Hiring new people vs. promoting from within?

I'm not talking about the traditional "only up" evolution, of course. :)
But the "on the job" development and the horizontal movements are part of a career plan. We can call it personal development plan, as well.

And yes we are idealists, and even there are only a few companies having coherent OD systems (most of them on the IT&C industry), there is still hope! ;)

There is a good book on this subject called 7 hidden reasons employees leave the company.
Here is what it’s mentioned there with witch I fully agree:
- The job or workplace was not as expected.
- The mismatch between job and person.
- Too little coaching and feedback.
- Too few growth and advancement opportunities.
- Feeling devalued and unrecognized.
- Stress from overwork and work-life imbalance.
- Loss of trust and confidence in senior leaders.
Of course, each persons needs are different and therefore each person has its own reason not to be satisfied. Above mentioned are just the most common ones.

I think that you need a good balance of hiring new employees and promoting from within. It all depends though on what you are trying to achieve. If your concern is replacing natural departures (cfr. age pyramid issues), then you may as well promote from within while the person to be replaced is still on board so that the adequate amount of legacy and coaching can be transferred naturally. This may mean that the newly promoted person will be hanging between two jobs for a while, but that is also part of managing the transition.
If you're looking to "urgently" get some special kind of skill sets and/or expertise for a given situation at hand, and assuming you have internally those capabilities, what you need to asses is what is the smoothest transition for replacing the person you "transfer" to the new project.
The whole dilemma rests on what is the most efficient of the two options to keep teams and the organisation as a whole agile. the worst situation you want to find yourself in, is promoting someone who still will need a good amount of "learning" in the new position and having his/her previous position filled as well with a not quite yet completely ready employee (regardless of whether internally or externally recruited).

Hi Chiara!

The answer resides in a well structured and on going career plan for each member of the team, plus a good induction training (and if you add at these a good succession plan - we are in paradise!;) ).

In terms of costs (in terms of money and time) it is cheaper to hire people at the base of the organization, and it is expensive to elaborate and implement a career plan for each position, but in the end you have a running system which provides you people knowing how the company works, an increasing retention rate, a better employer image and so on.

Analyze internal resources versus external opportunities and see which employees will add value and quality. One of the main characteristics that should be taken into account as follows: Character, Personality, Competence.

It's all about what you need from a candidate. What does s/he need to be successful?

If you look at the requirements of the job and an internal candidate is the best candidate (and hiring the person away from his/her current job won't bring the company down), you should make the hire.

There are advantages to hiring an internal candidate, such as employee morale (others see the possibilities), less training time, at least as far as intro into the company, and less cost for external sourcing/recruiting.