement, we’ll work with them to identify what kind of education, coaching or skill development they’d need to successfully move into that role,” Chansler elaborates. “We have quarterly check-ins that allow us to talk about employees’ performance and also discuss their aspirations so we can help them work toward those.”

When employees see that their organization is willing to invest in their development, it can fuel their motivation to continually perform their best year-round.

3. There’s less risk involved with internal promotions

One of the greatest risks when hiring externally is potentially ending up with a candidate who simply isn’t the right fit for the role or the company culture. One recent survey suggests that 30 percent of job seekers leave a position within the first 90 days of starting. It’s also true, according to some research, that external hires are more likely to be laid off or fired within the first two years of employment.

The reason for this, Chansler explains, is pretty simple:

You know what you’re getting when you hire internally.

“When you hire from outside, you look at a resume and speak to a candidate in an interview — but they may simply be telling you what you want to hear,” he says. “When you promote from within, you can see their work style and their work ethic. You can speak with their peers and managers to get a real sense of who they are and in what direction they hope to take their careers.”

Reap the benefits of promoting from within

There are clear, tangible benefits to promoting within your organization. Chansler and his team have experienced numerous advantages by using this method. Now, they make a point to communicate their hiring efforts whenever a new position opens up at Kawasaki.

“When we have an open position, we don’t just advertise it to the outside hiring boards, but we also advertise it internally,” he says.

As you think about the rewards your organization could gain from prioritizing internal mobility, it’s worth thinking about whether you’re offering employees what they want in a long-term workplace. Keeping their needs and wants in mind can help minimize turnover and keep employees for the long haul. Learn more about how you can boost retention by reading our article, “Business leaders explain how professional development benefits help with employee retention.”