Project Managers – External Hire or Internal Promotion?

Date: November 07, 2018

Project managers often hold the key to whether an interior construction or complete buildout will be completed on time or weeks behind schedule. In this critical and customer-facing role, who you appoint as the Project Manager, must be able to professionally represent your company at all times. The long-time debate becomes, do you promote from within, or are externally-hired Project Managers more effective in getting the job done. The jury is still out, but research suggests that more Project Managers are hired externally than those promoted from within. Depending on the complexity of the project, hiring externally for the position can be a good idea if the current employee pool lacks specific qualifications or experience. However, whenever possible, interior remodeling experts recommend providing continual training for all employees so you can mold highly qualified Project Managers that you can promote from within. Here are the top three reason why:

  • Company Morale. Your employees want to know that there are advancement and promotion opportunities. By hiring for more senior or supervisory roles as opposed to elevating a current employee, you subconsciously signal to your staff that they are not qualified enough to be considered and/or that their current position is all you are willing to entrust them with. Either way, this can lead to a major decrease in workplace morale, and can also make it harder for any new (externally-hired) Project Manager you bring on board.
  • Less Expense. When you hire someone from another company, you often have to offer them significantly more, either through base salary, bonuses, or benefits, to lure them to your company. This can be more costly for you, especially if the new Project Manager is not the best fit. Economists studied the compensation difference between an internal promotion and an external hire, and found that nearly 20% of new hires were paid significantly more than internally promoted employees. This is not to say that those you promote do not deserve an increase in salary, but the increase may not be as much as other intrinsic motivating factors. Examples like prestige may be more valuable to them.
  • Work Continuity. An internally-promoted employee already knows the company. They already have relationships with their fellow colleagues, with supervisors, and generally, have a solid understanding of the work expectations. Simply put, the learning curve is less steep which can be important if they are tasked with heading a complex project that has an aggressive delivery schedule. Even with the most seasoned Project Manager, when hired by a new company, has to become accustomed to how they do business and build a rapport with subordinates.

Do you have a large construction project, interior remodeling effort, or considering a complete buildout?

At the Beam Team, our experienced team of Project Managers are skilled in managing projects of all sizes. Contact us today for a complimentary project review consultation, and we’d be happy to review how we can be an immediate asset to your company.