Why External Hires Are Vital in Today’s Evolving Market

The challenges of internal mobility

Over the years, I’ve seen countless organisations grapple with the dilemma of whether to promote from within or hire externally, particularly for strategic leadership roles. While internal promotions offer undeniable advantages such as continuity, institutional knowledge, and cost savings, they don’t always equip a business for what comes next. In fact, relying solely on internal mobility can sometimes hold a company back.

That’s not to say internal mobility doesn’t have its place. It is a tangible way to improve morale and increase retention and employee loyalty. But the pace of change in today’s business environment, especially in financial services and technology, demands a fresh approach and often, fresh talent.

The value of hiring externally

When you bring someone in from outside the organisation, you are hiring a skillset and bringing in new ways of thinking. These hires arrive with perspectives unclouded by the way things have always been done. They challenge long-standing processes, can identify inefficiencies that have become normalised internally and introduce frameworks that reflect current best practice and market expectations.

In a business undergoing transformation, or one that wants to, those attributes can be genuinely game-changing.

Sometimes, the comfort of promoting someone familiar can create a false sense of security. Just because someone knows the business inside and out doesn’t mean they are the right person to lead it into the future. I’ve seen organisations make promotion decisions based on loyalty or tenure, only to discover that the person lacked exposure to the demands and standards expected elsewhere in the market.

Why executive roles are critical

This can be particularly risky at executive level. Positions like CEO or CFO are simply too critical to be filled without due consideration. These are roles that shape company strategy, influence investor confidence and impact every part of the organisation. Getting it wrong can be extremely costly, not just financially but also in terms of direction and momentum. Some positions you can live with having high turnover of staff in, they’re usually lesser skilled roles. But when deciding who is going to head up the next era of your business, having that person leave after six months can be a disaster.

The cost of internal vs external hiring

Hiring externally for senior roles can be more expensive at the outset. Salary expectations have risen and it is not uncommon for external candidates, in my experience, to negotiate increases of 15 to 20 percent compared to their previous roles. Internal promotions, by contrast, often result in pay rises of around five to seven percent.

But spending more upfront can be more cost-effective in the long term if it secures the right leader. The risk and cost of a poor hire at that level far outweigh any initial salary savings.

Market conditions and opportunities

We are also seeing a shift in market conditions. After the post-pandemic hiring surge in 2022 and 2023, things have slowed. There is less movement and many companies are focusing more on retention and promoting from within. That makes sense when budgets are tight and stability is valued.

However, this slowdown has also created a window of opportunity. There is currently a surplus of highly qualified professionals who are available, many of whom might have been hard to secure during the more competitive years. For businesses that want to evolve, this is the moment to bring in people with the experience, ideas and energy needed to move forward.

This thinking applies just as much to our own industry. In recruitment, we often pride ourselves on spotting top talent for others, but we need to apply the same scrutiny to our own teams. Bringing in new people can revitalise the business and might open up new markets or bring in different client approaches.

The key, in my view, lies in balance. Internal mobility remains important and should not be overlooked. But it shouldn’t be the default approach. You should always be thinking about what the business needs next and who is best placed to deliver that.

Hiring externally isn’t a sign that you’ve failed to develop talent. It’s a commitment to your business’s future. It’s about recognising that the person who got you here may not be the one to take you where you want to go next. And if that means stepping outside your comfort zone to bring in someone who sees things differently, that’s not a weakness. That’s what good leadership looks like.

Ultimately, choosing whether to hire from within or look externally is less a recruitment decision and more a strategic one. It reflects your goals, direction and ambition.

At Marks Sattin, we specialise in helping businesses find the right leaders to match their ambitions. Whether you’re weighing the benefits of internal promotion or considering external executive search, our expert team can support you in making the best decision for your future.

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