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Compensation & Rewards

Guide to internal promotions | How to plan & prioritize for the best fit

Leapsome Team
Guide to internal promotions | How to plan & prioritize for the best fit
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When there’s a new leadership position to fill, it’s tempting to want to hire externally.

Hiring internally can create another vacancy to fill or even stoke fears of favoritism. Plus, external hires can bring the skills your organization may lack for the position.

However, promoting from within the company can be the difference between fostering a motivated, loyal workforce and facing increased turnover and disengagement. 

Developing an internal promotions plan allows you to take a strategic approach to employee career development goals and proactively recognize growth opportunities. Having an internal promotion model in place also helps you identify and outline roles and responsibilities and find the best fit. 

In this article, you’ll read about:

  • What an internal promotion is 
  • The value of internal promotions
  • Promoting internally vs. hiring externally
  • A six-step internal promotions development plan
🚀 An easy, equitable promotion process doesn’t have to be out of reach 

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What is an internal promotion?

An internal promotion happens when an internal candidate is promoted to a new position — instead of the organization hiring an external candidate. Another interpretation of the term internal promotion is when an employee acquires the necessary skills to reach the next level of their professional journey. 

These promotions generally encompass:

  • Changes in responsibilities 
  • A new job title
  • A salary increment or pay increase 
  • More specialized tasks

People ops professionals and leaders typically rely on factors like performance and 360° reviews, experience levels, skills, and accomplishments to execute successful internal promotions.

⭐ Looking for more tips on carrying out successful employee promotions? Check out our comprehensive guide to employee promotions.

The advantages of internal promotion

Internal promotions demonstrate your investment in employee development and recognize your people’s hard work. By hiring internally, you show that your organization provides growth opportunities and has a fair and transparent promotion policy. Gaining respect is only one of the advantages of internal promotion — and there’s data to support all of them.

To see how different organizations have successfully applied these principles, check out these examples of effective employee development plans.

Increased retention

Promoting internally can help increase worker retention. Tracy Cauley, HR Manager at Vem Medical found that their organization retained internally promoted team members 15% more than other employees. 

“By promoting excessive-acting personnel to management positions, we showcased our commitment to career increase and development,” Cauley noted.

Higher engagement during training

Have you ever seen a stagnating team member suddenly decide to upskill after they’ve parted ways with the company? Internal promotions also benefit employee training as they provide people with clear goals.

It’s a way to ensure that team members continue to develop within your organization rather than grow after they leave. When employees know that there is a chance of a promotion on the other side of upskilling, they’re more likely to want to complete modules and coaching sessions and put their learnings into practice.

As an example, Vem Medical not only provided transparent guidelines for promotions, but also offered development programs and continuous development opportunities that aligned with those promotions. Consequently, they saw a 25% increase in current employees applying for new roles internally. 

“​​From an effectiveness standpoint, objective, transparent, and inclusive promotion practices continuously yield impressive results in employee engagement and retention. When employees understand what is expected of them and how the evaluation process works, they’re more motivated to improve their performance and aspire towards growth opportunities within the company.”

— Jessica Bane, Operations Director of Go Promotional

Reduced turnover

An interview with Gartner showed that 55% of employees expect a promotion within two years. Aligning promotions with these career development expectations boosts job satisfaction and keeps team members with your organization for longer.

However, it’s not only turnover from promoted employees that’s affected — the direct reports of promoted team members tend to stay longer, too. 

Anna Williams, HR Manager at Digital Silk, shared an example with us where she promoted an internal designer to a leadership role. “Thanks to our transparent promotions plan, he felt encouraged to communicate his career aspirations,” she said. “We then evaluated him based on his performance, 360° feedback, and potential. Impressively, upon his promotion, we observed a marked increase in team productivity, lower turnover within his team, and a morale boost.”

This helps build a healthy workplace that fosters employee satisfaction, development, engagement, and enablement.

“In companies that exclusively hire from the outside, employees might feel that the only way for them to [grow] (…) is to switch companies. But when you promote from within, employees will feel that their hard work is paying off, giving them a reason to stay.”

— Bill Harrison, CEO of ComplianceBridge
💪 Empower managers to make internal promotion decisions.

Leapsome lets you build an equitable and scalable promotion process to motivate your employees and help them grow.

👉 Learn more 

6-step internal promotions development plan

Internal promotion development plans increase transparency within your organization and outline the steps employees must take to achieve promotions.

Additionally, promotion development plans enable you to be more proactive about your promotion decisions by encouraging managers and reports to continuously think about their professional growth.

