MBA1820 Q&A Wednesday: Is it better to promote within or make an outside hire?

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It's time for Dell Tech Day's annual sales event celebrating our customers with fantastic deals and benefits. Perks include Dell Rewards, free shipping, premium Support and more. PCs like the Dell 14 with Intel Core Ultra processors will help you do more faster and with a premium suite of monitors and accessories, you can upgrade your whole setup with amazing savings. Visit Dell.com deals. Hey oh welcome to the $100 MBA Show. Your better business workout every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is a Q and a Wednesday episode. On our Q and A episodes I answer a question from one of you, one of our listeners. If you got a question you want to ask, just email me over@omar00mba.net Today's question is from Kenny and Kenny asks. Hey Omar, Love the podcast. Got a question about an important hire. I'm making my first leadership hire in my small business. I took the time to create a thorough job description for this new managerial role, but I wanted to ask you is it better for me to make an outside hire or should I promote within this position might be a good fit for somebody that is on my team already, but I'm also thinking maybe I can find somebody exceptional that can do a better job. Any advice on this would be super helpful. Thanks Omar. Kenny I really love this question that Kenny asks because at some point in our business journey we're all going to have to make this decision at least once. If not many times over. Is it better to promote somebody within your company to a position that has more responsibility like a manager? Or is it better to find the best talent for the position and getting some fresh blood from outside the company? I'm going to give you my take in today's episode. The advantages, the disadvantages, and how to make a decision for your specific business and situation. Whether you're like Kenny and you're trying to make a hire or it's a possibility this opportunity will arise in the future, you will find a lot of benefit in today's lesson. So let's get into it. Let's get down to business. If you, your parent or spouse served in the military, you could join our family. Our members saved an average of $70 a month on auto insurance when they switched. Tap the banner or visit usaa.com join today to check your eligibility Restrictions apply in business. Often we'll hear it's easier to sell a product to an existing customer versus trying to sell it to somebody who's never heard of you before. Same psychology and logic applies to recruiting somebody new in your business. You're selling them on your business, on your vision, on the job. And the more they're sold, the better job they will do. This is a transaction, you hiring somebody, them fulfilling their responsibilities, their duties, dedicating their time, effort and energy in exchange for compensation, experience and a chance to better themselves. So if we're going to use the same mentality, the same logic, then it's definitely going to be easier to sell somebody on a position you're hiring for that's already sold. Okay? That already part of the company. They're already producing results and obviously if they're qualified for a promotion, then they're doing a pretty good job. So that part of the equation, that part of the hiring process is much easier. You don't need to sell the vision. You don't need to make sure they're a good cultural fix. You know already they are because they're in your company and their learning curve to the new position is just naturally going to be faster because they know the systems, they know the product, they know the service, they know their colleagues. They're just going to have a leg up. They're going to really ramp up faster. Having said that, hiring somebody outside the company is not always a bad idea. I'm not saying that you should never hire someone outside the company because there are some advantages. Sometimes the person that available or best for the job is not in the company. There's somebody that is Doing it or crushing it somewhere else. Just like a sports team will often win a championship after they recruit a new player. This just recently happened a few years ago with the Toronto Raptors, a professional basketball team, right? They recruited an all star player, Kawhi Leonard. That same year they recruited him, they won the NBA championship. Of course they can train their players to get better and all the teams are doing that right. But often when you want to take a leap in your business, you'll have to just basically recruit better talent than you currently have in your talent pool. I've done this a few times in our companies where we can make one higher and it can make a significant difference to the outcomes that we see in the business because this person is coming with a high degree of talent. This is not saying that the people you currently have aren't talented or not the best people for the job they could be. But the point here is, is that when you open up your hiring to both internal and external candidates, you really get to see who has the best skill set and experience to knock this position out of the park. This is why I always recommend and like to entertain the idea that when we have a position open or promotion available, to make it available for people in the company and our company to apply for it, but also post the job publicly and interview some people for the position outside your company. So at least you have a gauge of what is available, what can you do with what you have and what you can possibly have if you hire externally. This also levels the playing field, allows people in your company to have the opportunity to apply for