The Advantages and Disadvantages of Internal Recruitment

Identifying organizational gaps is one of the biggest hurdles facing HR professionals and leaders. In today’s competitive job market, there are many candidates applying for every position, each bringing their own set of skills, values, and experiences.

To ease this hiring process, a company can recruit internally. As a result, this ensures the selected candidate is suitably qualified and fosters talent development.

But what exactly is internal recruitment? Are there any advantages or disadvantages? Is there a specific process to follow when you recruit internally? Well, let’s answer those questions.

What is Internal Recruitment?

Essentially, internal hiring or internal recruitment refers to hiring existing employees to fill a vacancy over recruiting new workers from outside the company.

In other words, you circulate information regarding openings internally instead of posting them publicly. Typically, this occurs through internal communication channels or mediums within your team or across the organization. Compared to hiring externally, it saves time, resources, and human effort.

Don’t believe me? Numerous studies have looked at hiring costs.

• As reported by the Society for Human Resource Management (SHRM), the average cost per hire was almost $4,700. According to many employers, hiring a new employee can cost three or four times the salary of the position.
• Depending on your industry, it is likely that you should aim for an average time to hire. According to a LinkedIn study, companies in engineering and other technical fields in research and finance take the longest time to hire employees (up to 49 days). Comparatively, the sales and customer service industries have much shorter hiring times (around 33 days on average).

Some of the most common types of internal recruiting include:

• Promotions. One of the most popular forms of internal recruiting is promotion.
• Transfers. Typically, a transfer involves moving to the same position at a different location or to a similar position in another department.
• Temporary to Permanent. An intern or temporary position holder is promoted into a full-time position, similar to a promotion.
• Employee referrals. Often overlooked by hiring managers, internal recruitment is a hiring manager’s dream. Employee referrals are an effective, cost-effective way to reach hiring managers with qualified candidates. You can attract a constant stream of employee-referred candidates if you implement a system to encourage and gamify the referral process.

The Advantages of Internal Recruitment

It is more efficient to hire internal candidates than to recruit externally:

You keep your best talent.

Whenever you promote from within your company, you send a very strong message to your team as a whole. When they learn that there’s a clear path to advancement, they’ll see that working at the company can be a career rather than just a job.

As a result, your organization that has a clear pathway for career advancement is far more likely to retain your best talent.

Streamlines the hiring process.

Recruiting externally involves finding candidates, evaluating them, and, if all goes well, convincing them to join your team. Suffice it to say, this takes both time and money.

On the other hand, internal candidates already belong to your organization, so finding and engaging them takes much less time and money. Additionally, assessing internal candidates is easier because:

• They’ve already been prescreened to ensure they are culturally compatible.
• You can easily access their track record.
• There may not always be a need for full management interviews. As an example, the department head already knows the candidate if the candidate is moving within the department.

Basically, internal candidates fit the company’s culture no matter what their role is, and they’re already known to hiring managers. Plus, you know their strengths and weaknesses, as well as how they work.

Reduces onboarding.

It is possible for current employees to start a new job within the same company without needing an extensive onboarding or training period. After all, it’s likely that they already know most of the policies, procedures, and expectations of your company. As they’ve been working together for some time, they may also need fewer meet-and-greets with colleagues.

For promotions or job changes within the same team or department, hiring internally may also require less time to understand the context and content of a new role.

It costs less.

According to research, external hiring costs 1.7 times more than internal hiring. When you hire from within, you usually do not need to:

• Place ads on job boards. Your company’s internal newsletter or email are great ways to inform internal candidates about job openings. If all your employees work at the same location, you could also post job ads on a bulletin board.
• Become a member of resume databases. If you’re looking for passive candidates, ask your managers about their team members or check your HRIS to find coworkers who might be suitable.
• Pay for a background check. When you hire internal candidates, you may have already conducted background checks. According to their manager or employee records, you know whether they are in good standing.

Risk reduction for performance.

A company that hires from within has more information about the candidates they are considering. From their own files, they can view current employees’ records and performance reviews. It may be easier for businesses to contact coworkers and supervisors since they can access more reliable references.

A job change or promotion is unlikely to affect an employee’s personality or behavior as they are already a part of the organization’s culture.

Enhance employee engagement.

It shows your employees that you value them and want to invest in them when you promote them from within. A good way to boost morale is to give employees opportunities for advancement or to move into similar positions.

