Special offer 

Jumpstart your hiring with a $75 credit to sponsor your first job.*

Sponsored Jobs are 2.6x times faster to first hire than non-sponsored jobs.**
  • Attract the talent you’re looking for
  • Get more visibility in search results
  • Appear to more candidates longer

Promotion Policy Best Practices

When it comes to staffing your business, finding the right employee for each position helps ensure your long-term success. Knowing when to hire from within and when to look for outside candidates is essential, and setting out a formal process for promotions and hiring keeps everyone from managers to new employees on the same page. A good promotion policy spells out how employees can build a career within your organization and how management can help each individual in your organization meet their career goals.

Post a Job
Create a Culture of Innovation
Download our free step-by-step guide for encouraging healthy risk-taking
Get the Guide

Hiring from within vs. looking for external candidates

There are distinct benefits to hiring from within your own company, but there are also good reasons to hire outside candidates. Sometimes the decision of whether to look internally or externally for new employees can get complicated, so it’s a good idea to consider the benefits of each option before producing a job ad and advertising for new hires.

The benefits of hiring from within

Internal hiring helps reduce overall costs for your business because you spend less time recruiting and training new employees. When workers move from one position to another within the same company, they already know the business culture, organizational structure and job expectations, making it easier for them to quickly get acclimated to their new duties. There’s less down time for an internally promoted employee because they’re already familiar with the technology and vendors you use.

Hiring from within can also help reduce turnover and improve morale in your workplace. If employees know there is a well-defined path to promotion, they feel more comfortable about sticking with their current jobs instead of seeking other employment. If you notice high turnover in a particular department, implementing a clear internal promotion policy can help boost retainment.

This is especially important when it comes to your best employees, since they are the ones with plenty of alternatives if they choose to leave. Retaining a stellar sales associate or accounting pro by promoting them to a higher position is better than letting them leave for your competitor who offers them more opportunities for career growth. You can also use internal hiring as a recruitment tool for new employees, since anyone you do hire from outside can expect a clear path of promotion in the future. If your company rewards hard work and loyalty, that makes it highly desirable to dedicated employees looking for a long-term career.

The benefits of looking outside the company for new employees

Sometimes a new position opens up at your company and there isn’t anyone in your current workforce who fits the qualifications. New talent can sometimes bring in skills that aren’t already present in your existing workforce, and the new hire may be able to teach your current workers new ways of doing things.

In some cases, employees hired from outside the company bring connections that no one else in your company can match. An employee moving to your company from a big firm that you want to collaborate with may have an inside track with management there that you can leverage. An external candidate might also have an extensive client base or industry network that could benefit your company. If you need an individual with specific knowledge about your industry that internal candidates can’t provide, hiring externally could be the only option for growing your business.

Implementing a formal promotion policy

If you’re going to promote employees from within your company, you need a formal policy that sets out the criteria for promotion and any steps employees should take to make themselves a candidate for promotion. Fairness is an important consideration when you’re developing a promotion policy. If employees feel as though promotions are based on managers playing favorites instead of on qualifications and seniority, they may become frustrated and start looking for other jobs.

Formal promotion policies don’t have to be completely inflexible, though. You can take an individualized approach to candidate selection as long as you make opportunities equally available to everyone who meets the qualifications.

Choosing when to promote employees

Some companies opt for a time-based promotion system. In this type of system, employees who have been in a specific job for a specific number of months or years automatically get promoted to the next level at a certain point. For lateral moves between departments or moves into positions requiring significantly more experience, you might need to open up a general application to anyone in your company who wants to apply.

A well-defined promotion policy that includes training opportunities for higher level positions can help you manage employee expectations about how to move up within your company. Offering training courses for all employees can be a way to get your workers ready for more responsibility.

Conveying your promotion policy to workers and management

Once you’ve decided on the details of your promotion policy, codify it into a formal written document. You can include this information in your employee handbook and also post it along with notices about job openings within the company. Specific positions, job responsibilities, titles and salary ranges should also be spelled out in your formal promotion policy. An increase in responsibilities should be paired to an increase in pay and a distinct change in title so employees have a clear understanding of internal job promotions that can impact their careers.

Managing employee career growth

Management can take an active role in developing your promotion policy and managing employee advancement. Building a company known for promoting from within starts with fostering a culture of development within your organization. Get management on board with the idea of helping employees gain new skills over time, and let employees know that your company is committed to internal promotion.