1. Determine what you need

To define what you need from your internal hires and what skills you’re looking for, you first need to get clear on your company’s current status. Ask yourself:

  • Is our management team equipped to support current employees? If your leaders don’t have the capacity or skills to mentor new hires and help them get the hang of their new roles, you’d be setting them up for failure. Setting up employee onboarding guides helps increase performance and gives new employees the support they need to succeed. Additionally, management needs to have the skills to hold useful career development conversations and create a plan for their reports.
  • Are our employees engaged and satisfied with their positions? Conduct regular pulse and engagement surveys to understand your people’s engagement levels and whether or not they’re satisfied with their current career paths. If not, it might be time for an internal promotion, a shift in responsibilities and compensation, or a 1:1 check-in to find out more about the problem.
  • Can we benefit from a fresh perspective? Sometimes, certain problems can only be solved with a fresh pair of eyes. If that’s the case for your company, an external hire could be a great solution.
  • Does our company have an established development framework? Where your employees are on their development and learning path gives you a clear overview of their current skill set and who’s due for a promotion.
💡 Support your managers’ conversations with our career progression framework template

2. Put together a job description with all the necessary skills

A clear job description guides you in your promotion process, helps you find the right candidate, and manages expectations. Assess the skills and experience levels of existing employees in the same or similar roles to help you narrow down what you’re looking for.

Additionally, if you’re planning to communicate the open position company-wide, you’ll use this job description to announce the new opportunity. Include details like:

  • Job title
  • Skills and qualifications
  • Benefits 
  • Role objectives

3. Establish your promotion criteria

Objective promotion criteria will help you narrow down your internal candidates and find the best fit more easily. That’s because you can use these assessment metrics to guide your decision-making process. 

Suppose you’re looking for a candidate that has excellent communication skills. In that case, you’ll know to mainly consider employees who have consistently received positive feedback from their managers and peers in this area. 

Other criteria to consider include:

  • Achievements
  • Training 
  • Seniority or tenure 
  • Working style 
  • Professional goals 
  • Growth potential 
  • Rapport with peers 
  • Willingness to learn
  • Alignment with company values
💡 Remember: While considering achievements is important, don’t forget to look at “failures” — how a person faces a problem, what they learn from it, and how they apply those lessons are all equally important.

4. Be transparent about promotion decisions

Transparency is crucial to creating a healthy workplace — especially when it comes to promotion decisions. One of the most meaningful ways to avoid a toxic work culture and demonstrate your commitment to transparency is to openly communicate how management handles promotions within your organization.

 Some questions you can answer for your people include:

  • Is this an open or closed promotion?
  • Who can apply for this position?
  • Why has this position become available? 
  • What data will inform your final promotion decision?
  • What are the criteria for this promotion?

Shutting the red curtains on these decisions can lead to staff feeling confused at best — and overlooked at worst. Additionally, being open about internal promotions and development paths shows other employees that they’ll have the same chances for advancing their careers in the future.

5. Communicate the promotion decision with employees

The timely announcement of employee promotions is great for transparency and allows for a company-wide celebration of your people — boosting morale and fostering a sense of community.

Your all-hands meetings or company newsletter are great places to make these announcements. Alternatively, consider your company’s Slack or Microsoft Teams channels.

6. Have employee engagement & development frameworks in place

Robust employee development plans and development frameworks help employees remain engaged, even if they don’t have the necessary skills to qualify for a particular position. 

Some steps you can take in your training and engagement process include:

  • Creating an employee engagement action plan to improve employee experience and keep your finger on the pulse of your people’s engagement and satisfaction levels. Your survey results can then guide your development initiatives.
  • Arranging regular 1:1 meetings with employees to discuss their personal and professional goals.
  • Creating a personalized career progression framework that illustrates the competencies an employee needs to develop before taking on a new role.
  • Keeping the conversation going, especially with unsuccessful candidates who might feel overlooked. This helps make your and your employee’s arguments clearer and keeps them motivated and engaged.
A people enablement platform like Leapsome lets you create detailed career progression and development frameworks for every organizational level, and the layout of these frameworks in Leapsome is illustrated in this graphic.
A people enablement platform like Leapsome lets you create detailed career progression and development frameworks for every organizational level
💡 Remember: Promotions aren’t the only way to reward employees who consistently go above and beyond. A performance bonus is a great way to acknowledge the value and hard work of employees who don’t yet qualify for a promotion.

7. Follow up

Promotions aren’t one-and-done tasks. Make sure to have a streamlined onboarding process planned — including the tasks needed to ensure a seamless handover — so the transition is smooth for everybody.

