When to Promote Internally vs Hire Externally

New research that examines an age-old question: If you have a manager position to fill, is it better to promote from within or hire from the outside? 👇 We analyzed the performance and turnover of over 11,000 managers who had either been promoted or hired into their positions in the years leading up to the Great Resignation. When the Great Resignation hit, and the job market tempted these managers to leave, we found significant differences between the promoted managers and their externally hired peers. 🔷 Those who were promoted were significantly less likely to quit than their externally hired peers. 🔷 Even more importantly, those who were promoted were higher performers than their externally hired peers. The takeaways? ✅ A promotion-first talent management strategy pays off. ✅ It pays off when companies need it most – when the job market’s pull on employees is strong. ✅ For this strategy to work best, companies need to be promotion-first even when there is an abundance of good external candidates (i.e., right now). Bottom line: When companies invest in their current employees’ careers, even during times when external hiring is especially appealing, their employees will stick around and keep performing well, even during times when switching jobs is especially appealing. #hr #talentmanagement #staffing Chase Thiel Jay Hardy Carter Gibson Andrew Barsa

I run an executive search firm. Yet my first advice to clients is counter-intuitive: promote inside first, search second. External hires: → 61% higher risk of exit in the first two years → cost 18% more in salary (Wharton study, 5,300 management hires) Internal promotions: → Culture already in their DNA → Signal to everyone that growth is possible At EBC, we practice this ourselves. We invest in leadership development not only to prepare successors, but because leadership skills make people better at every role they hold. The result: stronger retention, performance, and job satisfaction. Do we still love running searches? Of course. When growth outruns the bench, or when a mission demands fresh DNA, we step in. The search should begin where it’s most powerful: inside. Then, we help fill the real gaps.

If a team runs itself for six months while you’re searching for a manager, you probably don’t need to hire, you need to promote. This is a leadership blind spot I see often. An organization assumes leadership must come from outside, so they open a search. Meanwhile, someone internally is already stepping up, coordinating work, resolving conflicts, holding standards and keeping momentum alive. The team doesn’t stall, deadlines are met, problems get solved. That’s not an accident. Leadership isn’t just a title, it’s behavior. If someone has been informally leading without the authority, recognition, or compensation, you’re looking at signal, not coincidence. When companies overlook that signal, two things happen. The quiet leader feels unseen, and the rest of the team learns that initiative doesn’t necessarily lead to opportunity. Promoting from within isn’t about convenience, it’s about acknowledging demonstrated capability. So before you launch a hiring process, ask a harder question: Has someone already been doing the job? If the answer is yes, the real risk isn’t promoting them, it’s losing them.

The worst HRBP I’d ever seen cost this company $2.3M. But she eventually became their most valuable business partner. She was acting like an HR coordinator and they blamed her for it. For months, she'd been optimizing HR processes while the business bled talent costs: - $180K to replace our top sales director - $95K in overtime covering vacant roles - $2M+ in delayed product launches from key departures She was solving the wrong problems. Here's what I did wrong initially: I treated her like an HR coordinator, not a business partner. I gave her tasks, not context. I measured her on HR metrics, not business outcomes. Here's what I taught her: - How to read a P&L and identify talent risks - Why a 15% turnover rate costs less than retaining bad performers - How to calculate the real cost of an open role - When to say no to hiring requests that don't drive results But here's what she taught me: The best business insights come from someone who understands people. She started seeing patterns I missed: "Our highest performers all have one manager in common." "Teams with internal promotions outperform external hires by 23%." "The departments requesting most training have the lowest engagement." Today, she doesn't present HR metrics. She presents business impact: - "Promoting from within saved us $400K in external recruiting" - "Our retention strategy prevented $1.8M in replacement costs" - "Strategic workforce planning reduced overtime spend by 32%" The transformation wasn't just hers. The CFO now includes her in every major business decision. Because she stopped talking about HR and started talking about how people drive results. The best HRBPs aren't HR experts who learned business. They're business partners who happen to specialize in people. If you're developing HRBPs, teach them your P&L first. Everything else is just administration.

