To hire from outside or to promote internally?

When President Uhuru Kenyatta appointed James Mburu Githii recently to take over the leadership of Kenya Revenue Authority (KRA) from the outgoing Commissioner -General John Njiraini, many Kenyans may not have understood the criterion used to elevate him. Or if there was any criterion used at all.

The reappointment of Central Bank of Kenya Governor Patrick Njoroge for a second four-year term may have also raised eyebrows. After all, the President had a large pool of equally experienced professionals from which to choose Dr Njoroge’s successor.

Away from public appointments and succession conundrums, filling a vacant senior position in any organisation is a tough call for human resource managers. Whether to promote an insider or to hire talent from outside is a slippery precipice to navigate for HR.

Unlike in government where a candidate is appointed to a position for different reasons and biases, including to reward loyalty, the pressure is even more intense in the private sector where selection is a competitive process and suitability takes precedence.

Promoting internal talent to a senior position has its merits and downsides, and so does hiring externally.

Recruitment for senior decision-making positions is a demanding exercise that is both time and money intensive. Heavy costs are incurred during the hiring and training of the candidate.

Promoting an individual from the ranks of an organisation though saves the company resources.

An insider often has intimate knowledge of the company’s culture and business methods. This makes it easier for them to perpetuate these practices once promoted. A new recruit takes time to get up to speed with the company’s operations.

Similarly, a transition is less disruptive when an employee is elevated to a senior position. This cushions the business from the turbulence associated with the acquisition of talent from outside.

An insider is able to steady the ship quickly, especially if the organisation has been going through a tempest-tossed phase. It is also worth noting that hiring from within the business provides the assurance that there are real career development opportunities in the organisation. This has the domino effect of boosting employees’ morale hence better performance.

When an organisation hires for a senior role from outside, employees may develop resentment towards their organisation, thus affecting output.

On the flip side, promoting internal talent is viewed as maintenance of the status quo. Larry Smith, an entrepreneur and business writer, calls this ‘‘same thinking syndrome’’, adding that this has the potential to hurt future prospects of the business.

Recruiting from outside though is a shot in the arm for the business, as the candidate is certain to come with fresh ideas and perspectives.

On the one hand, challenging the norm is harder when an individual rises through the ranks, as they are often torn between losing the friendships that they have built for years or cracking the whip.

Outsiders will have nothing to lose and are likely to be fearless when dismantling internal cartels that may be derailing the organisation’s operations.

Internal promotions are in most cases chaotic as colleagues try to outdo one another. To stave off internal cut-throat succession politics and aggressive lobbying, some organisations opt to outsource recruitment for senior positions.

Mr Mburu, who survived a succession-related boardroom coup at the KRA, best illustrates the viciousness of succession battles.

An individual who has been promoted internally is often unable to exert authority over former colleagues, some who may have been above him or her before the elevation.

Granted, external hiring is a long and expensive affair. Research, however, shows that companies that invest money in the recruitment of talent have the privilege of acquiring highly-skilled professionals with the acumen to turn around the business’s fortunes.

HR managers must balance between all these competing interests when recruiting for managerial roles with the interests of the business at heart.

Diversity is arguably one of the principal drivers of success in today’s competitive corporate realm, and rightly so. A cursory glance at most modern organisations depicts a dynamic talent pool at the top level, constituted of individuals bred in different professional environments.

It is, therefore, imperative to have a blend of insiders and outsiders at the top level. Whether done internally or externally, an organisation ought to develop structures to facilitate a smooth, fast and effective succession process.

Whoever is picked to lead must be a person of unquestionable integrity, a visionary professional who enjoys general acceptability and has a strong sense of sway.

Perhaps most importantly, this person must possess the ability to inspire new and innovative thinking and have the readiness to challenge narrow-minded ideologies that may be standing in the way of results.

The writer is the Managing Partner and Head of Recruitment at Corporate Staffing Services, an HR consultancy firm in Nairobi.