Why internal promotion matters

There are many benefits to filling an open leadership position by promoting a current employee. These include:

Reduced time and cost to fill: You will fill positions faster if you have already identified and prepared potential successors. The cost to fill will also be lower without the use of executive recruiters.
Faster time to productivity and value-adding performance: Leaders promoted from within often have wide-ranging networks and relationships that make them effective leaders. Ideally, they have already been prepared for eventual promotion and are ready to step into the role quickly.
Enhanced retention of people and knowledge: Internal promotion helps support retention across the enterprise. When employees see their peers being promoted, they see that advancement is possible for them as well. When leaders are promoted internally, their knowledge and expertise also stay within the organization and can transfer to others through mentoring and coaching.

Why tracking internal promotions is important

There are at least four reasons why you should measure and track your internal promotion rate for leadership:

Doing so enables you to be more intentional about how you fill leadership positions. With the trend toward flatter organizational structures, it's critical to think about these decisions strategically.
Tracking internal hiring helps ensure that your organization is hitting its promotion rate targets and reaping the associated benefits of internal promotion.
Keeping internal promotion on your radar will help you remain competitive as an employer. Employees are more likely to join and stay at organizations that they see as committed to internal promotion and advancement.
Mandatory human capital reporting requirements and voluntary human capital reporting frameworks often include internal promotion rates in general, and sometimes specifically, for leadership positions.

Interpreting your benchmarking results

There is no ideal percentage toward which you should aim for this measure. You should interpret your benchmarking results in the context of your organization, its needs and its constraints. The following factors are important for contextualizing your benchmarking results:

The leadership capabilities that you need to execute your organization's mission and strategy. Are these readily available, or can they be realistically developed within your organization?
Your organization's retention goals and needs, including DEI-related retention goals. If you struggle to retain mid-career employees, you may want to look at your targets and performance for internal promotion into leadership positions.
Your organization's budget and infrastructure for identifying and developing potential leaders. Does your organization have the budget and staff necessary to identify, develop and assess potential leaders for promotion?
Any regulatory or labor union requirements that relate to how positions are filled (for example, diversity requirements).

Build a structured approach to internal promotions

Current employment trends like shorter organizational tenure and fewer promotion opportunities mean that it is more important than ever to design a thoughtful and deliberate approach to promotion. Open positions should not simply go to external hires due to a lack of planning or strategy on your part. Ideally, there should be a rationale for your decision regardless of whether you decide to hire internally or externally.

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