𝗦𝗲𝗽𝘁𝗲𝗺𝗯𝗲𝗿 𝘀𝗵𝗶𝗳𝘁: 𝗧𝗶𝗺𝗲 𝘁𝗼 𝗽𝗹𝗮𝗻 𝗹𝗲𝗴𝗮𝗹 𝗹𝗲𝗮𝗱𝗲𝗿𝘀𝗵𝗶𝗽 𝗳𝗼𝗿 𝘆𝗲𝗮𝗿-𝗲𝗻𝗱. September board meetings often return to the same question: "What happens if our GC leaves?" Yet most companies treat GC succession as crisis management, not strategic planning. 𝗧𝗵𝗲 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗣𝗿𝗼𝗺𝗼𝘁𝗶𝗻𝗴 𝗬𝗼𝘂𝗿 𝗗𝗲𝗽𝘂𝘁𝘆 𝗚𝗖 𝗧𝗼𝗼 𝗘𝗮𝗿𝗹𝘆 It's the obvious move. Your Deputy GC knows the business, earns team respect, and offers continuity. Case closed? Not quite. I've watched this scenario unfold more than a few times: 𝗠𝗼𝗻𝘁𝗵𝘀 𝟭-𝟲: 𝗘𝗮𝗿𝗹𝘆 𝗦𝘂𝗰𝗰𝗲𝘀𝘀 Deputy steps up. Everyone's supportive. Early wins build confidence. 𝗠𝗼𝗻𝘁𝗵𝘀 𝟳-𝟭𝟮: 𝗚𝗿𝗼𝘄𝗶𝗻𝗴 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 Board meetings get tougher. Strategic decisions pile up. Managing lawyers to influencing CEOs proves steeper than expected. 𝗠𝗼𝗻𝘁𝗵𝘀 𝟭𝟯-𝟭𝟴: 𝗖𝗿𝗶𝘀𝗶𝘀 𝗣𝗼𝗶𝗻𝘁 Performance concerns surface. Outside search begins. Deputy either exits or returns to previous role. Team morale degrades. 𝗪𝗵𝘆 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗣𝗿𝗼𝗺𝗼𝘁𝗶𝗼𝗻𝘀 𝗖𝗮𝗻 𝗙𝗮𝗶𝗹 𝗧𝗵𝗲 𝗘𝘅𝗽𝗼𝘀𝘂𝗿𝗲 𝗚𝗮𝗽 Great deputies often lack board presentation experience, C-suite peer management skills, and external relationships from years of market exposure. These capabilities take years to develop. 𝗧𝗵𝗲 𝗖𝗼𝗺𝗽𝗮𝗿𝗶𝘀𝗼𝗻 𝗧𝗿𝗮𝗽 Your last GC had 10+ years to build credibility. The deputy gets compared from day one. Unfair? Yes. Reality? Also yes. 𝗧𝗵𝗲 𝗡𝗲𝘁𝘄𝗼𝗿𝗸 𝗗𝗲𝗳𝗶𝗰𝗶𝘁 External GCs bring fresh perspectives and established relationships. Internal promotes start with neither. In private capital, where deals flow through networks, this matters. GC mobility has accelerated post-2020, and top candidates move faster than development timelines. 𝗪𝗵𝗲𝗻 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗣𝗿𝗼𝗺𝗼𝘁𝗶𝗼𝗻 𝗪𝗼𝗿𝗸𝘀 Success requires deliberate preparation: • 18+ months structured development • Board exposure before promotion • External mentorship from sitting GCs • Clear milestones • Realistic timelines Even then, success depends on business context. Stable periods favor internal development. Growth phases or disruption often require external expertise. I've seen PE portfolio companies spend two years preparing their deputies. CEOs consistently call it their best leadership investment. 𝗧𝗵𝗲 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗔𝗹𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝘃𝗲 Smart companies run parallel paths: 1. Develop internal talent with realistic timeline 2. Map external market for benchmarking 3. Make informed choice based on business needs Companies caught unprepared assumed succession would handle itself. Your Q4 legal needs won't wait for succession planning. Neither should you. What's your GC succession strategy? #Leadership #ExecutiveSearch #PrivateCapital

