While promoting your hard-working employees may seem like the obvious route to take, there are a lot of hidden drawbacks to this.
From an employee perspective, the ability to climb a company’s corporate ladder can only be viewed positively. There’s no downside to getting the chance to potentially earn more money and advance in your career. It’s truly what makes the American dream possible, and perhaps it’s why promoting from within has always received such good rep as a smart go-to business strategy.
After all, the strategy helps motivate your employees and allows you to promote someone who already knows how the business operates. Not to mention you don’t have to risk hiring someone who might completely botch the job.
However, despite all the benefits that come with promoting from within, don’t be fooled into thinking this is a completely foolproof strategy. Like anything else in business, there are always downsides that must be considered. With this in mind, here are all the disadvantages of promoting from within.
Your options are limited
I get that your employees are great and all, but do you really think there’s someone on your payroll who is going to be able to do the job better than literally everyone else in the job market you can potentially hire? Imagine you’re a small or mid-sized company with 20 employees. A manager leaves and you’re forced to fill the role.
Assuming there’s around 10 or so other employees who can realistically fill the spot, you’re still ultimately tied down to 10 choices. Now if you were to place job ads on sites like Indeed or ZipRecruiter, you’re likely to get a couple hundred applications. Obviously this route opens yourself up to a far larger talent pool than if you were to promote from within.
The bottom line is, promoting from within is often done out of convenience in order to save time and avoid having to bring in someone new. However, this method limits your options, and can lead to a suboptimal hiring decision.
Your organisation gains nothing new
Think about it. When you promote an employee, it’s not like the employee magically gains new superpowers that can help elevate your company to the next level. You’re simply reassigning responsibility.
On the other hand, hiring someone new allows your company to expand its horizons, whether it’s by bringing in new ideas, different management styles, or even insider knowledge. After all, it’s not uncommon for companies to hire someone previously employed by a competitor in order to learn their trade secrets.
It creates winners and losers
Imagine this scenario: five employees and one promotion. One employee is going to be super happy you chose him or her, but where does that leave the other four employees? Most likely disheartened and potentially even jealous.
Promoting from within leads to competition among your employees when they should really be working together to help grow your business. As with any competition, there are always winners and losers, and in this case – more losers than winners.
You run into the Peter Principle
If you didn’t already know, the Peter principle is the idea that employees will ultimately rise to the level of their incompetence.
If everyone gets a promotion for being competent at their jobs, they will eventually reach a point at which they are incompetent at their current position, because each new job will require a different set of skills and oftentimes will involve more responsibilities than before.
By being trigger-happy when it comes to promotions, you risk running into the Peter Principle where your employees ultimately end up with a job they can’t handle.
No way it’s a game changer
Let’s talk sports for a second. When has a professional sports team ever gotten substantially better by promoting one of their backup players to a starting position? Not very often I would say – and that’s exactly what you’re doing when you promote from within. It’s not realistic to think that one of your current employees will be able to suddenly excel in a more demanding role.
So how do teams go from being in the middle of the pack to title contenders? Usually it involves either drafting generational talent or making strong strategic player trades, which in the business world would be the equivalent of hiring someone from the outside.
You create employee entitlement
If your company is routinely promoting from within, this can lead to employee entitlement. This entitlement can disincentivise employees from putting forth maximum effort to really earn their promotions. Instead, they may think they deserve a promotion by simply showing up to work and doing their jobs.
Imagine if for my resume company, ResumeGo, I occasionally promote my resume writers up to higher positions. While sure, this might encourage some writers to work harder to try and earn that promotion. But on the other hand, it’s also causing jealousy among the writers who believe they deserve to be moved up too but aren’t.
It’s same old same old
No new employee means no new ideas and no new innovations. Assuming your employees have already shared all their business thoughts and suggestions to you, promoting them to a higher position doesn’t lead to anything new. This is regarded as a huge flaw in the internal promotion system.
By hiring people from the outside, you bring in a new perspective and a fresh take on how to handle the business challenges your company faces today. Promote an old employee, and none of this takes place. Bring in someone new though, and it gives your company the chance to evolve into something greater than it is already.
Now there are two positions to fill
Good, you’ve found an employee who can fill your management position, but who’s going to handle the responsibilities the employee had before he or she was promoted? Promotions from within can often lead to more work than you’d expect.
Instead of simply finding someone suitable for a single job position, hiring from within can often mean filling two job positions – the managerial role and the original role of the employee you ended up. `
So what’s really happening here? While you might be promoting from within, you are still forced to ultimately hire someone new. After all, if your company consists of ten employees, and one of your managers leaves, no matter how you allocate job responsibilities, you’ll still ultimately be short one person.
While promoting from within does have a lot of disadvantages, let’s not go ahead and pretend like there’s no upside to it. After all, if it really such an unarguably terrible strategy, no company would use it – and obviously many do. So what are some benefits?
Well, while I mentioned earlier how it can create employee entitlement, it can also give employees a reason to work harder than they otherwise would. If there’s zero chance of promotion at all, why bother putting in maximum effort? With that in mind, it’s important to still give employees salary raises and perks for good performance.
Another obvious benefit is that employees undoubtedly have a shorter learning curve when they’ve had years of experience working at the company and learning all the little ins and outs of it.
There are also specific circumstances where a company may find itself with too many of a certain type of employee while also simultaneously needing a position filled elsewhere. In such a case, it may be the perfect opportunity to move an employee over to fill that necessary position.
For example, you may have too many entry-level marketers on your team but not enough mid-level marketers…in that case well then it would be ideal to promote from within. The decision to promote from within or bring in someone new is a nuanced one, and it’s going to depend on the exact scenario that your company is in.
While it’s tempting at times to just take the shortcut and hand over the keys to someone else in your company, it’s not necessarily the most optimal decision to make. Remember that your company’s success is ultimately determined by the employees working at your company, and make your hiring decisions wisely.
About the Author
Peter Yang is the CEO of ResumeGo, a business of professional resume writers aimed at furthering the careers of job seekers across the nation. He’s also a regular contributor on CNBC, Inc.com, and Glassdoor, where he shares career and business-related advice to readers.