Today’s labor environment is especially challenging for HR managers looking to fill available positions within their organizations. In the U.S., as in much of the industrialized world, unemployment rates are reaching historic lows and the competition to recruit new talent is rising rapidly. Companies that are creating new positions will bear the brunt of the tight market, but those that are replacing departing employees have a better option – hiring from within.

Promoting existing employees into positions of higher authority is an excellent way to deal with internal job openings. It is an especially good idea in a tight labor market. The primary reason that this is true is that it’s far easier to recruit for entry-level staff than it is to find external candidates that have the right experience for the job. That isn’t the only reason that hiring from within is a winning strategy for HR departments facing a tight labor market. Here are the top four reasons that HR managers should consider hiring from within.

Quicker, more successful onboarding

Today’s HR professionals know that establishing a successful and comprehensive onboarding procedure for new hires can mean the difference between successful new employees and more costly turnover. It can cost the business up to $40,000 per 100 new employees to do it correctly, though. Most HR managers will agree that the long-term benefits of proper employee onboarding far outweigh the costs, but what if you could drive those costs down? Hiring from within will accomplish that. Existing employees will already be familiar with the company’s culture, values, and common procedures. They won’t require a lengthy introduction, or weeks of job shadowing before they get started.

Increased employee engagement

Another major benefit of hiring from within to fill staff openings is the fact that it will increase overall employee engagement. Offering opportunities for advancement is the best way to show employees that you appreciate their work, and that plays a critical role in retaining talented staff. Globally, studies indicate that 79% of employees that quit a job cite a lack of appreciation as a primary reason they left. Creating internal avenues for career advancement can become a cornerstone of the company’s engagement strategy. It’s a better idea to invest the saved recruiting dollars into subsidizing online diploma courses to upgrade staff skills to meet internal needs.

Lower risk

One of the biggest risks that an HR manager takes with each new hire is the risk that the person they choose just won’t fit well into the organization. That outcome could result from personality conflicts, an inability to conform to existing procedures or even a simple lack of ability. The consequences of a bad hire can also be disastrous for the organization as a whole. Hiring from within helps HR managers to reduce those risks because their candidates are a known quantity. If they’ve worked within the company for any length of time, there’s a good chance that any conflicts would have already become apparent.

Reduced time to fill open positions

For a well-run business, there’s no such thing as an unnecessary employee. If a staff position exists, it represents a workload that is necessary for the company to function well. That means that every day that a staff position remains open will reduce operational efficiency and cost money. There’s no way to quantify the exact ramifications of an unfilled position, but experienced HR managers know there’s a definite price to pay. On average, it takes about 30 days to fill an open staff position. Hiring from within reduces time-to-fill by shortening almost every part of the hiring process, and will increase overall stability within the organization by preventing long lapses in critical job functions.

Building from within

By creating and implementing a strategy of hiring from within to fill open positions in their organizations, HR professionals will help their company to realize several valuable benefits. From reduced costs and more successful hires to increased engagement and stability, there’s almost no end to the upside. As long as the pipeline of lower-level replacements remains full, there’s just no good reason not to build from within to foster long-term success.

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