Global Platinum shares their reasons for promoting from within.
Encourages employee retention- Even while the unemployment rate is high, an employee who feels that he/she is in a dead end job will eventually leave for a position with a company that isn't afraid to promote their own employees. If you don't have enough confidence in your current employees to do the job right, there isn't much point in them staying with your company. If you want to watch as your employees slowly head for the door, don't promote them when they deserve it.
Current employees already know the business- This is one of the best benefits to promoting from within. The employees who you currently have on staff are well versed in how the business runs. These employees are the best bet for filling the position with expertise. They already have relationships with the staff and therefore do not have to take time to build those relationships. Hiring someone new to fill a higher position in your company means this person has no idea about your actual business or the people that are charged with working there. That should be considered a great disadvantage.
Encourages others to strive harder- When other employees see that others have gotten promotions from within, it will give them the encouragement they need to better themselves so they, too, can obtain a promotion. When you work for a company, you want to know that you don't always have to stay in the same position forever. In fact, if you consistently overlook your current employees to hire a new employee to fill those higher positions, you will see morale drop like flies and employees won't be far behind it. There is no point in working for a company that doesn't allow growth for the employees.
Global Platinum strongly believes employers should consider promotion from within rather than hiring a new employee. There are great advantages to it for everyone involved. If you want to show your employees that you have faith in their skills, this is the best way to do it. Your business will flourish more than ever if you treat your current employees with respect and give them opportunity.