Assessing employee strengths

Regular assessment of individual employee strengths and weaknesses give you insight into who might be ready for more responsibility and who may need extra training before promotion. Develop clear metrics for performance and discuss these metrics during each performance review. Managers can also actively seek out employees who are going above and beyond their normal duties or who have good leadership skills and fast track these individuals into better positions.

Showcasing promotion and development opportunities

Make it a habit to mention upcoming skill development training and potential promotion opportunities at company and departmental meetings. Internal newsletters are another way to spread the word about future job openings and skill-boosting workshops. Making sure everyone at the company knows about internal job postings ensures that no one inadvertently misses out on the opportunity.

Spreading the word after internal promotions

In addition to letting employees know about upcoming opportunities, you should also spread the word whenever you promote someone internally. Showcasing internal promotions provides a morale boost to other employees who might not be ready for promotion but appreciate seeing their colleagues getting promoted from within.

You can also use the internal announcement of a promotion to help reduce disappointment in those who applied but didn’t get the job. Do this by sharing specific examples of how the successful applicant showed leadership in a previous job role and by emphasizing how that individual’s promotion can help the entire team succeed. Detailed examples help your other employees understand what they need to do to earn that promotion the next time an opening becomes available.

Committing to an internal hiring policy

Some companies opt to commit to offering job opportunities internally before opening up job postings to the general public. This typically involves posting on an internal job board for a few days or weeks before looking for external candidates. Internal employees who want to apply go through the entire interview process and external hiring is only considered if no internal employees meet the required qualifications for the job.

Developing individual career plans for your employees

Management can work individually with specific employees to help them prepare for future roles within the company. In a company with a strong policy of internal promotion, managers can serve as mentors for employees who want to eventually move into other positions. Some specific opportunities you might provide to employees include:

Job shadowing

Job shadowing involves letting employees follow someone in a higher level position for a few days to get an idea of the responsibilities and duties of that position. Shadowing gives first-hand insight into how people in that position manage their time, delegate tasks and set priorities. The upper-level employee might also offer tips and advice of how to gain the skills required for that position.


Rotations involve shifting employees between departments to let them learn about various roles within the company but outside of their current jobs. A formal rotation schedule not only helps expose employees to what everyone else in the company is doing, it also creates a workforce with lots of different skill sets so everyone in the company can take on additional duties or shift roles as your overall business needs change.

Regular evaluations

Management should implement a schedule of regular evaluations for each employee. While many companies stick to a once-yearly performance review, a company with a dedicated culture of internal advancement may want to have more frequent evaluations. Quarterly or monthly reviews can help managers work with each employee to develop an individualized plan for skills improvement and a detailed timeline for progression to a new role in the department or company.

Short-term responsibilities

Whenever you have a large project to complete in your department, consider breaking it up into smaller tasks that you can assign to different employees to help them develop leadership and project management skills. Putting an employee in charge of a smaller project provides experience for future management roles.

Avoiding potential pitfalls when promoting from within

One potential pitfall you might encounter with a strict promotion policy is that employees may feel trapped within a traditional job hierarchy. If the only path for promotion is within a single department or job path, employees with varied skills may think they need to move to another company to get the job they really want.

For example, someone working in a low-level support job may not be interested in eventually moving into workforce management but would prefer to move into a research and development role or a job doing product promotion in the sales department. Encourage managers throughout your organization to communicate with each other about people in their departments who might want to shadow someone in another department or who are taking courses related to another department.

Another pitfall for companies who want to increase their internal hiring is poor record keeping. Consistent, reliable records help you easily assess which employees meet the criteria for promotion and let you track who has applied for internal job openings in the past. Once you’ve promoted an employee, records of the application process help you identify candidates for future opportunities and give you clear documentation that details why each applicant was hired or rejected.

Making promotion requirements clear and concise helps you avoid another potential pitfall of internal hiring. If the path to advancement isn’t clear, employees can become disheartened or resentful when they are passed over for promotions. Specific promotion pathways let employees know when to expect a promotion and what they need to individually do to move up in the company. Building trust in the promotion process encourages employees to apply internally whenever appropriate job openings become available.

Post a Job
Create a Culture of Innovation
Download our free step-by-step guide for encouraging healthy risk-taking
Get the Guide

Ready to get started?

Post a Job

*Indeed provides this information as a courtesy to users of this site. Please note that we are not your recruiting or legal advisor, we are not responsible for the content of your job descriptions, and none of the information provided herein guarantees performance.

Editorial Guidelines