Deciding whether to promote employees from within or hire externally is difficult. Promoting from within can improve employee engagement and morale and show your dedication to your people’s professional growth; on the other hand, external hires bring in diversity of thought.
Developing an internal promotions plan allows you to take a strategic approach to employee career development goals and proactively recognize growth opportunities. These systems also help you identify and outline roles and responsibilities and find the best fit.
In this article, you’ll read about:
- What an internal promotion is
- The value of internal promotions
- Promoting internally vs. hiring externally
- A six-step internal promotions development plan
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What is an internal promotion?
An internal promotion happens when an internal candidate is promoted to a new position — instead of the organization hiring an external candidate. Another interpretation of the term internal promotion is when an employee acquires the necessary skills to reach the next level of their professional journey.
These promotions generally encompass:
- Changes in responsibilities
- A new job title
- A salary increment or pay increase
- More specialized tasks
People ops professionals and leaders typically rely on factors like performance and 360° reviews, experience levels, skills, and accomplishments to execute successful internal promotions.
⭐ Looking for more tips on carrying out successful employee promotions? Check out our comprehensive guide to employee promotions.
The value of internal promotions
Internal promotions demonstrate your investment in employee development and recognize your people’s hard work. By hiring internally, you show that your organization provides growth opportunities and has a fair and transparent promotion policy.
This helps build a healthy workplace that fosters employee satisfaction, engagement, and enablement.
“In companies that exclusively hire from the outside, employees might feel that the only way for them to [grow] (…) is to switch companies. But when you promote from within, employees will feel that their hard work is paying off, giving them a reason to stay.”
— Bill Harrison, CEO of ComplianceBridge
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Our platform lets you build an equitable and scalable promotion process.
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Promoting internally vs. hiring externally
Promoting internally is a great way to retain and nurture talent and strengthen your company’s brand and culture. However, without promotion policies that ensure fairness and invest in learning and development (L&D), it can lead to unhealthy competition and favoritism. Let’s look at some of the benefits and drawbacks of internal promotions in more detail.
Promoting internally is a great way to cut recruitment costs and invest in employee development. However, it can also lead to challenging workplace situations. Here are the advantages and disadvantages of this approach.
- Saves money — By significantly shortening the hiring process, human resources departments can reduce costs associated with advertising open positions and interviewing and sourcing candidates.
- Reduces training time and speeds up the onboarding process — Your internal candidates are already familiar with your organization’s processes and systems, significantly reducing the time and money you have to invest in their training.
- Boosts retention rates — Providing opportunities for employee growth shows your people they don’t need to leave the company to further their careers.
- Improves team motivation and morale — Current team members are more motivated when they see hard work being rewarded at your company.
- Ensures culture fit — Your existing employees already know your company culture, which eliminates the risk of a position being filled by someone who isn’t a culture fit.
- Can lead to challenging situations — If not handled well and not following well-defined policies, an internal promotion could cause unhealthy competition and resentment between team members.
- Limits fresh perspectives — Promoting from within can mean organizations remain stuck in their ways. That’s because internal candidates don’t add fresh perspectives like external hires do.
- Creates another open position — When one of your existing employees moves up in your organization, you create a gap in your current workforce.
Hiring a candidate externally can bring new, unexpected ideas into your organization, but it can also lower employee morale and retention. Let’s look at the pros and cons of bringing someone new into your company.
- Gives access to a larger talent pool — You can assess more candidates if you look outside your organization. And if you’re a remote company or use a hybrid work model, you can assess candidates from more diverse backgrounds and geographical locations.
- Brings diversity of thought and perspective — A fresh pair of eyes can, sometimes, more easily identify areas of improvement and drive positive change.
“It’s important to freshen up the team every now and then, too, to bring in fresh ideas and new perspectives. While a close-knit team is certainly a valuable asset for any company to have, it can create an insular, somewhat stale atmosphere if you’re not careful.”
— Peter Strahan, Founder & CEO of Lantec
- Doesn’t promote internal employee development — Your people want to grow as professionals over time and need their title, compensation, and responsibilities to reflect that. Hiring an external candidate to fill an open position doesn’t support those kinds of employee ambitions and goals.
- Lowers employee morale — Internal talent can feel overlooked, which has a negative impact on their satisfaction and engagement levels.
- Increases turnover rate — If employees don’t see future growth opportunities in your organization, they’re much more likely to leave your company to look for a better position elsewhere.
6-step internal promotions development plan
Internal promotion development plans increase transparency within your organization and outline the steps employees must take to achieve promotions.
Additionally, promotion development plans enable you to be more proactive about your promotion decisions by encouraging managers and reports to continuously think about their professional growth.
