Internal and External Hiring: Pros and Cons

“Minimum 5 years’ experience working in the industry…"

You see this in nearly every job posting. It’s understandable; unless you’re desperate for talent and need a position filled right now, you have enough wiggle room to make sure your new hire has at least some experience working in your field. So to keep the neophytes away, you write the “Minimum years’ experience” line. Industries are different, you don’t have time to train for transferable skills, you’re not looking for entry-level, there are a thousand reasons to use this very common refrain.

But is this always best? When do you need to look for experience and when is it okay to grab a fresh face?  

Avoid Stagnation — Hire Fresh Minds

In some companies, it can be hard to get new ideas through the door. Once a group of people have become set in their ways, it’s difficult to get them to think differently about a problem, or to inspire them with new ideas. In fact, 70% of all attempts to organizational changes fail. When your company gets to this point, you have two options: get your current employees to think outside the box and become more accepting, or get some new eyes on a problem and see if they can push through this stagnation and get some innovation going.

“Skeptics can actually be helpful: they can keep naïve impulses in check and, once they have been convinced their opinions are wrong, can become an idea’s biggest champions.” — Dr. John Kotter (@KotterIntl)

It’s appealing to look for industry insiders because you don’t have to train them in every aspect of your particular industry (imagine teaching someone another language so they can perform the translation job they were hired for!) But if you’re looking for that purple squirrel, it might be time to reconsider hiring for every tick mark on your checklist. Though hiring an outside employee can be a bit of a gamble, those that make it through the initial hump end up being promoted up the food chain more quickly, and can be some of the best hires you can make.

"Not hiring a person from outside the industry because they lack specific knowledge ignores a fundamental truth: people can learn. By seeking perfection, companies not only limit the candidate pool unnecessarily, but delay solving problems." - David Hunt (@davidhuntpe)

The pros of hiring an entry-level or inexperienced hire:

  • Every organization is different. Unless you need specific certifications, try someone “outside the box”.

  • It allows leadership to train on new skills and can result in more engaged hires.

  • If you work in a fast-paced industry, it may have changed enough that an experienced hire can be a hindrance (some tech skills were only invented recently!)

  • Inexperienced hires will ask a lot of questions and force your team to rethink why they do, what they do.

  • Transferable skills are immensely valuable in today’s consumer-focused economy, allowing experience in one industry to positively impact another.

Avoid Outsiders at the Top

If you’re looking to liven up your workplace with new ideas or seek a good ROI on a new hire, outside talent can be your best bet. But, if you’re looking to fill key executive positions, it might be better to look within. A good cautionary tale comes from JCPenney, who in 2011 brought in CEO Ron Johnson from Apple. During Johnson's two-year tenure, the retailer's stock declined by 50%, which some credit to his lack of relevant experience.

When it comes to hiring top-level executives, it seems that making a safe bet tends to outdo a gamble. Microsoft teased investors and execs alike when it said it would hire outside talent to replace then-CEO Steve Ballmer, only to reveal Satya Nadella, a 22-year insider, as his replacement.

The pros of hiring an experienced worker:

  • You may get valuable competitive intel.

  • Experienced workers already understand the lexicon and KPIs of the industry.

  • You can trust they won’t make subtle missteps (these exist in every industry).

  • It won’t make investors nervous.

  • You work in an industry that needs certifications or experience (medical, financial, regulatory).

These and other stories may indicated the gamble isn’t worth it when it comes to the highest leaders in your organization. But if you’re looking to fill any middle or entry-level position, hiring outside of your comfort zone, industry or pre-defined tenure expectations can reap rewards. Outside agents can force change in stagnant organizations, keep the yes men in your midst in check by providing healthy skepticism, and end up being some of your best workers with their outside perspectives.

Bio: Raj Sheth

Raj Sheth is the CEO & co-founder of Recruiterbox, an online recruitment software and applicant tracking system designed especially for growing companies. Prior to Recruiterbox, he founded two other web startups -- a classifieds portal and an ecommerce site. He is a graduate of Babson College and spent the first three years of his career as a financial analyst with EMC Corporation in Boston. Learn more about Recruiterbox right now.

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Views: 419

Comment by Daniel Fogel on June 12, 2015 at 11:12am

Raj - Great post!   I'd agree hiring from the outside can be a great way to get some fresh eyes on the processes and disrupt some stagnant systems. And I definitely agree about the value of promoting from within for executive roles. What do you think about hiring for aptitude versus specific skills?  Is it better to hire for someone who can do the job right now or someone who will be able to continue to do the job as it has evolves over the next 2-3 years?  In other words - Is it better to hire a candidate who knows the role now but doesn't adapt well to change, or a candidate who adapts to change well but needs some training to perform in the current role?


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