• Serving Sussex, Lannon and Lisbon in Waukesha County

Developing from Within vs. Hiring from the Outside

Written by: Megan Tzanoukakis Vice President of Supply Chain – Sussex IM

With the unemployment rate in Waukesha county at historic lows, it can be especially challenging to find and retain the best talent. Many seasoned employees are nearing retirement, and new positions are being created due to the migration to Industry 4.0 and change in the business environment. This leads many managers with staffing responsibilities to carefully consider the answer to the following question: Do we find someone internally to fill this position, or hire from the outside?

When considering an internal candidate, there are certainly many advantages. An internal candidate already knows the company culture and therefore, should be a good “fit”. They are also already familiar with the products and services offered by your company, which limits some training and onboarding. This is also a morale booster for the promoted individual & other members of the organization. It demonstrates that your company is willing to invest in its employees and reward them with new opportunities. From a monetary perspective, the company is also benefitting from not hiring an outside recruiting agency and paying fees to find a candidate for the position.

A significant and tangible drawback to promoting from within would be that you are essentially “robbing Peter to pay Paul.” In this tight labor market, you are not adding to headcount, but essentially stealing from another department that now needs to find a new employee. However, when thinking about the benefits of employee morale and the value that this person can add to the company in a new role, it’s a no brainer.

Hiring from the outside can also be advantageous for specific reasons. For example, if you are hiring for a position that requires a high level of technical expertise or a specific degree/certification, then your pool is likely much larger outside the company. New employees also offer a fresh and new perspectives to your business which can lead to new ideas and improvements that drive efficiencies. While there should be less technical training with a more experienced individual, there is always the risk that this person may not be the right “fit” with regard to the culture of your company. While effective screening & interviewing of a candidate should mitigate this risk, it is always a potential concern. There is also the risk of alienating members of your existing team because hiring from the outside might be perceived as management not having complete confidence in the existing workforce. This can be alleviated through effective internal communications about the specific attributes, experience, and education required for this new position.

The most important decision within this process, regardless of whether you develop from within or hire from the outside, is related to your company culture. The values of this individual must be in line with your company’s values to be successful in the long term. As evidenced by our Sussex Area Chamber of Commerce PEAK Speaker Series, a strong and relatable company culture is key to employee engagement and, consequently, long-term productive performance. With this alignment, the best is yet to come!