May 7, 2025 in Articles

Hiring From Within to Preserve Institutional Knowledge

Preserving institutional knowledge may not be at the top of most business leaders’ list of priorities, but it should be. According to some estimates, as much as 80% of what employees know is tacit knowledge. Tacit knowledge is held in people’s heads and is often hard to convey. 

When experienced employees retire or depart your business, their tacit knowledge can be lost, especially if you fill their vacancy with external talent. One effective approach to solving this problem is internal recruiting and talent nurturing. 

Promoting from within preserves institutional knowledge, especially when you plan ahead and allow outgoing employees to mentor up-and-coming talent. Here’s what you need to know. 

What Is Institutional Knowledge?

Institutional knowledge refers to the collective expertise and experiences held by your employees. The information in the minds of seasoned team members is usually not captured in any formal policy or system. Some examples include the following:

  • Pain points for a key customer 
  • Knowledge about best practices for reducing procurement expenses 
  • Behind-the-scenes processes that are not formalized

Retaining this knowledge is crucial to long-term business continuity and growth. Any time this knowledge is lost, it can take months or even years to replace. Unfortunately, replacing tacit information comes through trial and error, as someone must “relearn” what the outgoing employee took with them. 

The Advantages of Hiring From Within

The key advantages of promoting from within include the following: 

Retention of Institutional Knowledge

The most obvious benefit of internal hiring is that you can hold onto precious institutional knowledge. Internal candidates are already familiar with your company’s operations, values, and strategic objectives. 

If the departure of the seasoned employee was planned, you should arrange for them to mentor their replacement. This ensures that the newly promoted individual retains as much tacit information as possible. 

Reduced Ramp-Up Time

New hires often require months to reach peak productivity. This is particularly common in specialized fields or high-level leadership roles. In the most complex roles, ramp-up time can extend to a year or more. 

However, if you fill these vacancies with existing employees who have been mentored by the individuals they are replacing, you can drastically reduce ramp-up time.  

Cost-Effectiveness

Internal recruitment is a savvy way to save money. While you will have to pay for training and upskilling, you can avoid the costs associated with advertising, recruiting, and candidate screening. You can also skip the expensive and lengthy onboarding process. Since the new “hire” is already established with the organization, there is also a reduced risk of churn. 

Improved Employee Morale and Retention

Employees want career advancement opportunities. When they know that these opportunities are available, they will experience better morale and job satisfaction. Your top talent is more likely to remain loyal to the company, which drives down turnover rates and promotes long-term business success. 

Enhanced Succession Planning

Internal recruitment supports succession planning by preparing employees for leadership roles. This proactive approach ensures that your organization has a pipeline of qualified candidates to step into critical positions. 

Implementing Effective Internal Recruitment Strategies 

Ready to ramp up your internal hiring efforts? Here’s how:

Post Jobs Internally First

Before turning outward to fill a vacancy, look within. Make sure that your team members are aware of available opportunities and offer a streamlined application process. After all, they already work for your business. Make applying easy to encourage team members to interview for positions they are passionate about. 

Invest in Your Team

Provide training and development programs that equip employees with the skills needed for advancement. Your team members will recognize and appreciate that you care about their long-term growth. 

Identify and Nurture Top Talent

Determine which employees have that “x factor” that would make them good leaders. Talk to them about their short and long-term professional aspirations. Discuss future advancement opportunities and encourage them to acquire new skills that will support their career objectives. 

Create Mentorship Programs 

Pair employees with mentors who will convey tacit knowledge and guide the career development of junior team members. Match mentors and mentees based on each person’s strengths and weaknesses, as well as the career aspirations of the junior members. 

Build an Internal Talent Pipeline With AssetHR

At AssetHR, we understand the value of internal hiring and leadership development. Our comprehensive talent management solutions are designed to unlock the full potential of your workforce while promoting business continuity. Contact us to learn more about our leadership development services.