As your company grows and evolves, you’ll have new positions and vacancies to fill.
You could be in a period of growth, or you could be backfilling a management or senior leadership position. You might even be trying to change your strategic direction and looking for senior leaders who are behaviorally-wired to help drive the success of those initiatives.
Either way, the question will likely arise: Will we make an external hire or promote from within?
There are pros and cons to each, and the option you choose will be based on your business strategy and how soon you need to fill each position.
Key benefits of hiring from within
There are numerous reasons to promote from within. Here are a few:
1. Existing employees already know your business or product.
If a new role requires a deep understanding of your business or knowledge of your product, you should hire internally so that the employee can be productive faster.
Promoting from within is something we encourage and practice here at PI. At the beginning of 2020, we promoted five top performers across varying departments to product manager roles. These positions required candidates with a deep understanding of our business strategy and product, so it made sense to source them internally and then backfill their positions.
2. Internal candidates are already cultural fits.
Have you ever hired someone who wasn’t the right fit for your company culture? They had the right skill set, their resume was perfect, but they just didn’t fit with the organization. Maybe they couldn’t keep up with the quick pace, or maybe they were too much of a loose cannon in your highly regulated field. Either way, this mis-hire costs your business money.
3. Your top performers are looking for ways to grow—and leaving when they don’t find them.
A 2024 Engagement and Retention Report found that one of the top drivers of turnover intent is a lack of internal mobility and career growth opportunities. Your top performers are looking to hone or expand their skill sets, contribute more value to the company, and grow.
You can give them the growth opportunities they crave with internal promotions. Keep in mind: Not everyone wants to move into a management role. Some employees would prefer lateral career pathing opportunities.
4. Lack of career development opportunities is causing employee engagement to nosedive.
In addition to retaining top performers for the long term, promoting from within supports employee morale across the entire organization. Employees want to be able to envision a future for themselves at the company—and if there’s no opportunity for them to grow, they’ll start to look elsewhere.
Increase efficiency by reducing hiring time and cost
There are numerous benefits to promoting from within, and chief among them is that it streamlines the hiring process in ways external recruitment simply can’t match. Internal candidates arrive with proven track records—hiring managers have seen their work firsthand, understand how they navigate challenges, and know whether they collaborate effectively with existing teams. External hiring, by contrast, requires extensive vetting, multiple interview rounds, and ultimately, a calculated risk. Even the most thoroughly screened external candidate remains an unknown quantity until they’re actually on the job.
The financial case for internal promotion is equally compelling. External hires typically command higher salaries to compensate for the risk of leaving secure positions. You’re competing not just on compensation, but on the appeal of the unknown—and that premium adds up. Internal candidates, on the other hand, often accept promotions with more modest salary increases, motivated by loyalty, career progression, or the prestige of advancement within an organization they already know and value. They’re not negotiating against a counteroffer from their current employer because they already work for you.
Beyond salary, the cost savings extend to recruitment expenses. External searches involve job postings, recruiter fees, background checks, and the time investment of multiple stakeholders across several interview rounds. Internal promotions eliminate most of these costs while dramatically reducing time-to-fill.
This doesn’t mean internal promotion is always the right answer. Each role requires careful evaluation. Sometimes an external perspective or specialized expertise justifies the additional investment. But when internal candidates can meet the role’s requirements, the efficiency gains—both financial and operational—make promotion from within a strategic advantage worth leveraging.
When to bring in an external hire
While internal promotion offers clear advantages, there are situations where hiring externally makes strategic sense. Knowing when to look outside your organization is just as important as recognizing when to promote from within.
Lack of skills or experience
If you’ve conducted a skills gap analysis, you might realize no one in your company has the expertise necessary to take on a position—and that’s okay. When a role demands specialized knowledge, technical proficiency, or industry experience that doesn’t exist internally, an external hire becomes the practical choice.