that position for that promotion. And of course it can be disappointing if they don't get that position. But in my experience, the team members that bounce back from that, that take it on the chin and realize, okay, I have a lot of work to do here, there's still a lot I can learn. There'll be other opportunities are the ones that really succeed. I've seen this with my own team recently. We had a new position open. We opened it up to people in our company. Many team members applied, but one of them only got it right. So there was only one position open. So there were a handful of people that did not get the job that, that are still with us today, but they have a great attitude and they're thriving. And guess what? When a new position comes up and is available, who do you think is going to be at the top of our consideration list? The people that go for things that really bet on themselves. A lot of people want to Avoid this. And they want to just say, hey, we have a new business. We're going to make a hire outside so we don't have to deal with any of these disappointments. You can't let fear control what's best for your business, what's best for your company. You might find somebody great in your company that's great for this position and you miss that opportunity because of that fear. So how do you choose what might be best for your company? As a standard rule, open the position up for outside and internal hires. Right. Internal promotions as well as outside hires. I do preference though, if the position involves a high touch experience. What do I mean by that? Well, for example, our customer service manager, cj she is an internal hire for this position. She was promoted into this position. And one of the advantages she had is that she knows the product inside and out. She knows the customers inside and out. She knows the teammates that she will manage inside and out. She knows the culture, she knows the brand. She ate, breathed and lived webinar ninja for years before she got promoted. So that is hard to really put a price on Somebody in that type of position that has a lot of touch points. If they came in as an outside hire, their learning curve is going to take three months really to ramp up. It's going to take them three months at least to get to know their colleagues, understand who they are, how they should be evaluated, their personality types, who our customers are, our marketplace, the ins and outs of the product, the changes that we've had over the years, the challenges, all that stuff. Okay, so this is why you need to understand the position you're hiring for. And in my opinion, if there's a lot of touch points, there's a high touch type of position where they're interacting with a lot of people and information. Then I put a preference or I put kind of more weight to a promotion opposed to say, for example, you are going to hire assist admin engineer in your software company. This person is going to be in charge of all your infrastructure, your security, your redundancy. They have to be really, really acquainted with the technology. And they could know the technology from not working with you. They can work somewhere else with a similar kind of stack or technology, you know, configuration. They don't really need to know the product 100% as much as a customer service manager. They don't really need to know the customers really as much as somebody who's running customer service. And they're not managing anybody, they're just working with other colleagues. So you could see that this job making an outside hire and making an internal hire is pretty much the same. Doesn't require to have a Foundation, stocks.

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To wrap up today's lesson, today's Q and A Wednesday's question from Kenny should he make a promotion or an outside hire for a new managerial position? Review today's lesson. Take a look at the position itself, look at the advantages and disadvantages that I described and implement that matrix in making this decision. I do want to say there is one advantage to making an internal promotion that I did not mention. Say, for example, you make that promotion and the person in this new position doesn't really work out. They just aren't able to cope or not able to do the job up to the expectations you lay out. You have options. You can always put that person back in the position they were where they were doing a great job. And in most cases I found that that person is often relieved and not really upset. And then you can always again go ahead and try to fulfill that position again through the interview process. Thanks so much for listening to the $100 NBA show. If you love it here, hit subscribe so you don't miss a beat. Smash that subscribe button right now on whatever app you use to listen to my podcast so that you can get our next episode automatically and to have free access to over 1800 episodes in our archives. Before I go, I want to leave you with this. If you're hiring, if you're making promotions, you should just take a moment and say, wow, I'm proud of myself because this means your business is growing. This means that demand is growing. That means you are selling something people want. This is good, right? It's very positive. You should recognize and celebrate the fact that, hey, your little family is becoming bigger. Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care. Hey Fidelity, how can I remember to invest every month? With the Fidelity app you can choose a schedule and set up recurring investments in stocks and ETFs. Huh? That sounds easier than I thought. You got this? Yeah I do now? Where did I put my keys? You will find them where you left them. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC Member nyse, SIPC.