Michelle Hannen reports on the choice of internal or external candidates

Businesses have two choices when attempting to fill senior vacancies: to either look internally and seek to develop existing talent, or recruit with the aim of bringing in new expertise, fresh ideas and, depending on the position, new business. But while the old saying 'you have to spend money to make money' usually rings true, in a soft insurance market cost control is the mantra, and along with it, filling vacancies with internal candidates.

The HR manager of one Midlands-based broker, which has adopted a policy of 'internal replenishment' in the current cycle, says there are great advantages to be gained from internal promotions.
Aside from avoiding issues such as getting the cultural fit right and reducing the amount of training required, he says an internal recruitment strategy boosts staff morale.

"It creates a feeling of goodwill. Even those staff who aren't promoted see that we value loyalty. They realise that the company takes career progression seriously and that wins their loyalty."
But he admits that the strategy is, in part, driven by financial realities. "Rates aren't rising so our commissions are down, and the renewals market is very competitive.

"We're not looking for huge growth in this market - we'd be content to just hold on to what we have." Such an approach may, however, see companies with a policy to fill positions internally missing out on a wealth of talent, claims the managing director of a Manchester-based broker.

He says that such a strategy in the current market is "naive". "It sounds like they're sticking their heads in the sand. With the soft market in full throttle, there is a lot of churn and people are moving around more than they did in the past two years.

"We see this as a great time to attract talented people looking for a fresh challenge who can hopefully bring business with them and add to our bottom line." But the HR director of a leading insurer says it is possible to combine promotions with recruitment while still maintaining morale among existing staff
In this way it is possible to get the best from both strategies in the current market. "It's all about being clear on the skills that exist in the team and being honest about areas that are lacking," she says. "Getting staff to buy into the process by asking them to identify their strengths and weaknesses will make it an easier sell to bring new staff in to cover the weak spots.

"Provided staff are involved from the start you should be able to bring in fresh eyes to look at the business and innovate while still maintaining the foundations of your existing operation." IT ' Michelle Hannen is an executive consultant at Mansion House Executive