Key Findings: Firm-specific skills, or those skills acquired through working at a specific organization, are often necessary for succeeding at certain jobs; and internal employees possess higher levels of these skills than do people outside the firm. But, managers either fail to recognize the importance of firm-specific skills or discount their importance, as managers are just as likely to fill jobs requiring high levels of firm-specific skills with external hires as they are with internal candidates. Organizations frequently hire “star performers” into jobs where they are unable to demonstrate their superior performance. For some jobs, particularly those with many junior positions per senior position, managers have a strong mandate to fill those jobs internally rather than hire from outside. Some managers are aware that routinely selecting external rather than internal candidates for certain jobs can degrade employees’ morale, and tend to fill these positions internally rather than externally. Jobs in which specific employees are able to exhibit a wider range of performance quality tend to be filled more by internally promoted or transferred workers, rather than by external hires.