Internal Promotion vs. External Hiring: Which is the Better Choice?

There is a Chinese version of this article at the end.

Let’s begin with the conclusion: Based on Hive’s entrepreneurial experience, it is preferable to promote internally whenever possible, as the benefits of internal promotion generally outweigh external hires. However, if the current team members truly cannot handle the position, you should consider recruiting externally. Doing so can save a lot of time and resources.

Many startups, during their growth from 1 to 100, face a critical question: Should they promote internally or hire externally? This issue may not be prominent when the team is smaller, with fewer than 50 employees, but once the company enters the growth stage, when rapid expansion and handling multiple facets become necessary, the CEO will often find it impossible to continue managing everything themselves, and the company’s growth might slow. At this point, the founder’s first instinct is often to hire externally.

However, hiring externally at this stage frequently comes with practical challenges: affordable talent may not meet the company’s expectations, while top-tier talent might be too expensive. Internal promotions, on the other hand, often fall short of achieving the desired impact. These challenges are particularly common in departments like HR, finance, and sales. The reason is that many founding teams in B2B software companies are experts in technology and product development, and their teams are built around these competencies. However, the founders themselves often lack expertise in finance and sales, and their networks are mostly centered around product and technology, leaving them with a significant shortage of financial and sales talent within their founding team.

A founder’s typical first reaction is to quickly hire from a large company, but new external managers often face cultural clashes. They may struggle with the company’s pace, or conflicts might arise between the newly hired executive and existing staff. This situation is common, and ultimately, the turmoil caused by the new hire can result in the departure of key long-time employees. In the end, the company finds itself back at square one, but with even more damage.

Hive’s experience suggests that during the period between Series A and Series B, it’s best to promote internally for departments like HR, marketing, and sales, while finance should be filled through external hires. Finance is an especially specialized area that involves managing cash flow and fundraising, and this requires a high level of experience, making it difficult to promote mid-level finance personnel from within. However, for HR, marketing, and sales, as long as internal staff are willing to learn and take responsibility, letting them lead the recruitment of junior staff externally can often better implement the founder’s vision, and they have a much higher chance of adapting quickly.

Internal promotions have several advantages. First, internal employees are already familiar with the company culture. Second, promoting internally boosts employee loyalty, not only reinforcing the commitment of the promoted employee but also showing other employees that there is a fair path to promotion. Third, those promoted internally are familiar with departmental collaboration and processes, reducing the time needed to adjust and eliminating a steep learning curve. Survey data from joblist.com also confirms that 65.8% of employees are more accepting of managers who have been internally promoted, while only 34.2% can accept externally hired managers.

Source: https://www.joblist.com/trends/promoting-managers-from-within-vs-hiring-externally-which-is-better

Of course, hiring externally also has its benefits. First, early employees may form cliques or display protectionism, and external hires can help break such habits. Second, external hires can bring in fresh resources and new skills. However, external hiring also has its downsides. Existing employees might feel resentful, which could lead to a wave of resignations. The new executive might be forced to bring in their own team, ultimately leading the founder to realize that the entire department has changed significantly, becoming unrecognizable from before.

A well-known example of internal promotion is Alibaba. When Alibaba was founded in 1999, there were 18 members in its original founding team, often referred to as the “18 Arhats.” Twenty years later, although half of the original team had left, the other half still held high positions, including that of president, with seven members becoming part of Alibaba’s final partner group during its IPO.

The root solution to this problem lies in the initial hiring phase. You must seek out talent who possess “quick learning ability” and “passion.” These individuals can elevate themselves and attempt to move up to a higher level. Such talent should always be considered for internal promotion, giving them a chance to prove themselves. If you are only hiring for specific technical expertise, these individuals may find it difficult to step up once they reach mid-level management. In such cases, external hiring is the only way to address the issue.

高管究竟該內部升遷還是外部空降？

先說結論：根據Hive自己創業的經驗，能內部升遷就內部升遷，因為內部升遷的優點多於外部空降。然而，如果團隊內的員工實在無法勝任該職位，立即要考慮從外部挖角空降，這將節省大量的時間和資源。

許多新創公司在從1到100的成長過程中，會面臨一個棘手的問題：究竟應該內部提拔（Internal Promotion）還是外部挖角（External Hiring）？這個問題在團隊規模還只有50人以下時可能不會明顯，但當公司進入成長階段（growth stage），需要快速擴展並處理多個面向時，CEO已經無法再事無鉅細地管理公司，無法繼續以創始人的模式運作，創始人會發現公司成長速度下降，此時創始人的第一反應便是立刻去外部挖角。

然而，這時候去挖角往往會碰到現實問題：便宜的人才看不上，優秀的人才卻又負擔不起。而內部提拔，總是差了那麼一點效果。這類問題在HR、財務部門和市場銷售部門的主管尤其常見。原因是許多B2B軟體公司創始團隊大多精通技術和產品，他們組建的團隊和人才也多圍繞這些功能。然而，創始人自己往往不擅長財務和銷售，日常人脈圈也以產品和技術為主，導致其創始團隊內極度缺乏財務及銷售類專業人才。

一般創始人的第一反應是，趕快從大公司挖人，但新主管上任後往往會遇到企業文化的衝突問題。可能是節奏感不一致，或是外部空降的人與公司內部員工產生矛盾。這類情況相當常見，最後新主管不得不離職，，但過程中，老員工覺得不公平也離職了，公司不但回到了原點，且受傷不小。

Hive的經驗是，在A輪到B輪之間，HR、市場、銷售等部門優先內部提拔，而財會部門則應該從外部聘請。財會屬於極其專業的領域，且涉及cashflow及融資，必須有相當的經驗才能勝任，因此這幾個領域的中層人員難以透過內部培養快速提升。但是HR、市場和銷售這類功能，只要內部員工願意學習並承擔責任，讓他們來主導外部招聘基層人員，通常更能執行創始人的意志，且有很大機會能快速上手。

內部提拔有幾個優點：第一，內部員工對企業文化熟悉；第二，提升了員工的忠誠度，不僅鞏固了被提拔的員工，也讓其他員工感受到升遷的合理性及管道；第三，內部提拔的員工熟悉整個部門的協作和流程，能減少磨合時間。joblist調查數據也證實，65.8%的員工，比較能接受被內部提拔的主管來管理，而只有34.2%的人能接受空降的主管。

當然，外部挖角也有它的好處。第一，許多早期員工之間可能存在小圈子或本位主義，外部空降可以打破一些舊習。第二，外部人才可以帶來新資源和新技能。然而，外部挖角也有潛在的壞處，像是原有員工可能會因此感到不滿，進而引發離職潮。新主管可能因此不得不引進自己的人，最終導致創始人發現，整個部門已經徹底改頭換面，與以前完全不同。

內部提拔的著名的例子是阿里巴巴。阿里巴巴於1999年創立時，有十八羅漢，也就是18位創始團隊成員。儘管20年後，已有一半的創始團隊離開了集團，但還有一半的人位居高位，甚至總裁的位置，並且有7位進入阿里巴巴上市的最終合夥人席位。

要解決這個問題的根本之道，在於最初招聘時，必須找尋擁有「快速學習能力」和「熱情」的人才。這類人才能夠自我提升，並嘗試將自己提升到一個新的層次。這類人應優先考慮內部提拔，給他們一個機會展現能力。如果尋找的僅是擅長專業技能的人才，那麼當他們晉升到中層管理後，通常難以再上一層樓。這種情況只能通過外部聘請來解決問題。