Internal Hires and Promotions: Are They Right for the Role?

Are they right for the role?

Read time: 4 minutes

In this edition

One of the interesting and enjoyable things about fast-growing businesses is that they present almost limitless opportunities for internal movement, be they promotions or new roles in different functions. These opportunities are appealing to everyone, yet they are not without their challenges.

In my experience, the main challenge arises when the best candidate for the job is not the person who has been there the longest. It is a head-scratcher. Loyalty is not a bad thing. All things being equal, loyalty is great. However, loyalty can never be the sole or primary criterion for hiring or promotion. Choosing loyalty over quality is a recipe for disaster. That said, letting down a loyal employee is not something any of us would look forward to.

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Internal Hires and Promotions

Internal movement and promotions reward great employees with paths for growth and retention. However, these opportunities are not without their inherent challenges.

It is a simple fact that every person has strengths and weaknesses—not just for the role for which they’re being considered, but for potential future roles as well. These strengths and weaknesses will influence how the team and adjacent functions operate. For leaders especially, you need to folks who are both functionally and culturally competent.

There is another factor, though, which, in my experience, hiring managers give too much weight to, and that’s loyalty. That a person is “next in line” or is “good at their current job” is not an irrelevant consideration, for sure. But it’s not where you should start.

Whether you are hiring into an existing function or transforming one to work differently, there are three factors you should prioritize. In order of importance, they are:

1. Leadership and cultural capabilities

First things first: why leadership skills over functional knowledge? Because leadership is a discipline unto itself. One’s ability to execute the fundamentals the leadership role—which blend vision and structure and people and communications—counts for more than functional knowledge.

Before you begin hiring, think through what the job requires from a management point of view. What are the leadership related stresses the incumbent will face? What cultural skills will you value to overcome them? What broader perspective might the person need to succeed? Articulate these in a job description and test for them in the hiring process.

2. Functional knowledge

Of course, you will prefer someone with knowledge of your sector. Hiring a good leader who has no functional background is as bad as hiring a functional expert who is a bad leader. However, there are often analogous sectors and parallel experiences that will serve a strong individual, especially if that person is a self-motivator.

The importance of functional expertise cannot be understated, yet it should not be the sole criterion. Effective leaders use their sector knowledge to make informed decisions, mentor their teams, and drive strategic initiatives. However, this expertise must always be evaluated in conjunction with leadership ability to ensure that those at the helm are not only knowledgeable but also capable of guiding their teams through complex challenges and dynamic market conditions.

The point, again, is that functional expertise is not intrinsically correlated with good leadership. And you should recognize this pretty quickly when you start to imagine how people with different functional but no leadership skills might perform in a leadership role.

3. Tenure/loyalty

While loyalty and tenure are valuable, they often cloud the judgment of hiring managers who place undue emphasis on longevity over aptitude and adaptability. Loyalty can be a consideration, but it must not be the primary factor for granting a leadership role.

It’s crucial to discern between rewarding loyalty for its own sake and recognizing loyal employees who have continuously developed skills that align with future organizational needs. Ask yourself: has the person adapted to changes, taken on new challenges, or demonstrated ongoing professional growth? This is the loyalty we want to reward.

The trouble here is that, if a tenured/loyal team member is being passed over, you’re probably in for a difficult conversation. If you are lucky, the tenured/loyal employee is happy in their role—and there is absolutely nothing wrong with this! I have had many people who I knew would be culturally and functionally qualified turn down promotions because they didn’t want the additional responsibility. They remained high performers, I’m happy to say.

But if you have an ambitious person who is being passed over, they deserve to understand why. The conversation should focus on explaining the decision transparently, discussing perceived gaps, and identifying opportunities for future development. This approach not only maintains trust but also motivates employees to align their growth with the strategic needs of the organization. Ideally, you will have already been speaking with them about their strengths and weaknesses and guiding them on a journey to improvement.


When building an organization, it is crucial to prioritize the right competencies for internal hires and promotions of leaders. Strong leadership skills are essential for driving organizational growth and shaping its culture. Functional knowledge, while important, ranks second and should support, not override, the assessment of leadership qualities. Additionally, while tenure and loyalty are valuable, they should not be the sole or primary basis for advancement. By adhering to these priorities, you can ensure that your internal hiring process aligns with strategic goals and fosters a dynamic and effective leadership team.

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