Internal vs. External Hiring: Weighing the Pros and Cons for Executive Talent
Hiring a new executive is a defining moment for a company, especially if the role has been occupied by the same person for quite some time. Given the significant impact an executive has on a company’s culture, employee satisfaction, and bottom line, employers are extra critical of who they choose to fill the position. When an executive role becomes vacant, the hiring committee is often at a crossroads: should they promote an existing employee or open the position externally?
Advantages and Disadvantages of Promoting Internal Candidates
First, let’s cover the pros and cons of internal hiring for an executive role. On the one hand, promoting from within can be a cost-effective and time-efficient solution. The professional who is advancing to the higher position would also feel valued at their workplace, which can have a positive impact on employee engagement and retention. However, internal promotions also present challenges. The organization needs to address how to fill the position that the promoted employee left. Backfilling lower-level positions can be particularly challenging due to higher turnover rates or a limited talent pool, especially for companies based in less desirable locations. Our search firm has also engaged with companies that need to hire externally when a promoted employee is struggling in their new role and cannot meet expectations.
Benefits and Challenges of Bringing in Outside Leadership
Aside from an internal promotion not panning out, we often work with clients choosing to hire an external executive for a variety of reasons. Sometimes, the company’s team members are not interested or ready to step up into the role. Other times, the hiring authority prefers to find someone who already has experience in a similar role in order to hit the ground running. In some cases, the client is looking for someone who can offer a fresh perspective to shake things up in all the right ways. Whatever the motivation, bringing in new talent can be a gamechanger for shaping an organization’s future and fueling growth.
From our experience, an outside leader brings new ideas to the table and a positive change of pace to the current culture and team. A seasoned external executive can also bring an established industry network that can result in promising partnerships with the organization. After our firm successfully placed an external candidate for a CEO search, our client’s organization had a significant increase in their annual revenue, and then began major expansion projects. This would not have been accomplished as easily as it did without the new hire applying their broad operational knowledge, magnetic leadership skills, and financial acumen to the role.
Now, let’s address some of the challenges that come with external hiring. Executive candidates often reach out to our recruiting firm looking for a career move after being passed up for promotions at their current company. When an employee feels ready for the next step in their career, but their employer thinks otherwise, it is only natural for them to seek new opportunities that align with their goals and growth potential. Similar to promoting from within, there is also a chance that the external hire will not meet expectations once in the role, despite excelling throughout the hiring process. Likewise, the new employee may also realize that the company isn’t the right fit for them after they experience the day-to-day responsibilities firsthand.
How to Decide the Best Approach for Filling Executive Positions
So, how can an employer mitigate risks and determine whether to fill an executive opening internally or externally? The reality is that it ultimately depends on what the hiring team wants to accomplish from the position. Reflecting on the following questions will help decide which route is best for the organization when a new executive job opening arises:
- How urgently does the executive position need to be filled?
- Is the organization in a stable period suitable for internal promotions, or is it facing major changes that require external expertise?
- What are the specific costs and benefits of hiring internally versus externally? Consider how each option will directly impact the team and business.
All in all, the hiring process is a game of chance. Both internal and external hiring come with their own risks and rewards, and it is up to the employer to determine their priorities when filling a position. While there are times when organizations realize their next leader is right in front of them, there are other instances where hiring externally can propel the organization to heights beyond its current reach. By carefully evaluating their goals and weighing both options, organizations can turn a roll of the dice into a calculated decision that leads to lasting success.
As Published in Gaming & Leisure Summer 2025 Edition
Bristol Associates, Inc. is an executive search firm with over 55 years of excellence in recruiting nationwide. Bristol specializes in recruiting for the Casino Gaming; Facility and Concession; Food and Beverage; Healthcare; Hotel and Resort; Nonprofit; Restaurant; and Travel, Tourism, and Attraction industries.
If you’re interested in working with Bristol Associates, click here if you’re an employer or here if you’re a candidate.
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