There are many employers today that think it’s easier to hire new people than it is to promote and train employees from within. It is much more common for employers to hire from outside the company when they have vacancies.
"In the era of lifetime employment, from the end of World War II through the 1970s, corporations filled roughly 90% of their vacancies through promotions and lateral assignments. Today the figure is a third or less."
HARVARD BUSINESS REVIEW
When it comes to front-line leaders, it’s easy to understand why employers might want to hire outside of the organization. New people may have leadership skills that current employees don’t have. The best internal candidates may not be ready for the front-line leader position in question. However, promoting and training your front-line leaders from within is better for your bottom line.
The Case for Hiring Internal Front-line Leaders
The labor market in the U.S. is extremely tight right now. According to the U.S. Department of Labor, unemployment is the lowest it has been in 50 years at 3.7 percent. Ripplematch.com recently reported on companies that were hiring candidates without college degrees to increase the number of applicants.
In such a tight labor market, finding people to fill key roles can be costly and time-consuming. There are advertising fees from recruiting agencies, recruiting sites, magazines, social media sites, and newspapers. It is also a much longer process. You have to comb through resumes and screen and interview candidates. According to Workable, the average job in the U.S. can take up to a month to fill.
Additionally, it’s less expensive to promote and train your employees than it is to hire an outside employee. According to The Institute for Research on Labor and Employment at the University of California, Berkeley, the average cost to replace an employee–no matter the category of worker–is around $4,000.
A study in The Wall Street Journal by Matthew Bidwell also found that external hires typically made 18% more than internal hires in the same jobs. Bidwell also discovered that when the team had to bring a new hire up to speed, the overall performance of the whole unit declined.
Integrating new people into your processes can also decrease productivity and reduce capacity. There is a time period where the new hire is still learning their role, and they don’t get as much done. They are still figuring out their responsibilities, establishing relationships, and navigating new workflows. It can take up to eight months for a new employee to get up to speed and be productive.
There is also a higher risk of early turnover with new hires. If weeks of time are invested into the onboarding of the new employee only to have them quit three or even six months later, all of those resources have essentially been wasted. It’s easy to see how this can be financially devastating if this happens multiple times a year.
Other advantages of hiring internal candidates include:
Knowing the person is a good fit with your company and your company’s culture.
Hiring an outsider comes with a certain amount of risk that you won’t have to deal with if someone you already know is transferred or promoted. With external hires, there is always a chance that they won’t stick around, fit the culture, or measure up.
Internal candidates are much easier to find
In today’s extremely tight labor market, this is especially beneficial. When you hire an outsider, you will have to do a great deal of searching. There may be dozens or even hundreds of applications you’ll have to go through. When you hire internally, it’s much easier to get the word out about the position, and interested candidates can easily turn in their resumes. You may still have to make some decisions and go through a number of applications, but it will not be as time-consuming.
Internal hires boosts morale and company loyalty.
While hiring externally can make current employees feel ignored and unappreciated, promoting employees into other positions can bring a sense of optimism to everyone else on the staff. If they know that it’s likely they may be promoted someday, they are likely to work harder. Hiring internally is a great way to provide exciting opportunities to your staff, who you should be rewarding for their hard work, loyalty, and dedication.
Preparing Front-line Leaders
Front-line leaders face a lot of challenges, and they must have qualities that will allow them to lead their team to success. According to Development Dimensions International:
Front-line leaders are around
50 to 60 percent of the leader population.
Front-line leaders directly manage about
80 percent of the workforce.
2/3 of all front-line leaders
felt that they were unprepared for the role.
And in the case of first-time leaders,
87 percent felt anxious, uncertain, or frustrated about their role.
DDI’s 2018 Global Leadership Forecast found that
only 33 percent of leaders would describe the quality
of the front-line leaders as high.
Front-line leader positions are typically first-level manager jobs, making them ideal promotions for current employees that haven’t been in leadership roles before. There are many advantages to hiring internal front-line leaders, but one of the best reasons is how rewarding it can be for the staff.
Regardless of whether they are internal or external hires, though, more needs to be done to prepare front-line leaders for their roles once they are in them. Front-line leaders should be provided with learning experiences that are relevant. These can be real or simulated experiences. Diagnostics and insight should be used to personalize training. It is also helpful to focus on multiplier skills. DDI defines multiplier skills as “the skills that have the power to increase impact across multiple front-line leader situations and challenges.”
When preparing internal hires for promotion to a front-line leadership role, current leaders may want to try the following approaches:
When it comes to improving the processes of your front-line leaders, you may need an objective force to come in and observe. Powers can make your processes more efficient and help front-line leaders to develop or strengthen their leadership skills. This way–whether they are internal or external hires–your front-line leaders will be more successful, making your company more profitable. To learn more about our approach, have a look at our front-line leadership page.