When you’re looking to hire new workers, is it better to hire from the outside or from the inside? This is not a new question, and it does not have an easy answer. In our experience of attracting, developing, engaging and retaining top talent, the best answer is that “it depends.”
Here are some of the factors to consider when you are looking for top talent to build your organization’s current and future capabilities:
1. Length of time to hire
Look internally first if you need to fill a position quickly. It takes far less time to hire from within because your talent pool is on site, easily accessible, and known.
2. Speed to productivity
Workers promoted internally typically get up to speed faster than new external hires. It is generally acknowledged that external hires take up to about two years to be fully productive in their new jobs. Everything is new…they have to build relationships and figure out where to go for support and resources.
3. Institutional knowledge
Hiring internally allows you to build on the employee’s knowledge of how the company works. They have developed the firm- or industry-specific skills needed to succeed.
4. Cultural fit
There is no doubt that an employee who does not fit the organizational culture will not be as effective as an employee who understands and adheres to the values and behaviors that the company espouses. Presumably, if you hire from within, you can be pretty certain that the employee knows and supports the organization’s culture.
5. Morale and company loyalty
If you hire from the outside as a matter of course, you risk undermining employee morale and their loyalty to the company. Employee engagement experts will tell you how important the idea of career development can be to your work force. If employees do not see a path toward advancement and growth, they will be discouraged and disengage or leave.
Almost always, it is more expensive to hire externally. Hiring managers have come to expect to pay 10 to 20% more for outside hires. This can be because of external hires’ more impressive resumes or because it costs more to lure them away from their current position into one that is somewhat uncertain.
7. New skills and approaches
The one clear and persuasive advantage to hiring from the outside is that you bring new skills and approaches aboard. Companies benefit from multiple perspectives and diversity. The mix of ideas in an open environment fosters innovation and constant improvement.
8. Onboarding process or system
If you hire externally, you should be confident that your onboarding process is a sound one. The faster you can incorporate new hires into the fabric of your organization, the faster they will contribute to the company’s overall business success.
9. Performance on-the-job
Despite getting higher pay, Pennsylvania Wharton School professor Matthew Bidwell’s research on hiring decisions in the investment banking industry shows that external hires receive lower performance scores during their first two years at a new organization as compared with internal hires in similar positions.
So it’s a mixed bag. Consider your unique situation carefully before hiring and prioritize the factors that are most critical to your organization’s success.
We partnered with LSA Global to help us invest in our people in the areas of performance coaching, diversity, and inclusion. They focused on helping us succeed and were very flexible in meeting our specific needs. LSA Global exceeded my expectations from a speed, quality, and value standpoint. I would recommend LSA Global to anyone looking for a true business partner.
Director, Human Resources
We value our relationship with LSA Global. We came to LSA because we wanted to improve overall behavioral based interviewing capabilities of our managers to increase the probability of both hiring top talent and future leaders. LSA designed a highly customized solution for our business and culture. We are currently rolling out this solution to our leaders. I would highly recommend LSA Global as a top quality resource.
HR Project Manager - Training & Development, PHR
LSA custom designed a Management Development program that is absolutely “on target” for our technical managers. Their facilitator has done a superb job delivering the material in a way that is fast paced, highly interactive, and fun. She presents practical solutions to the people situations that our managers face every day. I regard LSA as an excellent partner that understands our business needs and a virtual member of our HR department.
Vice President Human Resources
LSA has added tremendous value and intellectual rigor to help take us to the next level. They have been a training outsourcing goldmine for us. Their flexibility, expertise, and speed has been extraordinary. I am a big fan and recommend them to anyone looking to drive true business value.
Global Financial Services Company
Director, Organizational Effectiveness
LSA’s approach and ability to bring the best resources to eBay has been a great asset. They really focus on helping us succeed in any way they can and are very flexible in meeting our management and talent needs.
Learning & Development
SeaTel has found our partnership with LSA Global to be very valuable and beneficial. We turned to LSA to customize a supervisory/leadership solution to meet our needs. LSA delivered a customized top quality solution. I’d recommend LSA Global to any company looking for a best-in-class training and consulting partner.
The refreshing thing about LSA is that they focus on understanding our business situation and helping me succeed instead of selling a product. With over 150 experts, they are an invaluable resource that helps me deliver higher quality results faster. I recommend them to anyone looking to improve the performance of their workforce.
VP of Human Resources
We signed up with LSA early on–as their 22nd Member! Since then, our organization’s learning needs have increased and decreased and increased again with the changing times. The beauty of the LSA business model is its flexibility…when we needed to supplement our own internal resources, we used LSA services knowing that we could depend on the outstanding quality of the leadership development and management training programs they provide.
I continue to be impressed by the level of leadership development and management expertise and quality of advice and facilitation that LSA has to offer. What a smart and client-centric group of great people who really know how to help leaders attract, engage, develop and retain top talent.
Director, HR Business Partner
We engaged LSA to design and deliver a 6-month custom executive coaching program for a group of our key leaders. The focus of the program was to help a core group of senior leaders to leverage previous investments in management training, to ensure the engagement and retention of key employees, and to push critical strategic initiatives forward. Even with the high expectations of our senior people, LSA has completely exceeded our expectations. I would recommend them to anyone looking to create and implement a custom coaching methodology using proven tools to drive true change.
Senior HR Manager - Staffing, Training, & Development
Our relationship with LSA has been fantastic. We actually brag about their business value all the time. Their flexibility, focus, and ability to continuously deliver true results has been extremely refreshing and different than any other training outsourcing firm we have engaged.
Fortune 500 Financial Services Company
Senior Vice President Learning & Development
Hyperion has a commitment to lifelong learning. LSA helps us provide the right business sales training, management training programs, and leadership development programs at the right time to meet the needs of both individuals and departments. I especially appreciate their ability to listen to my needs and recommend the appropriate facilitators, solutions and content.
Senior Project Manager
For our go to training outsourcing partner, LSA provides exactly what we want. As always, they deliver outstanding work!
Director, Organizational Excellence & Development
In my years working with LSA, it seems like I’ve had a personal consultant at my fingertips to help me identify just the right solution to satisfy our needs. The entire LSA team has become a trusted friend of Actel — assuring we provide state-of-the-art learning to meet our complex, high-tech business and people needs.
LSA’s customized Effective Presentation Skills program has helped me elevate my presentation skills to the next level. I now have a much greater self-awareness of my presentation skills and can leverage off of my strengths while working to improve upon other areas. I would definitely recommend this solution to anyone for whom business presentations are an integral part of their job.
Senior Marketing Manager
Download key published insights and tools from industry experts highlighting best practices in the areas of talent, strategy and culture.
Want to know how you stack up against leading organizations? Receive a complimentary benchmarking analysis courtesy of an LSA Expert.
Get up to speed on timely solutions critical to your business. Published by LSA Experts based upon client feedback and key industry trends.
First we identify the key metrics you want to improve. Then we assemble a dedicated team of elite experts who have successfully solved similar problems with similar clients.
Stay up to do date with the latest information on how we help high growth companies align their culture and talent with strategy.
Real world consulting and training approaches from LSA projects, providing insights on how your company can outperform the competition.