When there’s room in the budget for a new position in your department, it’s okay to do a happy dance. We won’t judge. When you’re done celebrating, it’s time to get down to business.

You have a lot to think about. Do you from hire outside or promote from within? If you promote, who do you choose? How do you make the process fair and still find the right person for the job?

Why Promotion?

Promoting from within sends a strong message to your team. It shows that you value their work. Promotion rewards employee performance that is in line with company values and reinforces the kind of behavior you’re looking for.

Not to mention, promotion is cheaper than hiring external people who usually have more experience and relevant education. External hires are not only more expensive but are more likely to leave the company sooner, according to one study.

Define the Job

Consider implementing an internal hiring process. Though promotions are a positive thing, the process may leave people dissatisfied if done unfairly. Being overlooked for a promotion is a top reason people leave their jobs according to a survey by CareerBuilder.

Start by creating a list of Key Performance Indicators (KPIs)  for the new position. Even if you have a person in mind for a promotion, it’s only fair that the new position is well-defined. KPIs keep you from promoting based on seniority. Instead, they develop a competitive model of promotion based on performance and merit.

Decide Who Gets Promoted

Though HR usually defines when and how people move up in a company, managers usually have a lot of input in the process. After all, you know your team. You’ve seen their challenges and triumphs firsthand.

When it’s time to decide who gets promoted, look at the basic qualifications first. Ask yourself:

  • Does he show up on time?
  • Is she keeping up with currently assigned work?
  • Is he achieving goals?
  • Does she elicit positive reactions from clients and coworkers?

Six Signs an Employee is Ready for a Promotion

Giving a promotion is about recognizing a person’s hard work and rewarding them for their dedication. Here are six signs that show an employee may be deserving of a promotion:

1. Consistently high-level performance

The keyword here is consistently. You’re probably not looking to promote someone because he had one huge acheivement last week. Instead, look at data over time. If an employee is regularly meeting or exceeding goals without long lulls in between, he might be a good candidate for promotion. Consistently high levels of performance show resiliency, which upper-level employees need.

2. Flexibility

Taking on more responsibility can mean moving from very concrete tasks to more idea-based work. Things in management are often uncertain and projects can feel unstable. A promotion-ready employee is someone who is comfortable with changing direction at a moment’s notice. Think back to the last time you had to ask an employee to drop everything and focus on something new. Did she respond by jumping right in, barely fazed by the sudden change? Or did she complain and make excuses later on?

3. Daring

Employers are always saying they want people who think outside of the box. Most employees, though, are given tasks to accomplish and do just that work. An employee ready for promotion likes a challenge. He sees new tasks as invigorating rather than stressful. And he isn’t afraid to roll up his sleeves and try something new to see if it will work.

4. Ready to learn

An employee who frequently asks to take on new work may be ready for a promotion. Look for people who tend to master new skills easily. They finish work before deadlines and then help their teammates do the same.

5. Passion

A good candidate for a promotion is someone who is interested in all aspects of the work. Passionate employees use team-based vocabulary, saying things like, “Our project is really taking off” or “We knocked that proposal out of the park.” This employee puts the team above himself.

6. Already making a difference

Who is the person on your team you immediately go to when you need something done? If your go-to person is also the team’s go-to person, you’ve probably found yourself someone worth promoting. This type of employee comes up with solutions and actively seeks to find ways to help. She is respected by her colleagues and trusted by her superiors.

Make it Happen

Hopefully, now you have an amazing employee in mind for a promotion. Of course, there are certain steps to take before offering the new job.

  • Talk to other people about the employee’s performance. Find people who interact with him in ways that you don’t—colleagues in different departments or direct reports.
  • Look at actual data about her performance. Has her presence had a consistently positive impact on the company?
  • Understand what his current job responsibilities are. It’s possible he’s already doing a lot of the same work in his current role.
  • Write up the new job description even if there are overlapping responsibilities. A promotion should feel like a step in a new direction.
  • Talk to the employee to assess the match between the new role and her future job goals and interests. You’d be surprised how many people who are high performers have no desire to manage other people. It may be that the best person for the role doesn’t want it.
  • Decide on how the employee will be compensated in his new role.

It’s a proud moment when an employee you’ve mentored shines in the workplace. Granting promotions is one of the best things about being a manager. Enjoy this experience—your employees sure will!

Lisa Andersen
Lisa Andersen Content Editor
Part of Planday’s content team in Copenhagen, Lisa is into yoga and loves good writing. Her experience includes working with communication and PR for international grassroots organizations in Argentina and Bolivia.