Grow your own: the value of internal promotion

I was intrigued to read research in The Sunday Times last month on the added value of internal promotion over external hiring. The analysis demonstrated that in big companies internal promotions at a senior level generated 6% more value for the company and cost 20% less in salary terms than their external counterparts.

This certainly accords with my experience and I suggest doesn’t apply to only big companies or only senior level appointments. As an employee-owned company, it is our policy to advertise all vacancies internally first, and to encourage internal promotions. This very process encourages ambition, gives people an opportunity to demonstrate their ability and interest, and shows that the company places a premium on the value of its employees. Internal promotion ensures the applicant understands the company culture and hits the ground running.

Of course, there are occasions when no suitable internal candidate exists and new blood from time to time ensures a company does not become insular, but the general principle certainly works for us.

Indeed we have recently announced three senior appointments at general manager level all from internal candidates. This means all our depot general managers have now come from internal candidates who have progressed through the ranks, with our senior general manager, Pete Mullan, having joined us in 1980. Pete came to us with an engineering background on a temporary basis that summer in between other jobs, and in our very young business had to be laid off in January 1981. By March 1981 (still only our ninth month in business) we were able to ask Pete to return and he remains a loyal and highly valued employee, respected throughout the wholesale sector.

I applaud the efforts of the Women in Wholesale conference held recently for similar reasons - why would it make sense not to properly use the skills and aptitudes of half the population? In that context it was a real step forward to appoint our first female general manager, Becky Webster, at Halifax last year. Becky also started working for Parfetts on a part-time basis while still a student and has progressed through the ranks to her current role. We have other excellent female employees at all levels but like the rest of the sector can certainly do more in future in this area.

‘Staff are our most valuable asset’ remains an overused cliché, but good businesses know it is true and realise no business succeeds on the ability of senior managers alone - hence the Parfetts commitment to employee ownership as recognition of those staff, past present and future.

Steve Parfett is chairman of AG Parfett & Sons