CEO Succession: Internal or External? Over the past twelve months, we have seen a number of changes at the top of major companies. It raises one of the most important questions for boards, investors and employees: Is an internal or external CEO better for shareholders? Encouraged by my late father, I have been investing in the stock market for a very long time. I have had some wonderful successes. I have also had some real train wrecks. And I learned one painful lesson: I usually lost money when I paid too little attention to the people at the top. When I relied too much on numbers, strategy presentations and analyst recommendations — and too little on the quality of the executive team and the culture around them — I often paid the price. I admit I have a bias for internal CEO candidates. If a company is commercially sharp, culturally healthy and full of hungry A-players, internal succession is often the best answer. It preserves momentum. It protects culture. It rewards leadership development. Some of the world’s most valuable companies have followed this logic. Alphabet promoted Sundar Pichai. Microsoft promoted Satya Nadella. Amazon promoted Andy Jassy. And Apple has now chosen John Ternus(image above) 25-year Apple veteran, to succeed Tim Cook as CEO in September 2026 — another example of long-term internal succession planning. Founder-led companies often understand this instinctively. They know that CEO succession is not an HR process. It is an existential decision. But there are moments when internal succession is exactly the wrong answer. Sometimes a company needs blunt intervention. Sometimes it needs a cultural tsunami. Sometimes the internal pool is filled with loyal B-players rather than hungry A-players. And sometimes the system has become too comfortable, too political or too self-protective to renew itself from within. Then you go external. It took a bp lifer, Tufan Erginbilgic, to shock Rolls-Royce back to life. It may now take Justin Hotard, the former Intel Data Center & AI leader, to reframe Nokia for the AI infrastructure age. His first major quarterly earnings call was very encouraging. So, internal or external? Four simple questions matter and can provide guidance: 1. If the company is commercially sharp and has a deep pool of hungry A-players — stay internal. 2. If the company is at an inflection point and real transformation is needed — go external. 3. If the culture has drifted into a “civil service” mindset — go external. 4. If integrity is compromised and loyalty is valued above competence and delivery — go external. The role of the board is not to debate internal versus external in theory. The role of the board is to make sure the company never drifts so far that only an outsider can save it. Because CEO succession is not one decision among many. It is the board’s most important decision. #succession

"70% of our promotions MUST come from within the company in order to have the culture we need." The president of a large company in N. America shared this with me last week. So many interesting lessons from this conversation. The leader IS the culture of any team. If you leave your culture to accident...you are in for a rough ride. Environments where people thrive...rather than just survive...are never a "Happy Accident." Being introduced to a metric he'd identified for having the culture needed to achieve the company vision was really interesting. Having it start with the company's approach to leadership development... That's worth sharing. Promoting from within isn't just about filling roles. When I asked him why he needed 70% from within he was really clear. Promoting from within... -Builds trust. - Builds loyalty & commitment. - Makes it easier for leaders to fuel change. - Accelerates long-term success. - Fuels a psychologically-safe environment. He told me in their org (a well-known market leader with '000s of employees): "When leaders are grown & nurtured from within, they embody our values, they've bought in to the vision, & they appreciate our culture and how we are different." He told me hiring the other 30% from outside brought new important new ways of thinking CRITICAL for their success. BUT... 70% needed to be from people who already were part of "our family." And that's why systems to develop internal leaders was his TOP priority. Here's why: 1) Retention & Engagement. When people see paths for growth & see their peers getting promoted...people are more likely to stick around & give their very best. And don't forget...working your hardest is MUCH different than giving your very best. 2) Cultural Consistency. Culture is about behaviors. What you permit is what you promote. The more consistent this culture can be...the easier it is to have clarity. Clarity might be the #1 "bang for the buck" leadership tactic. It costs very little & provides almost immediate impact. 3) Cost-Benefit. He shared the economics of developing talent through several lenses. The biggest was virtually eliminating cultural mismatches. Bringing people in from the outside always costs more. Outside hires bring massive benefits to the org...no doubt. But internal dev. costs less & is less risky. 4) Consistency. Investing in dev. of the next gen of leaders keeps a good pool of leaders who likely have a deep desire to see the company thrive. They have aspirations for themselves AND the company. Having well-prepped people from the inside creates smoother trajectory and fewer roller-coaster rides. Prioritize developing leaders from within. Your people will rise to your expectations & how you equip them as leaders. Here's a final quote from our convo: "If they don't have the potential to grow...why hire them? And if they have the potential, I have a responsibility to fuel that growth." Best investment you can make? Your leaders.

