Advantages and Disadvantages of Internal Promotion

Do you prefer external hiring over internal promotion when you have a higher position vacancy in your company? If your answer is yes, then you should consider promoting your existing employees over hiring new ones. As internal promotion has numerous benefits for the company.

Still, trying to figure out what to do? Then this article will explain to you in-depth the advantages and disadvantages of internal promotion. Also, it will explain when to promote internally and when to hire externally.   

What is Internal Promotion?

Promoting your employees internally for the higher vacant position instead of hiring someone from outside is called internal promotion. Internal promotion benefits the company by saving hiring costs, boosting employee morale, increasing employee retention, and using their existing talents. It can be the best way to recognize your company’s good performers by giving them a  job  promotion letter as a reward for their hard work. 

Advantages of Promoting Employees Internally

These are the advantages of promoting employees internally:

• Reduces Cost

Usually, every company wants to minimize their expenses, and internal promotions assist them in that. If you choose to hire a candidate through in-house recruitment or you choose a recruitment agency for the same, the cost still increases than promoting an employee from the organization. 

Additionally, it doesn't matter if it is in-house recruitment or a recruitment agency company has to negotiate salaries for the new hire. Instead of doing this, the company prefers internal promotion. 

• Saves Time

If you are in a hurry to fill a vacant position, then the best option is to promote someone from your organization. Because hiring from outside can be time-consuming, as an HR you have to write job descriptions for the vacant positions, go through resumes, screen and shortlist the candidates through different tests and interviews, conduct background checks of the candidates, and many more. 

Moreover, you will save a lot of time as you already know about your existing employees, their behavior, performance, and goals. In addition, they already know the company's workflow and are a proper fit for the company. If you hire a candidate from outside, they will require time to adjust in the company and understand how the company works and its workflow. 

• Boost Employee Morale

Nowadays, an essential factor for any company is to boost employee morale. So far, it is the most difficult task to achieve for the human resource team. But if the company values their employees by supporting internal promotions and giving incentives to them for their good performance then it will help the company to boost employee morale.

If you don't give the employees a fair chance to grow in spite of their good performance, there are chances that the employee will leave the company. As a result, this will increase the employee turnover ratio.  

• Give Assurance

Hiring new employees is always a doubt whether they are a good fit for the company or not. You only have a few chances to test their skills and knowledge, and on that basis, you hire them.  

Whereas, when you promote the employee internally, you know very well about them. Moreover, that employee is fully aware of the company culture and is already adjusted to it. 

• Improves Employer Brand

Hiring from outside instead of promoting your existing employees shows that the company does not give their employees a chance for their career growth. This can make your employees unsatisfied with the company and can affect your employer's brand. Thus when you will need to hire candidates but because of your poor employer brand, you may lose talented and skilled applicants.  

If the company fairly gives a chance to existing employees as well as external hires to grow in the company, then it will improve the employer brand of the company. As a result, in the future, you can attract talented employees.

When to Promote Internally?

These points you can consider when you are promoting internally:

• Having a low budget to use on recruitment and training

• Recruiting for a role that requires detailed knowledge about the company

• Already having employees who are best for the vacant position

• Having less time to fill the position

Disadvantages of Promoting Employees Internally

These are the disadvantages of promoting employees internally:

• Gaps in a Workplace

However, it looks easy to promote an employee internally, but when you promote or transfer an employee to a higher position, then you have to fill the promoted employee's position too. This will create a series of employees promotion and transfer of roles. For some duration, the business may get affected, and at some point, you need to hire an external candidate.  

• Restricted to a Specific Talent

The biggest disadvantage of internal promotion is that you are restricted to some skillful employees only. However, it is not a bad thing, but sometimes it may be possible that your existing employees are lacking in the skills and knowledge for the higher position. In that situation, it becomes difficult for you to find an employee for the vacant position from the organization. 

• Chances of Resentment 

Not every internal promotion will be better than an external hire. Internal promotion in the company creates a possibility of   employee resentment   with the manager. Usually, employees who didn’t get the promotion start feeling jealous and insecure. It may affect the work environment. Besides that, sometimes the team lead doesn’t feel good as they lose their team member. Despite the fact that the employee is moving upwards.

• Decreases Competition

If the employee knows that there is no competition for the higher position, they start becoming self-satisfied. In this situation, they start to lack productivity and give less effort to impress and test themselves. As a result, it influences other employees and also affects the company’s productivity. 

When to Hire Externally?

These points you can consider when you are hiring externally:

• Expanding your business

• Requiring new and fresh ideas

• Companies demanding a diversified workforce

• Having a flexible budget and time to train them

To sum it up

Many times there are advantages and disadvantages of every decision you choose for your organization and one of them is promoting internal employees for the open vacant position. A better way to select is to think about the role and your needs from the employees. If you already have one in your organization that can take the responsibilities then promote them. If not then go for hiring a candidate as per your requirements. 

The most important thing here is to understand your  company’s business strategies and act according to them. If you are not sure what to do, then referring to this article will definitely help you with the advantages and disadvantages of internal promotion so that you can choose wisely.