Why you should be promoting from within your startup

When you have a new position to fill, one of the first choices you’ll make is whether to accept outside applicants or promote from within. Promoting from within is a value-packed option that will help foster business growth, increase loyalty, and cut costs. You don’t have to look far to find compelling reasons to fill open positions from within.

Internal promotions

Internal promotions can be tricky with office politics and department jealousies coming into play, which is perhaps why many companies opt to look outside their walls for new management or supervisory hires. However, statistics show that hiring externally is less effective and efficient. Outside hires are less likely to feel a personal connection or stay with the company. Set yourself up for success by prioritizing internal promotions instead.

Building a stronger culture

Your corporate culture defines who you are as a business. Are you passionate about sustainability, with recycling bins throughout the office and green office supplies filling your cabinets? Perhaps you have a fitness-friendly culture with an onsite gym, complimentary protein shakes in the kitchen, and frequent office marathons. Even coworking spaces have a distinct culture, particularly when they feature innovative amenities like the game room and outdoor wellness space at WeWork’s Valley Towers office in San Jose.

Whether your culture is quirky and fun, with a slide between floors and pingpong in the break room, or you’re more traditional with a dress code that requires daily suits, your culture will set you apart from the competition.

Company culture grows from within. It’s the long-time staffers who are at the core of your traditions, whether they’re at the top of the company or the bottom of the ladder. The most outsiders you bring in, the more you’ll dilute the culture you’ve founded. Internal promotions, on the other hand, only strengthen your cultural habits by elevating the people who best embody what your business is all about. Keep your culture intact by looking to fill your positions from within.

Reducing training and onboarding expenses

Bringing a new employee into the company is a complex and lengthy process. Even the most qualified applicant will need training in the specific ins and outs of your company. They lack knowledge in the most basic of areas, such as where the supply cabinets are located, which conference rooms have teleconferencing capabilities, and how to navigate your corporate cloud.

Successfully onboarding an outside hire can take months. You have to work through mundane tasks like setting up new email accounts, printing ID badges, and signing your new employee up for benefits plans. This is followed by company training in officewide procedures, as well as more detailed training or shadowing in the hire’s specific role. Formal education can only go so far. There’s real value to the internal education that long-term employees gain from years of working in your office.

When you hire from within, you can skip over nearly all the standard training steps. You don’t have to spend weeks paying an employee who is too busy learning to get any real work done. When you move an employee from the role of marketing assistant to marketing manager, you can rest assured that he or she already knows your company’s voice, typography, social media schedule, and recent product releases. Training is minimal and onboarding is nonexistent.

Keeping operating expenses low

A study by Matthew Bidwell, assistant professor at Wharton, revealed that external hires make an average of 18 percent more money than those who are promoted internally. This hike in salary doesn’t correlate with increased productivity or value, however, as these professionals typically score lower on their performance reviews and are 61 percent more likely to be fired.

Employers may offer higher pay in an attempt to draw in fresh talent, but their efforts are often wasted when these hires discover they’re not the right fit for the company or the job isn’t what they expected. An existing employee who’s promoted to a new role has a much better idea of what he or she is getting into. These job applicants already know who they’ll be working with and what’s in store, lending toward higher retention and lower operating costs.

Professional networks are already in place

It takes time to form strong office relationships, and in many cases, internal networking never gets beyond the distantly courteous phase. While you can try to draw external talent that will prove an effective match for your existing team, this is easier said than done. Bringing in an outside hire is sure to shake things up, but it doesn’t always happen in a good way.

Internal promotions already have strong working relationships within the company. You can even fill positions based on the connections each employee has in place. If someone on your sales team has an exceptionally strong working relationship with those in the finance department, they’re well-placed for a promotion to a job focused on restructuring spending in sales. A standout employee in customer service who is always the first one to master the ins and outs of new tech workarounds is the ideal choice to move into a training position where they can pass knowledge along to entry-level hires.

Internal promotions boost motivation

When employees know you typically promote from within, they have greater motivation to excel at their jobs. It’s disheartening to know that no matter how well you perform, your boss will come from an external management track. It’s much more exciting to know that someone in your department will get that management spot if your current supervisor leaves. Your corporate culture will include a natural sense of loyalty and dedication when everyone knows the best job opportunities go to applicants who are already in the company.

The promotional ladder increases efficiency

If you consistently hire from within, your entire business will get a refreshing shift when you begin moving employees into better positions. When a manger moves up to a director position, one of their assistant managers will also step up, filling the vacant manager role. A supervisor can then shift to the assistant manager position, and so on. Your outside hires will then remain within the lowest entry-level positions.

Entry-level hires are typically easier to train because they have less experience in other companies. You can choose fresh graduates who haven’t built their professional habits yet, and mold them to fit your company’s culture. Following this promotional ladder, you’ll have top-level managers who have held several other positions in the company. This increases their empathy for and understanding of those who work beneath them.

An outside hire who takes on a management role may not understand all the responsibilities of their assistant managers or supervisors. However, someone who has held these jobs himself can step in seamlessly to fill the gaps if another employee takes an extended leave, is out sick, or quits. You’ll enhance your efficiency throughout the business if you regularly promote from within.

Better returns on educational efforts

Ongoing training and education can benefit employees at any level of the company. Whether you’re sending some of your sales reps to annual skill-building conferences or you’re offering tuition reimbursement for employees pursuing an MBA, the money you pour into employee development will typically come back to you if you can keep these employees inside the company.

If you don’t promote from within, the money you spent growing your employees will go to benefit your competitors when these workers take their newfound skill sets elsewhere. Supporting training and education increases productivity and fosters innovation. If your employees know there’s a strong chance for internal promotions, they’ll be far more likely to add those new certifications and degrees to their resumes because they’ll see the immediate payoff. You can maximize your investment in employee development by working hard to retain workers and place them in the roles they deserve.

Promoting from within is a smart way to grow your business. When entry-level employees look up to managers who have spent years working their way through the ranks, you get to enjoy a level of respect that’s hard to duplicate with outside hires. The next time you have a position to fill, look within first. The workers who are already with you are often the best fit for the job.

Interested in workspace? Get in touch.