1. Determine what you need
To define what you need from your internal hires and what skills you’re looking for, you first need to get clear on your company’s current status. Ask yourself:
- Is our management team equipped to support current employees? If your leaders don’t have the capacity or skills to mentor new hires and help them get the hang of their new role, you’d be setting them up for failure. Setting up employee onboarding guides helps increase performance and gives new employees the support they need to succeed.
- Are our employees engaged and satisfied with their positions? Conduct regular pulse and engagement surveys to understand your people’s engagement levels and whether or not they’re satisfied with their current career paths. If not, it might be time for an internal promotion, a shift in responsibilities and compensation, or a 1:1 check-in to find out more about the problem.
- Can we benefit from a fresh perspective? Sometimes, certain problems can only be solved with a fresh pair of eyes. If that’s the case for your company, an external hire could be a great solution.
- Does our company have an established development framework? Where your employees are on their development and learning path gives you a clear overview of their current skill set and who’s due for a promotion.
2. Put together a job description with all the necessary skills
A clear job description guides you in your promotion process, helps you find the right candidate, and manages expectations. Assess the skills and experience levels of existing employees in the same or similar roles to help you narrow down what you’re looking for.
Additionally, if you’re planning to communicate the open position company-wide, you’ll use this job description to announce the new opportunity. Include details like:
- Job title
- Skills and qualifications
- Role objectives
3. Establish your promotion criteria
Objective promotion criteria will help you narrow down your internal candidates and find the best fit more easily. That’s because you can use these assessment metrics to guide your decision-making process.
Suppose you’re looking for a candidate that has excellent communication skills. In that case, you’ll know to mainly consider employees who have consistently received positive feedback from their managers and peers in this area.
Other criteria to consider include:
- Seniority or tenure
- Working style
- Professional goals
- Growth potential
- Rapport with peers
- Willingness to learn
- Alignment with company values
💡 Remember: While considering achievements is important, don’t forget to look at “failures” — how a person faces a problem, what they learn from it, and how they apply those lessons are all equally important.
4. Be transparent about promotion decisions
Transparency is crucial to creating a healthy workplace — especially when it comes to promotion decisions. One of the most meaningful ways to avoid a toxic work culture and demonstrate your commitment to transparency is to openly communicate how management handles promotions within your organization.
Some questions you can answer for your people include:
- Is this an open or closed promotion?
- Who can apply for this position?
- Why has this position become available?
- What data will inform your final promotion decision?
- What are the criteria for this promotion?
Shutting the red curtains on these decisions can lead to staff feeling confused at best — and overlooked at worst. Additionally, being open about internal promotions and development paths shows other employees that they’ll have the same chances for advancing their careers in the future.
5. Communicate the promotion decision with employees
The timely announcement of employee promotions is great for transparency and allows for a company-wide celebration of your people — boosting morale and fostering a sense of community.
Your all-hands meetings or company newsletter are great places to make these announcements. Alternatively, consider your company’s Slack or Microsoft Teams channels.
6. Have employee engagement and development frameworks in place
Robust employee engagement, employee development plans and development frameworks help employees remain engaged, even if they don’t have the necessary skills to qualify for a particular position.
Some steps you can take in your training and engagement process include:
- Creating an employee engagement action plan to improve employee experience and keep your finger on the pulse of your people’s engagement and satisfaction levels. Your survey results can then guide your development initiatives.
- Arranging regular 1:1 meetings with employees to discuss their personal and professional goals.
- Creating a personalized career progression framework that illustrates the competencies an employee needs to develop before taking on a new role.
- Keeping the conversation going, especially with unsuccessful candidates who might feel overlooked. This helps make your and your employee’s arguments clearer and keeps them motivated and engaged.
💡 Remember: Promotions aren’t the only way to reward employees who consistently go above and beyond. A performance bonus is a great way to acknowledge the value and hard work of employees who don’t yet qualify for a promotion.
7. Follow up
Promotions aren’t one-and-done tasks. Make sure to have a streamlined onboarding process planned — including the tasks needed to ensure a seamless handover — so the transition is smooth for everybody.
Additionally, check in with your employee regularly through 1:1s and team meetings to ensure they have the resources they need to succeed. You can also assign them a mentor or buddy to support them and show them the ropes so they can confidently grow into their new role.
Nurture career growth with Leapsome
A lot goes into promoting from within. Your organization’s promotion processes need to be equitable, fair, and transparent while making it easy to find the right candidates and support internal growth. Internal promotions require a lot of forethought. That’s where Leapsome comes in.
Our new promotion management tool helps you automate your company’s promotion and compensation processes and create scalable, unbiased, and consistent workflows.
It also lets you collaborate with key stakeholders and integrates with our tools for personalized career development paths, performance reviews, team alignment, and more. Because putting your people first and achieving business goals can go hand in hand.
🚀 Build scalable and equitable promotion processes with Leapsome
Leapsome’s promotion and compensation tools empower managers and leaders to make more data-informed decisions and increase employee trust.
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