NFIB

Should You Promote From Within or Look Elsewhere?
03/ 28/ 2002

Things were fairly simple when you had only a few employees. But when a company starts to grow, it may not be best to simply promote your original employees to management positions. Jeffrey Moses explains in today's Workshop.

As your company has grown, it's become evident that you have the management skills it takes. But when your departments grow from one hardworking and extremely capable individual to four or five people (or more), you have some decisions to make.

Problems can arise when you consider promoting existing personnel to management status. A top salesperson, for instance, may have put your company on the map in its infancy, but he or she may not have the managerial expertise to coordinate the activities of four or five other salespeople.

By the same token, your original bookkeeper may know the ins and outs of all your accounting needs. But is he or she really able to manage an accounting department with half a dozen employees?

Your first inclination will always be to promote your dedicated, original employees to management status. You feel like they've earned it, and you know they would be hurt if you hired a new manager from the outside. Certainly, you should always look first at your in-house staff. Promoting from within solidifies loyalty and helps maintain the momentum your company has developed.

But management requires leadership abilities. And though someone is an expert in their field, it doesn't mean that person can be an effective manager. When you have to pass on promoting employees, consider rewarding them in other ways, so they don't feel that their former service has been overlooked. Perks, stock options and added benefits are appropriate options for a valuable employee who has helped your company during its initial growth stages.

Before promoting employees based solely on their length of time with your company, consider doing the following:

1. Determine the job specifications of your new management position(s). Decide what experience and qualifications you would look for in someone from the outside.

2. Speak with your existing employee(s) about these requirements. Ask them if they feel they possess the skills required of a management position, and if they even are interested.

3. Determine the training required to teach your existing employees about management skills.

4. Determine the salaries new hires would demand. Even when you promote in-house, you'll need to offer competitive salaries.

5. When you decide that promotion from within is not an option, meet personally with your existing employees and explain the situation to them. Inform them that a growing small business can be damaged by putting the wrong person into an important position. Emphasize that the decision is not personal.

When existing employees are capable and willing to take on management positions, the company may benefit from the continuity. But leadership within a growing small company is often too important to risk promoting someone on the basis of goodwill or friendship.

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