For example, at PI, we’re hiring engineers who can help build and refine our suite of talent optimization tools. While we’ve given internal candidates with an interest and aptitude for engineering an opportunity to move into the role and grow, we’re currently looking for experienced engineers who can contribute immediately. As a result, we’re hiring externally. If this is a hire you need to make immediately and the skills simply aren’t present in your organization, external recruitment is your path forward.
Injecting new perspectives
Sometimes the best thing you can do for your organization is bring in someone who thinks differently. External hires arrive without preconceived notions about “how things have always been done” and can challenge assumptions that may be limiting growth.
When you need to disrupt the status quo, drive innovation, or bring fresh approaches to entrenched problems, an outside perspective can be invaluable. This is particularly true in leadership roles where a new strategic direction is needed.
Scaling rapidly
When your organization is growing faster than your talent pipeline can keep pace, external hiring becomes necessary. If you’re expanding into new markets, launching new products, or building entirely new teams, your internal talent pool may simply not be large enough to fill all open positions.
Rapid growth often requires a hybrid approach—promoting internal talent where possible while simultaneously recruiting external candidates to meet immediate headcount needs.
Avoiding internal conflict
Occasionally, promoting from within creates more problems than it solves. When multiple internal candidates are competing for the same role, choosing one can damage relationships and morale among those who weren’t selected.
If the promotion would shift power dynamics in ways that create political tension, or if the internal candidate’s promotion would leave critical gaps elsewhere in the organization, an external hire might be the cleaner path forward. Sometimes bringing in someone from outside neutralizes internal politics and allows the team to move forward without resentment.
Implementing an effective internal promotion process
Foster a culture that supports internal growth
When we released the results of our Employee Engagement Report, one finding stood out: Nine of the 10 top drivers of engagement—and turnover intent—relate to the organization itself. Engagement isn’t just about loving your job, working on a great team, or getting along with your manager. It’s about how the organization is structured to support growth.
Without a culture that values internal development and mobility, promoting from within becomes an uphill battle. You’re not working with your culture—you’re fighting against it. The alternative is worse: lose talented employees to organizations that actually prioritize internal growth.
Proactively identify opportunities for employee development
To promote from within successfully, you need a systematic approach to identifying talent and matching it with future opportunities.
- Conduct talent reviews. Ask business leaders to assess employees on both current performance and future potential. This creates visibility into internal candidates who could fill upcoming roles.
- Implement talent mapping. Work with HR to identify high-potential employees, ensure people are in roles that leverage their strengths, and create clear career paths that retain top talent.
- Hold personal development conversations. Give employees the opportunity to share their career aspirations. You may discover significant gaps between where someone is and where they want to be—insights that help you plan for internal moves before losing them to external opportunities.
- Use behavioral assessments. Leverage tools like the PI Behavioral Assessment to understand what drives each employee. Match people with roles that align with their natural working styles and behavioral strengths, increasing the likelihood of success in new positions.
By proactively identifying growth opportunities—whether lateral moves, promotions, or leadership development—you keep employees engaged while building a robust internal talent pipeline.
Leveraging The Predictive Index for Internal Promotions
Promoting from within delivers clear advantages, like reduced hiring costs, faster time-to-productivity, and stronger employee retention. But success depends on making the right match between person and role.
The Predictive Index provides the data you need to promote with confidence:
- Behavioral assessments reveal what drives each employee and how they prefer to work. Use these insights to match internal candidates with roles that align with their natural strengths and communication styles.
- Cognitive assessments measure learning agility and problem-solving ability. Identify which employees can quickly adapt to new responsibilities and handle increased complexity.
- Team dynamics analysis helps you understand how a promotion will affect existing team composition. Evaluate whether the newly promoted employee will complement or clash with their new colleagues, and make adjustments to optimize collaboration.
When you combine a culture of internal growth with behavioral data, you don’t just fill positions—you build careers, strengthen teams, and create an organization where talent wants to stay.
