At some point, most financial services businesses face the same decision. A role opens up, or growth creates the need for another layer of leadership, and you have to work out whether the right move is internal progression or an external search.
On paper, promoting vs hiring seems straightforward—but in reality, it can shape your company’s culture, leadership strength and long-term performance. From our perspective at Godfrey Group, this is rarely just about filling a seat. When employers ask, “Should I promote or hire?”, what they’re really trying to determine is whether the business needs stability or a change in focus.
Promoting vs Hiring: Start With the Purpose of the Role
Before deciding between promotions vs new hires, get clear on what the role needs to deliver. Is this about protecting what already works, or changing direction? The answer usually sits in the gap between what your team can do today and where the business is heading. If that gap is about leadership and continuity, promotion can make sense. If it’s about new expertise or sharper commercial thinking, external hiring often closes it faster.
The Benefits of Promoting Over Hiring
Research indicates that external hires are 61% more likely to fail in their first 18 months compared to internal promotions. In regulated environments like financial services, promoting internally often reduces risk because candidates already understand your compliance framework, client expectations and internal systems.
The benefits of promoting over hiring often include:
- Faster ramp-up time because systems and stakeholders are already familiar
- Lower cultural risk, particularly in advice and compliance-heavy teams
- Clear career pathways and succession planning that strengthen retention
- Reduced recruitment cost and disruption
We’ve seen this approach work best where the next-level capability already exists internally and simply needs formal recognition. That said, promotion based purely on tenure or loyalty can create strain. If someone steps into a role before they are genuinely ready, the performance gap affects not only them but the broader team.
The Benefits of Hiring Over Promoting
The benefits of hiring over promoting become clear when your business needs something your existing team can’t yet provide. External hires bring experience from different systems, client models and leadership environments, which can sharpen decision-making and lift standards quickly. Sometimes, that expertise simply isn’t available internally.
External hiring tends to make the most sense when:
- You’re entering a new product or service area
- Regulatory complexity has increased
- Growth has outpaced leadership depth
- A clear performance reset is needed
That said, bringing someone in from outside requires careful onboarding. Without strong integration, even capable hires can struggle to gain traction.
Should I Promote or Hire? Questions That Clarify the Decision
When clients are weighing up whether they should promote or hire, we usually encourage them to consider a few key questions:
- If you promote internally, who fills the vacancy that follows?
- Is the internal candidate already operating at the required level, or are you relying on potential?
- If you hire externally, do you have time and leadership bandwidth to onboard properly?
- Is the role designed to maintain momentum, or reshape it?
Looking at promoting vs hiring through this lens reframes the discussion, and the decision becomes less about preference and more about structural impact.
Promotions vs New Hires: Consider the Cultural Effect
Promotions vs new hires also influence culture in ways that are easy to underestimate. Internal progression builds loyalty and reinforces trust in leadership. External hiring can introduce new energy and raise expectations across the board. The strongest financial services firms we work with rarely rely exclusively on one approach. They invest in developing internal talent while remaining open to external expertise when it adds measurable value. That balance protects both continuity and innovation.
How to Make the Right Call for Your Business
This decision works best when it’s intentional rather than reactive—especially in financial services, where leadership changes ripple further than you expect. Be clear about what this role must solve over the next one to two years, not who is most convenient to step into it. When you define the outcome properly, the right direction usually becomes obvious.
A Better Hiring Decision Starts With the Right Advice
If you’re currently deciding whether to promote internally or bring in someone from outside, it can help to step back and talk it through. If you’d like to discuss your options, call Godfrey Group on 02 8004 9350 or enquire online today!
