If you are seeking an effective leader, are you looking in the right places?

In today’s high-tech world, it’s not uncommon to find new recruits from completely different geographic locations which means many recruiters are looking at things like online job platforms (such as Indeed or Upwork), social media (such as LinkedIn), or forums.

Research shows that companies with 250+ employees have twice as much difficulty filling positions as those with less than 10 employees and almost one-third of employers say a lack of applicants is the main reason for the difficulty and 27 percent say applicants lack the necessary hard or soft skills.

Since 74 percent of recruiters today believe that hiring will become more competitive in the next 12 months, it’s clear there is good cause to look within for the talent you are seeking. While external hiring may be preferred in some instances (such as when specific academic prerequisites are necessary), here are seven more reasons why hiring leaders from within your organization can positively impact your organization.

1.  Employee Loyalty and Commitment

It’s one thing to get out of bed in the morning and head to work each day in exchange for a paycheck. But when employees know their work is being evaluated and there are opportunities for them to advance within the organization, this gives them even more incentive to put their best work out there.

This means increased productivity and proactive results. Research has shown that enhancing career development is as important to today’s employees as job stability and “the better employee[s] feel about their longer-term career development, the more engaged they will be in their work today.”

Needless to say, when an employee believes they have the chance to advance up the corporate ladder, they are going to be more inclined to stick it out, learn more, and push themselves in an effort to advance.

2.  Lowers Onboarding and Training Costs

The cost of new hires varies from industry to industry but when organizations recruit outsiders, they are going to spend anywhere from $5,505.80 to upwards of $125,000 per vacancy.

These costs are significantly reduced (if not completely dissolved) when hiring from within your organization because the person selected to promote already knows what is expected and whatever techniques, particular tasks, or other specifics they do not know, they will learn quickly due to their intimate knowledge of the way things work already. They already have the organizational knowledge and will be quicker to pick up their new roles than external hires.

3.  Proven Compatibility With Teams and Workflows

When you hire from within, you have the ability to first examine the potential leader’s relationship with their colleagues and leaders. A prospective leader will already be compatible with those they work with and there will be no getting-to-know the organization or team members.

4.  Incentivizes The Workforce

Knowing their hard work will pay off will certainly increase the morale of employees. Along with recognition for small achievements, experts report that progress and growth are key elements to motivating employees. When employees have the tools they need to advance their careers, they feel valued and valuable and, indeed, they will be.

Employees who rate their employers overwhelmingly factor in the employer’s willingness to provide advancement and training. The ability to move up within an organization is an incredible motivator for both existing and future employees, making organizations who hire from within, globally competitive.

5.  Promoted Leaders Can Relate With Lower Positions

When a leader is promoted from within, they know the struggles, challenges, and obstacles of their subordinates because they’ve been there. Not only will this help to eliminate or remedy unproductive situations/circumstances, but will serve to improve productivity because employees will be more likely to receive the solutions they need.

Another side to this, is they will know who the A players are and who may need additional training or even replacement because they have worked with them. Research shows that people generally have better knowledge about colleagues they know well than those they don’t.

6.  Generally Better Performance

Research conducted by HCI and Oracle found that “60 percent of 291 employers said workers who were promoted into jobs performed significantly better than employees hired externally into similar positions.” TIME reports that between 40 and 60 percent of external hires are not successful compared to 25 percent for internal hires.

Additionally, research shows that external hires generally under perform compared to internal hires and have higher exit rates, despite being paid more than their internal counterparts.

7.  Less Haggling

When seeking to hire externally, recruiters will need to be prepared to offer a competitive salary and benefits package. However, hiring internally removes the need for haggling and negotiation. You will already know how much salary and benefits the internal hire will need. Research has shown that external hires will generally make 18 to 20 percent more than an internal hire and external hires were 61 percent more likely to be fired from their new job than someone hired internally.

Hiring from within has too many benefits to ignore but it’s important to establish an internal recruitment policy. If you have not been looking at your existing human capital, you could be missing out on some outstanding leadership. Developing a succession plan and recruitment policy can help you not only identify strong leaders within your organization, but also determine which ways you can help cultivate those leaders in your existing employee pool.

Some of your lower level employees may be goldmines of untapped talent that simply need the right mentor, training, or sponsorship. Learning more about team-building and leadership can help employees develop the skills needed to augment what they already know about your organization and turn them from being employees to being leaders.

Nexalearning is passionate about bringing out the best in your employees, teams, and leaders. We invite you to contact us today to learn more about how we can help you identify and strengthen the talent your organization already possesses and capitalize on retaining the best employees for your organization.

Developing leadership is one of the top challenges faced by Human Resources and Learning and Development Professionals across the companies in all industries. Download our whitepaper on “Great Leaders are Made Not Born” – The benefits and strategies for Implementing a Leadership training program.