Howdy, folks. I know it has been a little while since I have written anything on my blog, so thank you for sticking with it during the lull in the action. Today, I am writing from a different mindset than I normally write. I am writing not from a position of leadership; rather, from a position of observer. You see, everything that I have been taught about leadership and business seems to prepare me for what is supposed to happen inside of the lines. But what about what is happening outside of the lines? First and foremost, when leadership says one thing, and does another, it places people in an awkward position of having to rationalize their emotions and perspectives against an ideal that may or may not be communicated. If an organization states that they promote from within, they better follow through on that promise. When leadership is misaligned between actions and words, it is a deadly cocktail for perception management.
There are many reasons why an organization should promote candidates from within rather than hiring externally. The first reason is cost efficiency. By promoting from within, the organization is reducing hiring costs and training times. Hiring externally is expensive–not only in recruitment fees or advertising the job, but also the toll and time it takes on employees that have to review resumes, interview, and onboard somebody new. A person who is already part of the company does not need the same level of training and time to adjust. This familiarity means that an internally promoted resource can hit the ground running. Promoting from within also impacts employee engagement and retention. When people see a clear path to advancement, they feel more invested in their work. They know that risk taking and their efforts can lead to bigger opportunities. Organizations retain institutional knowledge about the environment when there is less turnover and opportunities for growth. They also minimize disruption by promoting employees that understand key workflows and processes. It builds leadership and prepares employees to become the future leaders of the organization.
On the flip side, there are several risks of passing up deserving candidates and neglecting internal talent. First and foremost is the risk of higher turnover and loss of talent completely. Talented employees who feel passed over can become disengaged and frustrated. They may begin to question, “Why should I stay here if I don’t have a future?” Losing skilled team members can be costly, both in terms of productivity and morale. Replacing employees is not only disruptive, but also expensive. While external hires can bring fresh perspectives, they often take longer to adapt to the company’s ways of working. It can take months—or even years—for someone new to reach the same level of understanding and efficiency as someone who’s been with the company for a while.
Additionally, neglecting internal talent can create a negative ripple effect within the organization. If employees see that hard work and loyalty don’t lead to advancement, it can undermine the motivation of the whole team. People may start to feel like there’s no point in going the extra mile because their efforts won’t be rewarded. This can hurt overall performance and lead to a less engaged, less productive workforce.
By promoting from within, companies not only reward employees for their hard work but also avoid the pitfalls of high turnover and disengagement. It’s a simple way to show that the company values its people and wants to invest in their future.
Recently, I had the opportunity to witness firsthand, the problems of not promoting from within. The ripple effect has extended beyond the resource affected and all the way to the core of the entire team. The following is a hypothetical case study of what can happen when you pass over qualified internal candidates for external ones.
Background
Sarah had been with Company X, a mid-sized technology firm, for seven years. She started as a junior software developer and worked her way up to a senior developer role. Over the years, Sarah had consistently demonstrated her skills, taking on challenging projects and mentoring newer team members. She was widely regarded as a key player within the company and had expressed interest in moving into a leadership role.
When the position of Development Team Lead opened up, Sarah believed she was a strong candidate. She had not only proven her technical capabilities but also showed an ability to manage people and projects effectively. However, despite her tenure and track record, the company decided to bring in an external candidate, citing the need for “fresh ideas” and “new energy” in leadership.
Immediate Effects on Sarah
Sarah was understandably disappointed. The promotion felt like a natural next step in her career, and being passed over left her feeling undervalued. The decision affected her morale, and she began questioning her future at the company. Over the following months, Sarah’s enthusiasm waned. She became less engaged in team meetings, was slower to volunteer for new projects, and her productivity dipped. Despite her continued professionalism, the sense of loyalty she had felt toward Company X diminished.
Impact on the Team
Sarah’s demotivation didn’t go unnoticed. Her peers, who had long looked up to her as a leader, sensed her dissatisfaction. The team dynamic shifted as employees speculated why someone so capable had been overlooked. Morale across the team began to drop, especially among other long-term employees who feared they too would be passed over for future promotions.
The new external hire, while technically competent, took time to get up to speed with the company’s processes and culture. In the interim, there were delays on key projects, which frustrated clients and put additional strain on the team. The external hire also struggled to gain the respect and trust of the team, who still saw Sarah as the natural leader.
Long-Term Consequences for the Organization
Ultimately, Sarah decided to leave Company X after accepting an offer from a competitor. Her departure left a significant gap in the team’s expertise and leadership. The costs of replacing her were high—recruitment, onboarding, and training a new developer took time and resources. More importantly, Company X lost the institutional knowledge Sarah had built up over her years with the organization.
The external hire, meanwhile, continued to struggle with team cohesion, and after a year, they too left the company. The turnover created instability within the department, which affected overall productivity and client satisfaction.
Lessons Learned
This case illustrates the potential damage that can occur when internal talent is overlooked for promotions. Sarah’s departure not only led to the loss of a highly skilled and motivated employee but also had a broader negative impact on team morale and productivity. By failing to recognize and promote from within, Company X inadvertently created a cycle of turnover and instability, which ultimately cost the company far more than investing in Sarah’s development and promotion would have.
Promoting from within isn’t just about filling a role—it’s about fostering loyalty, engagement, and long-term growth for both the individual and the organization.
So what do you think? Have you ever been passed up for a job opportunity by an external candidate? How did it make you feel? Let me know in the comments.