Additionally, check in with your employees regularly through 1:1s and team meetings to ensure they have the resources they need to succeed. You can also assign them a mentor or buddy to support them and show them the ropes so they can confidently grow into their new role.

📚 Developing internally?

A manager shouldn’t have to figure out how to develop their team on their own. Use our free employee development plan template to put your team on the right path to growth.

Promoting internally vs. hiring externally

Promoting internally is a great way to retain and nurture talent and strengthen your company’s brand and culture. However, without promotion policies that ensure fairness and invest in learning and development (L&D), it can lead to unhealthy competition and favoritism. Let’s look at some of the benefits and drawbacks of internal promotions in more detail.

Promoting internally

Promoting internally is an effective way to cut recruitment costs and invest in employee development, but it can also lead to challenging workplace situations. Here are the advantages and disadvantages of this approach.

Internal promotion benefits

  • Saves money By significantly shortening the hiring process, human resources departments can reduce the costs associated with advertising open positions and interviewing and sourcing candidates.
  • Reduces training time and speeds up the onboarding process Your internal candidates are already familiar with your organization’s processes and systems, significantly cutting down on the time and money you have to invest in their training.
  • Boosts retention rates Providing opportunities for employee growth shows people that they don’t need to leave the company to further their careers.
  • Improves team motivation and morale Current team members will be more motivated when they see hard work being rewarded at your company.
  • Ensures culture fit Your existing employees already know your company culture, which eliminates the risk of a position being filled by someone who isn’t a culture fit.
“Managing expectations and preserving team dynamics after a promotion are common challenges. We prioritize having honest conversations, provide helpful criticism, and give all staff members the chance to grow professionally to address these. In the end, internal promotions foster talent while reaffirming our dedication to staff development, increasing engagement, and reducing turnover rates.”

— Sebastian Petrosi, HR Manager of How to Watch

Internal promotion drawbacks

  • Can lead to challenging situations — If it isn’t handled well, an internal promotion could cause unhealthy competition and resentment between team members.
  • Limits fresh perspectives — Promoting from within can mean organizations remain stuck in their ways. That’s because internal candidates don’t bring new perspectives into the mix like external hires do.
  • Creates another open position — When one of your existing employees moves up in your company, you make a gap in your current workforce.

Hiring externally

Hiring a candidate externally can bring new, unexpected ideas into your organization, but it can also lower employee morale and retention. Let’s look at the pros and cons of welcoming someone new into your company.

External hiring benefits

  • Opens up a larger talent pool You can assess more candidates if you look outside your organization. In addition, if you’re a remote company or use a hybrid work model, you can consider candidates from more diverse backgrounds and geographical locations.
  • Brings diversity of thought and perspective A fresh pair of eyes can, sometimes, identify areas of improvement more easily and drive positive change.
“It’s important to freshen up the team every now and then, too, to bring in fresh ideas and new perspectives. While a close-knit team is certainly a valuable asset for any company to have, it can create an insular, somewhat stale atmosphere if you’re not careful.”

— Peter Strahan, Founder & CEO of Lantech

External hiring drawbacks

  • Doesn’t promote internal employee development — Your people want to grow as professionals over time and need their title, compensation, and responsibilities to reflect that. Hiring an external candidate to fill an open position doesn’t support those kinds of employee ambitions and goals.
  • Lowers team member morale — Internal talent can feel overlooked, which has a negative impact on their satisfaction and engagement levels.
  • Increases turnover rate — If employees don’t see future growth opportunities in your organization, they’re much more likely to leave your company to look for a better position elsewhere.
Comparison chart of promoting internally versus hiring externally, showing pros and cons for each method.
Internal promotions support internal growth, keep employees motivated and engaged, and boost retention rates

Nurture promotions within your company with Leapsome

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Leapsome Compensation takes the guesswork out of raises and promotions and empowers HR teams to make data-guided people decisions

A lot goes into promoting from within your company. Your organization’s promotion processes need to be equitable, fair, and transparent while making it easy to find the right candidates and support internal growth. Internal promotions require a lot of forethought. That’s where Leapsome comes in. 

Our promotion management tool helps you automate your company’s promotion and compensation processes and create scalable, unbiased, and consistent workflows.

It also lets you collaborate with key stakeholders and integrates with our tools for personalized career development paths, performance reviews, team alignment, and more. Because putting your people first and achieving business goals can go hand in hand.

🚀 Build scalable and equitable promotion processes with Leapsome

Leapsome’s promotion and compensation tools empower managers and leaders to make more data-informed decisions and increase employee trust.

👉 Book a demo

Written By

Leapsome Team

Written by the team at Leapsome — the all-in-one people enablement platform for driving employee engagement, performance, and learning.
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