Hiring for experience vs promoting internally: Which works best for you?

When a key role opens up, do you promote someone from within or bring in fresh talent from the outside?

Every growing business eventually faces this same question, and it’s not always an easy one to answer. 

On paper, both approaches make sense. 

Internal hires already know the company and its culture. They’re faster to onboard, lower cost and often more loyal. But external hires can bring new ideas, new skills and a level of experience you may not have in-house.

So the decision is rarely black and white. It requires weighing immediate needs against long-term goals, while being clear-eyed about culture, capability and risk.

Here’s how to get it right.

The case for promoting from within

For many businesses promoting internally is often the first instinct. And there’s usually nothing wrong with that. The person knows your systems, your team and your customers. They understand how things work and can often ramp up in days, not months.

Hiring internally also costs less. There’s no advertising, agency fee or relocation cost. In fact, research suggests internal promotions typically come with 18–20% lower salary premiums than external hires.

But the benefits go deeper than just cost. Internal promotions signal there’s a future at your company. That loyalty and effort are recognised. That high performers don’t have to look elsewhere for growth. 

And that message can be a powerful retention tool, especially in a tight labour market.

However, there are caveats. Promoting from within will create a vacancy elsewhere, potentially triggering a cascade of hires. It can also stir internal politics, particularly if others feel overlooked. Bringing in an outsider doesn’t usually trigger the same reaction. And, if you promote the wrong person – either too soon or without proper support – you risk setting them (and the team) up to fail.

In short, internal promotions work best when part of a clear talent development strategy, not a rushed reaction to a sudden vacancy.

The case for hiring externally 

When you need specific skills, experience, or a shift in mindset, hiring externally can be the smartest move. A new hire brings a fresh set of eyes – and often also ideas or methods that don’t exist within your current team.

External recruitment can also help you fill gaps that internal candidates simply can’t. Whether it’s digital transformation, entering a new market, or scaling a new function, you sometimes need people who’ve done it before.

There’s also a diversity dividend. External hiring often improves cognitive diversity, bringing in people with different ways of thinking, problem-solving, and working. This can be especially valuable when your business is evolving.

But there are risks. External hires are more expensive. They take longer to get up to speed. And they’re more likely to churn in their first year, especially if the culture fit isn’t right.

And brace yourself… Research from Wharton shows that external hires tend to be paid more, perform worse in their first two years and are more likely to exit early compared to internal hires.

That doesn’t mean external recruitment is wrong. It just means it needs to be done deliberately, with clear expectations, structured onboarding and strong cultural alignment.

Common pitfall: Quiet hiring 

One mistake we’re seeing more of lately is “quiet hiring”, when organisations quietly increase the responsibilities of an internal employee without formally recognising or rewarding the shift.

It’s often framed as a stepping stone or a temporary solution. But when it drags on it breeds resentment, fatigue and attrition. If someone is stepping up, they should be supported with a clear plan, development support and a timeline. And they should be compensated accordingly.

Worse still is promoting someone temporarily, letting them deliver strong results, then hiring externally above them. That sends a clear message: your loyalty isn’t valued and the real opportunities lie elsewhere.

So please, we beg you to avoid quiet hiring whenever you can. It’s not just about fairness, it’s about culture and long-term sustainability. 

So which should you choose? 

The smartest companies don’t pick one strategy over the other. They build systems that let both options work together.

Here’s a general guide for what to choose when. 

Promote internally when:

• You have someone 80% ready, with the ability to grow into the rest
• Speed of onboarding is critical
• Culture and context matter more than credentials
• You want to retain high performers by showing them a path forward

Hire externally when:

• You need skills or experience not found internally
• You’re heading into a new market or transformation
• A role has stagnated and needs fresh perspective
• There’s no clear successor, or the internal candidate isn’t quite ready

And if neither option feels perfect? Get creative. 

Consider interim appointments with mentoring. Support “stretch” internal candidates with external training or coaching. Or hire externally with a clear mandate to upskill your internal team as part of their remit.

The final word

Whether you hire from within or bring in new talent, the real challenge is ensuring the move doesn’t just fill a vacancy but strengthens your team. 

That means having a clear talent strategy, transparent processes, and a culture that values both loyalty and excellence.

Get that right, and you won’t just make the right hire, you’ll build a workforce that’s ready for anything.

Want more? 

Need help designing a smarter hiring strategy, building talent from within or avoiding the quiet hiring trap?

Catalina Consultants works with growing businesses to align people, process and performance.

Get in touch today to talk recruitment, retention and building the right team for your business.