Hiring an external or internal employee is often related to the stage of development that the company is currently experiencing. However, sometimes the choice is not obvious. I’ll tell you from personal examples what indicators should be used when selecting an employee for a leadership position.
Large corporations. Internal hiring
Companies that only welcome growth in their employees tend to be large corporations with a large number of employees. These could be clothing stores, retailers, banks. Thanks to an extensive pipeline, they have the opportunity to screen the required number of internal candidates and identify leaders.
For example, a company has 1000 employees as sales managers. The average staff turnover in Russia per year is approximately 20%. That is, 200 people who quit, go on maternity leave, are replaced by new employees. Taking into account employee turnover a company of 1,200 people can select managers based on competencies suitable for promotion.
There are several advantages of such a system. Candidates eagerly go to large corporations for rapid career growth. Growth in position and income is expected even with little or no experience, depending on the person’s learning ability and personal qualities. Due to the fact that an employee who is familiar with the “inner workings” of the company is appointed to a leadership position, he can quickly pick up the work process, knows the peculiarities of communication in a particular team and can level out potential conflicts. Another undoubted advantage is the interchangeability of specialists. If the HR manager of a company is tasked with hiring ordinary employees with an eye to their growth, regular training and knowledge sharing takes place. This insures the company against stopping processes in the event of a sudden dismissal of a top specialist.
The disadvantage of internal hiring often lies in the interpersonal relationships formed within the staff. If there is strong rivalry in the team, the promotion of one line employee can provoke a conflict. At best, conflict will reduce employee performance. At worst, it will lead to the dismissal of not only individual specialists, but also the entire department. Also, large companies often unjustifiably ignore professionals from the open market in favor of their subordinates. Long-standing acquaintance and high loyalty to the personnel under subordination may not have the best effect on the development of the department. An internal specialist may not have enough experience in business processes or building competent communication with subordinates.
Small business. External hiring
For example, for individual entrepreneurs with a staff of 10 employees, the turnover rate, according to statistics, as in a large company, is 20%. That is, out of ten people, two or three change or go on maternity leave per year. Candidates in small companies are usually interviewed by the manager himself or HR selects them based on the owner’s criteria. Thus, employees may be similar to each other in personal qualities, and there is little chance of finding a person with management skills on staff.
Now the system in the agency is established. Before hiring a manager from the open market, an HR assistant reviews application forms. She sends a video to candidates who meet the agency’s criteria. In the video, the director talks about the agency’s mission and staff motivation. Of the 100 candidates who received an invitation to watch the video, approximately 50 watch the video, 20 respond and fill out the form. In this way, we deliberately screen out candidates who are not suitable for the proposed position.
The internal questionnaire contains questions that, already at the funnel stage, allow us to look at the manager’s experience and competencies. From 20 applications, the assistant invites 10 most suitable candidates for an interview. Out of 10 invitees, 7 people come for an interview, and only one passes. Thus, we eliminate 99 people.
Part of the agency’s internal questionnaire
The “pro” of hiring a third-party specialist is the fact that in small companies it is irrational to spend several months or years training an employee who may leave for another company. Businesses need to grow and scale. To do this, we need people who can take on regular tasks and relieve the owner of the workload. In this situation, it is right to hire an experienced specialist for a leadership position.
Arguments against”. Hiring from outside means additional costs for the company, time spent immersing a specialist in current processes, and the lack of replaceability of top personnel. Sometimes a company has to change managers several times due to the fact that they do not fit into the team. The lack of experience in successful communication with specific subordinates in the process of work leads to the fact that the team is not satisfied with an overly innovative or, conversely, conservative style. This may be due to authoritarianism, hasty dismissals of subordinates, or low empathy from the manager. In this case, the company has to use an additional budget to recruit a new official.
Medium business. Combined hiring
For medium-sized companies, the combination method is typical. As a rule, for every 10 employees you need a manager. If from a team of 100 people there is someone suitable for a management position, he is appointed head of the department. In this case, it is easier for the team to adapt. If there is no such person, then a specialist is brought in from outside.
As a medium-sized enterprise scales, the pipeline of employees becomes larger, and internal employees can be promoted. Top HR, as in large corporations, can select personnel by hiring managers with the makings of a leader in advance. This allows the owner to evaluate how they will perform in a managerial position and prepare them for higher positions. In such a selection, you should rely on the candidate’s resume: if a person under 30 has changed several jobs, but was not promoted at any of them, then it is likely that he will also remain in his original position in the new company. Reluctance to get promoted is due to various reasons. This may be a fear of taking financial and collective responsibility, internal blocks or other reasons.
The agency is currently in the process of expansion. We want to scale the existing department for working with bloggers. An outdoor advertising department (advertising on banners at concert and sports venues) and a media relations department are now being formed. Initially, we will hire line managers, then we will appoint or attract senior managers, then we will select a manager. Our plans are to promote the current head of the department for working with bloggers in all three areas, and to hire specialists from the open market for her position and for the positions of heads of two new departments.
The positive side of the combined method is interchangeable employees. In this case, the entrepreneur will not be faced with a situation where a top manager gets sick and work processes come to a standstill. The opportunity for vertical growth will be a motivating factor for candidates and employees.
Cons: rivalry among potential managers and the resulting conflict situations, which reduce work efficiency. Dissatisfaction in the team with the hired specialist can also result in a serious conflict and lead to the dismissal of the department.
