First, unless you are dealing with clones, you should be able to find some key differences to help you decide.
Look carefully not only at the two employees’ current performance, but also at the knowledge, skills, abilities, and other strengths that are needed in the position you are going to fill. If the position requires leadership, the employee who has consistently gravitated into leadership roles should be given some extra points. Look also at the steps each employee has taken to continue his or her education, and do not overlook performance reviews, tenure, overall work history and career path. It can also be helpful to solicit feedback from other managers.
At the same time, you should be honest with the employee who does not receive the promotion. You can tell this person that the decision was difficult, and you will continue to look for advancement opportunities for him or her. Without making promises, give this employee a clear idea of the opportunities that can be available down the road. In addition, try to enrich this employee’s current position by providing more opportunities for achievement, recognition, and growth.
If promotions from within are part of your company culture, this employee is not likely to part company at this time.
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