Hiring from inside the company makes total sense, but there’s a downside!
There’s a lot to like when hiring internally. You’re targeting individuals already familiar with company practices and culture. They have forged relationships within the company, and they rarely require signing bonuses and/or inflated contracts that external hires often demand. They also provide a concrete example to others of how they too can seek advancement within the company structure.
Despite these many benefits, what often goes unnoticed is how the positive example of an internal hire creates negative feelings from those applicants who weren’t chosen.
The reality is that for every internal hire made there may be eight or nine internal rejections. How those rejections are handled can have a big impact on the future of those employees within the company.
Employees can feel less satisfied within their roles and have less faith in the company’s belief in them. Indeed, employees who have been rejected during an internal hiring process are twice as likely to leave the company shortly thereafter than those who never applied at all. Further, rejected employees can become jealous of their colleagues who were promoted, creating negative tension within the workplace.
If even just a third of rejected employees feel this way, then you have three disgruntled and less-productive employees who may decide to jump ship or simply not perform up to par.
So, how do companies continue the clearly positive practice of hiring internally, while avoiding the potential backlash from rejected employees?
Where do I stand? Where do you stand?
Employees know that you cannot hire everyone applying for the position. Therefore, they often apply for the job not merely in hopes of getting the job, but also to see where they stand in the company and what their chances of advancement might be in the future. They also want to see how the company operates when it is hiring, and whether internal hires are likely.
Whether or not the candidate has an interview with the hiring manager is of great significance. Experience shows that a hiring manager’s feedback and insights are critical to an internal candidate. It matters what the hiring manager has to say. Interviews with HR representatives, on the other hand, simply do not provide the same reinforcement. As a result, employees are less likely to leave the company if they make it through to an interview with the hiring manager as they take it as a validation of their value.
Whether the company makes an internal or external hire acts as a signal of commitment to their own employees. If the company hires externally, then the internal candidates can take that to mean that they do not have a very good chance at advancement from within. As opposed to giving the company their efforts, trying to impress, they then do the minimum while searching for opportunities for advancement elsewhere.
Companies of course cannot interview every candidate, nor should they hire internally exclusively. What they do need to do though is manage their rejections carefully.
That means keeping track of all the employees applying for the role, and knowing when a particular employee is one that is regarded highly within the company. They might not be the right fit for the current opening, but they are an excellent fit for your company, and you don’t want to lose them. Candidates like this, even though you are already certain they are not the right fit for the role, are candidates you should take the time to interview with the hiring manager in order to send them the message that they are valued. Interviewing the right employees, even though they are the wrong candidates, is the best way to keep them engaged.
The 5 steps for internal rejections
For those internal candidates that you don’t hire, here are five steps to take:
Don’t do it over email: Sit down face to face and explain your decision. Your tone, facial expressions, and body language all make a positive impact on how the employee feels about the outcome.
Be clear about the reasons for your decision: Think clearly about what you’re going to say and plan it out. Chances are they’re already a culture fit if they’re an internal candidate, so it’s probably more about experience, or lack thereof. You’re in a better position to give them honest and direct feedback that makes sense to them and that they can use to improve.
Ask about their professional goals: Have an open conversation about what they’re looking for. What title would they love to have one day? Who do they admire professionally? What part of the company or their job gets them most excited. You can be a great advocate and support for them through this process. Chat, and lend them whatever advice you might have.
Find other opportunities for them to grow within the company: Share other openings you feel they may be better suited for. Share future revenue streams or product development under consideration. Let them know where you’re hoping the company will go and how they might take part in fostering that growth. Show them how they might be best aligned for such a role when it eventually comes along.
Check in with them a few days or weeks later: This shows you care about how they’re feeling, how their current work is moving along, and if they have further thoughts about your discussion. This builds lasting affinity.
When you hire internally, employees take note of the process to assess their own place within the company. Companies need to manage internal candidates strategically to get the most of the people they decide to hire, and those that they don’t.