Why External Hires Get Paid More, and Perform Worse, than Internal Staff

Here is some research sure to rankle every employee who has applied for an internal promotion and been passed over in favor of someone brought in from the outside.
According to Wharton management professor Matthew Bidwell, "external hires" get significantly lower performance evaluations for their first two years on the job than do internal workers who are promoted into similar jobs. They also have higher exit rates, and they are paid "substantially more." About 18% to 20% more. On the plus side for these external hires, if they stay beyond two years, they get promoted faster than do those who are promoted internally.
"Most jobs are entered into through a variety of different routes, sometimes by being hired from the outside and sometimes by moving up from inside the firm," says Bidwell. "I was curious as to what the effect of these different routes would be" on an individual's job performance. His research is presented in a paper titled, "Paying More to Get Less: The Effects of External Hiring versus Internal Mobility."
Read the full story:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2961