Ready, Steady, Take Off: When to Promote and When to Hire?
Your business has reached a crossroads. To grow, you need an extra team member. Do you promote an existing colleague or do you recruit someone from outside your business?
Before assessing the cost and benefits of promoting versus hiring, it is advised to step back and look at the wider picture in terms of your short and long term business strategy.
Time to promote?
For an existing employee, would they relish a potential role change or the prospect of acquiring new skills? Cost out the investment needed for training a team member, and consider providing incentives for their loyalty. Loyalty is seen as a significant factor in favour of promoting someone your business has already invested in, and increases staff retention (it is estimated that replacing an employee can cost over £30K).
Also, hiring externally can be demoralising for existing employees who might feel overlooked, or under valued when someone is ’parachuted’ into the team from outside – an established employee might also start looking elsewhere for a job.
Time to hire?
For a new recruit, as part of your recruitment strategy is there a strong case for bringing in a new hire to give you an edge over your competitors? For example:
- Introducing particular skills or innovation.
- New knowledge or experience.
- Encouraging a shift in culture.
- Strategic change in direction.
- Bringing a fresh and objective perspective.
External recruitment can be costly in terms of time and money, and not everyone new settles in and adapts to a new culture or different systems. This can have a detrimental effect if you have paid recruitment costs and invested the time in welcoming the new colleague into the team. Estimates suggest that a new recruit can take up to two years to get to know a business and reach full productivity, and recruiting and training middle managers can cost between six and nine months of that candidate’s salary.
The flip side is that someone new can invigorate a business, particularly if the candidate has a broad experience of what other businesses have tried, what has worked and what has failed.
For long and short term success, it is crucial to maximise the time and money invested in attracting or keeping valuable employees who are the right fit for your business.
David, a Director at Polyroof says:
“We believe in promoting from within. Three members of our senior management team have been brought up through the ranks which must inspire other members of the team. We are fortunate that this is a fast growing Group incorporating three companies and that provides us with the opportunity to reward success and commitment.
“We have recently recruited externally to our senior management team, a rarity for us, ensuring Sam fitted in to the culture of the business was equal if not more important to us than his experience and skill set.”
If it is not feasible to train your existing workforce to facilitate growth, then hiring a temporary contractor is another option which can be managed alongside investing in training for current employees.
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