Employee promotions vs. hiring externally

As you write an employee promotion policy, establish the criteria for internal and external hiring. Before the HR team posts a job description, they should consider the benefits of each approach.

Benefits of hiring from within

Internal hiring can help cut costs by reducing recruiting and training requirements. Because employees already understand the company culture, organizational structure and job expectations, it’s often easier to acclimate to a new position. Their familiarity with your technology and vendors can also help them become productive in less time.

Hiring from within can potentially reduce turnover and improve morale. When employees know there’s a defined path to promotion, they may be more motivated to advance their careers with your company. Your company’s focus on career advancement can also help recruit new employees or encourage job satisfaction with existing ones.

Benefits of hiring externally

External hiring also benefits your business. Outside hires can bring new skills, ideas and perspectives that support innovation and creative problem-solving. New employees can also help prevent stagnation, making it easier to maintain a competitive advantage.

Employees hired from outside the company may offer valuable industry connections. Their professional networks can open new opportunities for collaboration, client contracts or vendor partnerships. Their unique expertise might also be valuable as you grow your business.

Implementing a formal promotion policy

A promotion policy standardizes the criteria for promotion and defines the steps employees must take to move up in the company. A fair, transparent process can help ensure all employees have equal opportunity for advancement, close the pay gap and create a fair compensation schedule that adjusts to market standards and workers’ skills and responsibilities.

Decide when to promote employees

Your promotion policy should help employees understand if and when they’re eligible for promotion. Consider establishing criteria that workers must meet before applying for a promotion. Requirements may vary by position, but a basic promotion criteria template might include:

• Tenure with the company

• Performance against relevant, objective key performance indicators (KPIs)

• Skills that align with the open position

• Required certifications or licenses

For promotions into positions requiring more experience, you might offer training opportunities and open a general application.

Standardize job details

Define the job responsibilities, titles and salary ranges for each position. Ensure that promotions involving additional duties are paired with an appropriate pay increase and title change. These details help employees determine whether the transition is right for them.

Convey your promotion policy to workers and management

Once you’ve decided on the details of your promotion policy, distribute it to employees. Include it in the employee handbook , on your company intranet and on internal job postings.

Determine when a promotion interview is necessary

You may conduct a promotion interview if the position is also open to external applicants or the job suits an existing employee .

For example, if a literary agent departs from their agency, the literary associate who has reported to them and assisted with previous projects may move into that position without a formal interview. The company would likely benefit from this transition, instead of hiring an applicant unfamiliar with the existing client list.

However, external applicants may be invited to apply if the agency needs to fill a foreign rights manager position. In this case, the company will likely conduct a promotion interview.

How to assess employee career growth

Manager participation is essential for building a culture of internal development and promotion. Your managers and supervisors must actively help team members gain new skills, guide career progress and encourage employee advancement.

Assess employee strengths

Regular assessments are an important part of the promotion process. These evaluations measure employees’ strengths and weaknesses, providing insight into whether they have the skills necessary to succeed in a new role. Transparency, consistency and objectivity are essential for a fair assessment process.

To measure progress, develop a set of clear metrics for each performance review. These can help managers assess employees’ strengths or soft skills compatible with a new role or opportunities for upskilling to prepare a worker for an eventual shift.

Discuss development opportunities

Encourage employee development by discussing upcoming skill development training and potential promotion opportunities at company and departmental meetings. You can also advertise workshops and job openings in internal newsletters, internal social media posts and break room flyers.

Share internal promotions with the team

Each time you promote an employee, consider announcing it to the team. This helps demonstrate your commitment to hiring from within. It can also boost the morale of employees working toward higher positions.

Commit to an internal hiring policy

If you’re serious about hiring from within, consider an internal-first process. Post positions internally, and consider external candidates if you can’t fill the job with an existing employee.

Developing career plans to support the promotion process

Employees can prepare for future promotions by developing individual career plans. Managers can act as mentors, working with each employee to determine professional goals and an advancement path within the company.

You might support career growth by providing:

• Job shadowing: Workers follow a higher-level employee to learn about their responsibilities and duties. Shadowing may provide insight into time management, task delegation, required skills and prioritization.

• Rotations: Employees may move between departments to learn about various company roles. A formal rotation schedule can create a workforce with diverse perspectives and skill sets.

• Regular evaluations: Ask managers to implement a regular evaluation schedule. Quarterly or monthly reviews help monitor skill development so employees can progress toward specific roles.

• On-the-job training: Break larger projects into smaller tasks, and assign ownership to different employees to develop leadership and project management skills.

Avoiding potential challenges when promoting from within

As you build a promotion policy, consider the following concerns to support a positive experience:

• Inflexibility: A customer service employee might want to move into a research and development role or a product promotion job. To support non-traditional career paths, ensure your promotion policy allows interdepartmental moves.

• Inconsistent recordkeeping: Managers must keep consistent and reliable records to support fair promotions assessments and track applications.

• Lack of clarity: Consistency and transparency about your promotion policy may help build trust in the promotion process and encourage employees to apply for internal jobs.

Frequently asked questions about developing a promotion policy

Can you promote employees based on length of employment?

If your company uses a time-based promotion system, employees may be promoted automatically after a specific time. This strategy can reward loyalty but doesn’t always incentivize high performance.

Do promotions always come with a raise?

Promotions typically come with a pay increase. Raising salaries can be an effective way to retain workers and encourage internal advancement. It also helps avoid challenges that come with lateral career moves, where an employee accepts a different role and responsibilities without a change in pay.