Top 10 Hiring Mistakes, #7: Only Hiring Outside – or Inside

When it’s time to make a hire, you’ll want to get good at knowing whether the best candidate already works for you – or if you have to go somewhere else to find her.

It’s a delicate balance. You don’t want to go outside for every important hire, nor do you want to confine yourself to internal candidates. Each approach has its advantages, but either can become a liability if you rely on it too much.

Outside hires can bring skills and experience that people on the home team just don’t have. If you’re looking to open an office in China, you need someone with experience doing business there; if there’s no such person on your team, you’ll have to hire one. If you’re a brick and mortar retailer and you want to build your Internet sales channel, you may not have a person with the technical skills to make it happen.

Outside hires can bring new ideas and dazzling problem-solving approaches with them – and those infusions of creativity will often allow new perspectives to replace older ones. That’s how a culture evolves.

But in the same way, hiring outside people can become habit-forming. The excitement about new insights they’ll bring, and opportunities they’ll see that others won’t, can be seductive. Internal candidates can seem all too familiar: their shortcomings are well-known, their reputations are established; so why not take the risk and look for an outsider who could be your next superstar?

Beware of this siren song. You know your internal candidates, but you don’t know the outside ones, and it’s precisely what you don’t know that can come back to bite you. You can fill some of the gaps with thorough interviews and reference checking, but not even the best hiring practices reveal every potential problem.

Promoting from the inside leaves less to chance. Your people are known quantities; you’re aware of their character and capabilities. Moreover, advancing one of your team members lets the others know that you care about the upward mobility of your team. It’ll show that your organization values professional development, and backs it up with real opportunities. That will help you keep your stars, and boost the chances that, when it does become necessary to bring in talent from outside, your people will be onboard with it.

When going outside does make sense

In an earlier post, I wrote about the perils of hiring only people who are familiar to you. The same kind of mentality can lead to an allergy to outside candidates – they’re people you don’t know. But inside-only hiring can lead to insularity and stagnation in your organization. It can weaken your ability to stay agile and innovative. At worst, you’ll fall out of touch with your customers and the market.

You might worry that bringing in outsiders can disturb your firm’s culture and disrupt the way things are done. Maybe. But many cultures can benefit from a periodic shake-up. Sometimes that kind of jolt is just what your firm needs to leave behind old habits.

So when you’re trying to decide whether to hire an internal or external candidate, interview both. The process itself can be helpful to all involved. For internal candidates who don’t make the cut, it can be an opportunity to offer feedback and help them craft a plan to improve and advance. Likewise, if you decide to go with an insider, having talked to external candidates will give you insight into what’s happening in other parts of the industry, and to meet candidates who may be a good fit for another position later.

In the long run, you’ll want to strike a balance between keeping current employees engaged and excited, and bringing in fresh talent and perspective. As with many areas of business and life, there are two sides to every coin, and you’ll want to be comfortable picking both heads and tails.