One of the more puzzling developments in modern business is the employer complaint that they can't find the right candidates to fill their positions. But when you look closely, the jobs they are trying to fill require skills and experience that candidates are likely to get only if they worked for that employer! So, why aren't they promoting from within to fill those jobs? Employees that see this come to believe they have no way to get ahead, so they leave.

My colleague Matthew Bidwell has made the case in his new book "The Insider Advantage" that outside hiring and hopping around don't even work for employees let alone for employers. They advance faster when they stay put, and they perform better.

This is contrary to prevailing wisdom for a generation that career advancement is all about hunting for the best job elsewhere. It is what our Wharton students believe, as Bidwell notes. That makes the situation worse by causing ambitious employees to jump rather than wait a bit when there may well be opportunities.

What does the evidence show? First for employers, internal candidates who advance perform better and are also paid less than those who are hired into the same job from outside. The difference is big. It would save a lot of money to promote from within. Employers that do promote from within are also more likely to retain other employees: The more internal movement they see, the less likely they are to move—a virtuous cycle.

Second, employees who move to take jobs elsewhere typically end up doing the same work. They do get a pay bump at first, sometimes a big one, but the insiders catch up and pass them in the long run.

Bidwell finds that moving does pay off in one important way: If you can move around in your own organization, you can find jobs that suit you better and also where there is more opportunity for advancement. Career advancement here is measured by jobs with more responsibility, supervising more people and having more authority. The big attribute that leads to advancement, Bidwell argues, is having more and better relationships.This story is not a "who you know" account of buttering up the boss, it is that success in our complicated organizations requires a lot of insider knowledge as to how to get things done and how to get the resources needed to do so. Moving around builds those relationships to get that knowledge.

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