What is the right balance of promoting your c-suite from within versus hiring externally? What is the right ratio? Does it depend on the performance of the business? Just before Christmas, I spent a day in Paris for some end of year conversations with the HR teams of various luxury maisons. We reviewed the challenges of 2024 and what action was necessary for renewed success in 2025. The consensus was that the first half of 2025 would remain flat, but lay the foundation for growth from the third quarter onwards. We talked about the importance of how organisational design was changing to become more effective in 2025, moving away from the legacy luxury thinking into a leaner, more innovative structures. We also talked the mindset of leadership which until this point had only experienced success and was now having to adapt to a turnaround situation. To do this the organisation needs to be optimised and potentially invest in bringing in changemakers to unlock the potential. The most critical conversation was around the balance of promoting leaders from within, versus the impact of hiring externally. How do you achieve an optimum mix of culture carrying individuals who are instinctive brand guardians supported by new talent and fresh ideas coming into a brand to prevent it becoming too inward looking? Unanimously, the various HR leaders suggested a 70% / 30% split would be the right figure, but despite the encouraging increased mobility of individuals within the luxury groups, this ratio is rarely achieved. Internal moves are often complex and political and can raise unjustified questioning around loyalty or a perceived dissatisfaction with their current role. Eradicating the internal obstacles to internal progression was a key focus for 2025 for the HR leaders we met. The nucleus of any good company are their tenured teams who champion the core values and self-regulate consistently high standards. Identifying the potential high performers within a brand is critical to ‘growing your own’. It is a wise investment to provide the mentorship to engage and reward those leaders who have the potential to become future c-suite leaders. We initiated several projects last year to build bespoke programs for brands looking to fast track the skillsets of leaders whom they’d identified as future superstars – the next generation of individuals who’ll keep a business relevant, innovative and challenge conventional thinking from within. Recognising this talent and proactively investing in growing it further creates a deeper engagement, especially at a time where their success will begin to create a level of visibility that will attract the attention of other brands. DHR Global #leadershipconsulting #highpotentialprograms

Senior talent is everywhere. But that doesn’t mean you should hire. The market is saturated with high-caliber, recently redundant operators and executives. You’re being told now’s the time to “upgrade your team.” And on paper, it’s true. • The resumes are impressive • The price is lower than usual • The urgency to grow is real But here’s the leadership tradeoff experienced CEOs are pausing to weigh: Hire externally and gain short-term horsepower ⤷ But risk misalignment, ramp time, and team disruption Or promote internally and build long-term momentum ⤷ But it takes patience, coaching, and strategic investment So what’s the right move? Start with this question: Are you trying to accelerate growth or sustain it? When to Hire Externally: → You need new capabilities fast → You’re entering a market that requires credibility →You’ve lost a true linchpin and must backfill → Risk: Misfit costs time, trust, and trajectory When to Promote From Within: → You have untapped high-potential leaders → You’re seeing signs of early ownership → You want to compound existing momentum → Risk: Progress takes longer, but ends up sustainable A sound option? Do both with care. 1. Use external hires for strategic capability gaps ⤷ Not just resumes that look good on LinkedIn 2. Run a 6-month "internal operator accelerator" → Nominate 3 leaders → Give each one real growth responsibility → Coach, measure, and assess outcomes 3. Decide with data, not gut feel ⤷ Performance, team feedback, leadership behaviours Remember this: A layoff doesn’t equal leadership readiness. And loyalty isn’t enough either. Are you hiring for growth or building it from within? CEO's can book 45 minutes with me to work through this question. Confidential, independent and outcome focused. There are 3 times available in August. Send me a DM to book. ♻️ Share this with a CEO in your network ➕ Follow me, Phil Hayes-St Clair for more like this.

A friend reached out to me with a frustrating situation. Their manager left, and despite successfully leading the accounting team through the transition, the CFO is hesitant to promote them because they "lack specific experience." This is a case study in how companies often overlook their strongest assets: their existing talent. And here's why: 1️⃣ Institutional knowledge is irreplaceable. Someone who understands your systems, processes, and history can hit the ground running. External hires will have a 3-6 month learning curve. 2️⃣ Motivation is currency. An internal promotion represents a career milestone. External hires may see it as "just another role" on their resume. 3️⃣ Experience gaps can be filled. Professionals build networks of mentors and resources specifically to navigate new challenges. Training and development plans exist for a reason! 4️⃣ The hidden costs add up. Recruiting fees, lost productivity during transitions, and the risk of losing a valuable team member who recognizes their worth. I'm speaking from personal experience here. My career wouldn't be what it is today if leaders hadn't taken chances on me when I "lacked experience." Before founding Inscope, I was given several opportunities where I didn't check every box on the job description. Those leaders saw potential, drive, and transferable skills that outweighed the gaps in my resume.