"When to Promote From Within vs. Hire Externally"

A senior role opens up. You could promote someone internally or hire from outside. Both options have advocates, and both can fail spectacularly.

Here’s how to think through the decision.

The Case for Internal Promotion

Promoting from within offers real advantages:

Known quantity. You’ve observed their work firsthand. No guessing about whether they can perform.

Cultural fit proven. They already navigate your organisation successfully.

Faster ramp-up. They understand your business, systems, and relationships.

Retention signal. Showing that growth is possible encourages other employees to stay and develop.

Motivation and loyalty. Promoted employees often show increased commitment.

The Case for External Hiring

Bringing in outside talent has different benefits:

Fresh perspective. New hires see what insiders have become blind to.

Skills you lack. External candidates may have experience your organisation hasn’t developed.

Change catalyst. New leaders can drive transformation more easily than those embedded in existing culture.

No Peter Principle. Internal candidates might be excellent in their current role but wrong for the next level.

When Internal Works Best

Promote from within when:

The internal candidate genuinely has the skills required, not just tenure. The role requires deep organisational knowledge. Continuity and cultural preservation matter. You’ve invested in developing people for advancement. The internal candidate would likely leave if passed over.

When External Works Best

Hire externally when:

You need skills that don’t exist internally. The role requires someone to challenge the status quo. Internal candidates aren’t ready, even with development. You’re trying to change culture or direction. The internal pipeline wasn’t adequately developed.

The Hybrid Approach

Often the answer is: genuinely consider both.

Run an open process where internal candidates compete alongside external ones. This:

Gives internal candidates a fair shot without assuming they’ll win. Exposes internal candidates to competitive evaluation that develops them regardless of outcome. Ensures you’re making the best choice, not the convenient one.

Common Mistakes

Assuming tenure equals readiness. Years in role doesn’t automatically prepare someone for the next level.

Promoting to retain. Giving someone a role they’re not suited for, just to keep them, hurts them and the organisation.

Always going external. Never promoting from within tells employees there’s no growth path, accelerating departure of your best people.

Skipping the process for internal candidates. “We know them already” leads to less rigorous evaluation and worse outcomes.

The Development Question

The best organisations rarely face this dilemma sharply because they’re continuously developing their people.

If you consistently have ready internal candidates, you’ll promote from within more often—not from bias, but from having genuinely qualified people.

If internal candidates are rarely ready, that’s a development failure to address, not a reason to always hire externally.

Making the Decision

For each specific opening, ask:

What does this role truly require? Who—internal or external—best provides that? What message does this choice send to the organisation? What are the risks of each option, and how would we mitigate them?

There’s no universal right answer. But there’s a right answer for each situation if you evaluate honestly.