One great way for growing small businesses to find effective managers is to promote from within.
Companies often develop a forceful hiring plan during periods of significant growth. However, this employment spree can strain resources during an already demanding period due to the need for training and acclimation that comes with hiring someone new, Entrepreneur explained. This is an obstacle that many small businesses face during stretches of expansion.
It is vital to maintain organizational culture as growth occurs, the publication explained. This is the connection your small business will hold with its roots as it expands far beyond humble beginnings. It is the atmosphere you promote within your office that will attract people to the company as it grows. While at times it may be essential to hire an outside candidate for leadership positions, try to stick with promoting from within in order to maintain organizational culture.
Many people fear being stuck in the same position for too long, and this can work against small business owners, according to Inc. The feeling that a promotion will never come is enough to make someone unhappy with his or her job. This can lead to employees seeking out better positions with other companies – leading your small business to lose out on top talent.
"It's important for companies to promote from within. Otherwise, there's no career path for the people there and it forces [employees] to constantly be job hunting because they know they're not going anywhere in that company," Penelope Trunk, founder of Brazen Careerist, told the publication.
There are a number of benefits that come with promoting from within, according to Careerbuilder. Some of the benefits of hiring from within are:
1. Cost-effective hiring
When you promote from within, it is beneficial to your overall financial plan. You won't have to invest resources in advertising for the job, because everyone already knows the position is available, the employment website explained. This will allow you to hire from a smaller talent pool that you know very well. This also allows your small business to reduce labor lost due to a position being open for an extended period of time. In addition, chances are the employee won't turn down the position, as opposed to an outside candidate who may be juggling several offers.
2. A less costly compensation package
Hiring from outside, especially for tough-to-fill positions, will require a competitive compensation package, which can be costly. If you can't offer a competitive rate to outside talent, simply hire from within. You will maintain your organizational culture while avoiding having to tailor a demanding compensation package to lure a job candidate.
3. Watch your small business's productivity rise
Promoting from within means you're guaranteed to know what to expect from your newest manager. In addition, there's no need to waste resources on an onboarding training for a new employee, since finding a candidate for leadership positions within your company allows for a continuation of organizational culture.
Research has actually shown that hiring from within is better for productivity, The Wall Street Journal explained. Usually external hires get paid between 18 percent and 20 percent more, yet their performance is often worse than that of internally promoted employees. Also, external hires are 61 percent more likely be fired and 21 percent more apt to leave for another company.
Small business owners who are experiencing rapid growth should remember that hiring from within for managerial positions will more often than not work out better for productivity, with the added benefit of saving some money.