Economics – it’s more efficient to hire internally and if hiring a competent internal candidate, would be cheaper. Reducing the time to fill vacancy keeps the business moving forward. An internal candidate would also be able to get up to speed quicker and would need minimal transition time compared to an outsider.
Motivation – hiring internally signals to other talent internally that they are valued and can be recognized/rewarded for top positions within the company. If an organization is hiring outsiders it may signal to internal talent that they aren’t good enough.
Why do you think organizations struggle to develop employees for promotions?
Fernandez-Araoz talked about three things for why organizations fail to develop internal talent. 1 – Business leaders don’t know what to look for (e.g. competencies needed for success) 2 – Business leaders don’t know how to look for it (e.g. which models and assessments to use) 3 – Talent does not receive development opportunities (e.g. don’t get exposure to learn/develop new competencies/skills)
To add to this list, which Fernandez-Araoz alludes to later in the podcast, is a lot of managers don’t want their direct reports to surpass them. In my experience I’ve seen where managers like having talent that they are smarter/more proficient than. They prefer to ha ve talent that is good at taking orders versus talent that thinks strategically and “moves the needle” so-to-speak. This is turn limits the talent pool for potential top-level positions and cripples development.
