Should your agency hire externally or promote from within?

See how to decide whether to hire externally or promote from within.
Written by: Karl Sakas

Is it better to promote from within? You know it’s a good strategy… but it’s not always an option. As you grow your agency and build your leadership team, how do you decide whether to hire externally vs. from within?

Let’s look at the pros and cons of each approach, to help you decide which is the right option for you today—and for your next hire.

Deciding whether to hire externally or promote from within

As engineering manager Kate Heddleston notes, there are two ways to get great people: “make” them (promote from within), or “steal” them (hire externally).

When to Promote from Within

Promotion-from-within is a good “default” option. Current employees know you, your team, and your agency. You know (or can make an educated guess about) their likely strengths and weaknesses. And people can see there’s a path for internal growth; they won’t have to leave the agency to grow in their career.

For this to work, you need a candidate (or multiple candidates) who want to get promoted, and who have the potential to do the job. To put it another way, they need Desire and Competence; when you promote them, you’ll create Capacity in their schedule.

The challenge is that if they don’t manage anyone already, you don’t know what they’ll be like as a manager. Prior experience as a team “lead” can help (e.g., mentoring junior team members as a “design lead” or “strategy lead”) but that doesn’t help if they haven’t previously done that work for you.

You might also need someone with more experience than your current team has—and you can’t wait months to develop it internally. As I note in my article about training employees to become Client Strategists, the up-leveling process can potentially take years.

This is especially true if your current team members haven’t worked at other agencies. Working elsewhere gives people important perspective on their work. I saw this as an agency employee—I took experiences from the first agency, to make better decisions at the second agency. Now as a consultant, I can share advice based on what I’ve seen at hundreds of agencies.

When to Hire Externally

When you hire externally, you can hire someone with the ideal (or semi-ideal) level of experience. When it works, you’re jumpstarting the entire process, to get the exact level of experience you need. You’ll want to think about how much experience is ideal, versus the minimum acceptable level.

When it comes to hiring people to join your agency leadership team, I recommend hiring people who’ve worked at 2+ agencies before yours. This gives them important perspective about the work, to help them customize their approach to your agency.

This is especially important when you need someone who’ll manage existing team members (e.g., a manager to oversee individual contributors, or a director to manage managers). You can learn from their mistakes elsewhere, instead of having them make their first mistakes at your agency.

The downside is that you don’t know if an external hire will fit into your team. And they may over-represent (or even mis-represent) their expertise. As a former mentor observed, people will say anything to get a job at your company. Even when you have a great match, it takes longer for an external candidate to adjust to the agency, since they’re doing a new job at a new place.

Be sure to check references for any external hires—ideally Extreme Referencing, or perhaps something less intense. Consider more in-depth background checks, too, especially if they’ll be handling money.

What About “Both”?

What if there were a candidate that had the benefits of “culture fit” while also bringing helpful external experience? They exist! Review the list of top performers who previously left your agency because you didn’t have room to promote them.

You might have a great new job for them today. For instance, an agency owner mentioned they were considering re-hiring a great project manager. After leaving the agency earlier in their career, they’d worked at several agencies… and seemed like a good match for what the agency needed today.

This is part of why companies like McKinsey have an employee alumni program—to stay in touch with people who might eventually help the company. When you build an alumni program on a one-to-many basis, it doesn’t require a lot of incremental effort to stay in touch with everyone.

More recently, I recommended this to an agency that had a long-time team member who wanted a new role. The agency didn’t have that role for them now; I suggested they help the team member find a new job, to potentially return in the future as the agency grew.

Still, be cautious; people change, and your agency has certainly changed. Make sure you know who they are (and what they want today), and that they understand what the agency is today (including how you’ve changed as a leader yourself). This is especially important if you’ve made major changes in how you operate as a leader, and/or how the agency itself operates.

Building a Leadership Pipeline: How to Develop Internal Candidates

If you want to promote from within in the future, create opportunities for people to move up. This tends to improve employee retention, because people see they don’t have to leave to grow in their career.

At many agencies, that growth progression looks something like this:

  1. Individual Contributor
  2. Lead
  3. Manager
  4. Director
  5. VP
  6. CxO

You might not have all these roles today—and not everyone can move up to a C-level position. But it helps to think about your options.

Creating Structure for Internal Candidates

It’s easier when you define a clear new-hire ramp-up plan. It’s easier to manage people when they know what you expect from them. But be careful about over-promoting people; you’ll end up with a manager with a director title, or a director with a VP title… and now you’re stuck ’til they leave.

Recognize that not everyone wants to move up to management. Ideally, let them grow within their Subject Matter Expertise (SME) area, instead of pushing them to manage. For instance, someone might become a strategist or switch to sales, instead of becoming a manager.

If someone’s on the fence about becoming a manager, encourage them to read my book Made to Lead: A Pocket Guide to Managing Marketing & Creative Teams. It gives them an idea of what to expect. This can also help you have two internal candidates: assign them both to read the book and “report back” on what they learned. When a client did this a few years ago, one of the internal candidates bowed out—they didn’t realize how hard it would be.

Your current and aspiring managers can also sign up for my free email course: “Become a Better Manager in 30 Days.” You might like it, too—bite-size reminders, every workday for a month.

What to Do at Your Agency

Do you have a strong internal candidate for a current role? Consider promoting from within—or at least giving them preferential treatment in the hiring process. Even if you don’t promote them, it’s important that they feel you gave them a fair chance.

Don’t have someone internally who can do the role (and wants to do the role)? You’ll need to hire externally. But take this as a wakeup call, and start building a leadership pipeline so you can hire future candidates from within.

Either way—congrats on your growth, and good luck in your hiring!

Question: How do you approach the “hiring externally” versus “promotion from within” decision at your agency?

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