Sometimes our travels take us to companies where all the managers and employees have been there forever.  CEO’s suggest that low turnover is a badge of honor. Yet I often find these to be the same companies that are slow to change and unlikely to disrupt.

Of course, the need to bring in external candidates speaks to the ability of a company to develop great people and establish a meaningful succession plan. Companies today are struggling to build bench strength and management depth. Often, highly qualified successors cannot be found from the inner ranks.

As Harvard Business School Professor Boris Groysberg put it, “It’s not whether you build or buy, it’s figuring out under what conditions you build or buy[i].  There is clearly a tradeoff between the speed and seamlessness of hiring within, and the need to stretch your team by bringing in new ideas.

A recent survey of mid-marketing companies by the Society of Human Resources showed that three-quarters of management positions were being filled by external candidates. The study also showed that a majority of such hires took 6 months or more to make an impact in their role.  HR professionals point to higher recruiting costs when utilizing recruiters and outside resources.

Conversely, hiring within also takes a toll. Promoting an internal candidate requires that you have an able replacement.  Tribal knowledge is valuable, but it can also be a curse. It is easy for complacency to set in. Bringing in external candidates tends to shake up the existing team and send a message that new ideas are welcomed and expected. Additionally, companies often recruit talent when entering a new market, or building a competency that they do not already have.

Diversity in hiring and in thought are keys to getting a well-rounded set of opinions. And it is the diversity of thought that drives innovation. Bringing people in from the outside brings a special energy and new skills. But perhaps even more importantly, external people have experienced different working environments, systems, and processes.

So mix up your hiring practices, and make sure your team is not inbred.


[i] Weighing Internal vs. External Hires by Eric Krell Society for Human Resources