The reason? The knowledge that similar opportunities may exist in the future is gained by employees who change roles, and others are aware of such opportunities. As a result, employees are engaged and retained due to a culture of trust.

The Disadvantages of Internal Recruitment

It is important to remember some things regarding internal recruitment, despite its many benefits.

Employees and managers will become resentful.

If an employee who was considered for a role is ultimately hired, they may feel bitter. It is also common for managers to feel uncomfortable losing good team members, and they may even obstruct the promotion or transfer of good team members.

Echo chambers can be created by it.

Working practices can stagnate if you rely too heavily on internal promotions. Rather than coming from within your company, new ideas and fresh perspectives are more likely to come from outside of it.

New hires bring fresh eyes to the company. As a result, you’ll get fresh insights from them.

The talent pool is reduced.

Choosing internal recruitment reduces the number of candidates a company can choose from. Existing employees may make the best fit in some cases, but external perspectives might be better in others. The role and team may benefit from innovative skills and fresh ideas brought by a new employee. Employee complacency and stagnant company culture could also result from an overreliance on internal recruitment.

Further, an internal candidate may not succeed in a new position. It is possible that their skills and experience will not translate effectively, and a change of position may affect their attitude or behavior at work. As opposed to an external candidate who knows the role in question, they may need additional training.

Inflexibility in the workplace.

A more traditional or standard culture can be promoted by hiring internally. Culture-fit employees could become stuck in routines or habits because they are too comfortable with current practices.

The problem may be more acute in leadership roles. The organization may be able to introduce new practices and perspectives by hiring externally.

It is not always possible for fast-growing companies to hire internally.

Recruiting new employees within a company may not be feasible for small or growing companies. When companies grow rapidly, there may not be a sufficient variety of internal candidates to choose from, forcing them to look outside the company for candidates.

There is another gap to be filled.

Recruiting internally may result in another gap elsewhere in the organization. To take over the role of the previous employee, external hiring may be necessary, resulting in time and cost issues. If a company’s talent pool is too small for internal hiring, small and fast-growing companies may not be able to hire at all.

By implementing workforce planning processes, HR managers can ensure that there are no unforeseen gaps within an organization. Leaders or the HR department can ensure that the right people are working on rigs by analyzing business objectives and workforce capabilities.

[Related: 9 Ways to Automate your Recruitment Process]

FAQs

1. What’s the difference between internal and external hiring?

Traditionally, external recruitment involves sourcing candidates outside of your business, perhaps through online job boards or recruitment agencies, as opposed to internal recruitment.

In contrast, internal recruitment involves hiring or promoting current employees within your organization.

2. How and when should internal hiring be considered?

Many HR and business leaders are still debating the answer to this question. A company usually looks for or attracts potential candidates from outside when there is a vacancy.

Despite its numerous benefits, it’s also important to hire internally.

You will find someone with experience in multiple disciplines who can add unique capabilities to your business. The bottom line, however, is to ensure that your business stays true to the core goals and values that you and your employees have worked so hard to achieve.

You should, however, also provide your employees with ample opportunities for career development and growth as a responsible business leader.

Further, there’s the trust factor to consider. Those who have earned your trust by working for the organization and being integral to its success will be trusted.

The next question is when should you consider hiring internally?

When it comes to filling job vacancies at your company, internal hiring might be your best option.

• An in-depth understanding of the company’s internal operations is necessary for the position.
• You can’t afford to hire and onboard external employees.
• Within the existing workforce, most employees already possess the qualifications needed for the vacant position.
• Your current employees are eager to prove their worth once again and take on the vacant position.
• A vacant position must be filled as soon as possible without much time for external talent exploration.

3. In order to minimize the disadvantages of internal recruitment, what could you do?

To avoid resentment, cultivate trust, and ensure effective hiring, you could:

• Ensure promotions and job changes aren’t the only means of recognizing or advancing employees. Offer training, job shadowing, and rotational opportunities. Establish a frequent reward system for employees as well.
• Ensure that the process is transparent. Describe the hiring process and why internal candidates weren’t selected. To ensure future success, it is important to give them feedback on their interviews or pointers on what skills to develop.
• It’s important for managers to help their team members advance in their careers. Assist managers in thinking about possible career moves for their team members and ask them to contribute to the succession planning process. As a result, you could consult your plan immediately if a position becomes open.
• If you have a candidate in mind, don’t communicate the opening. By communicating an open position, you give employees hope. Rather than encouraging others to apply, hire teams should reach out directly to candidates they already prefer.
• Recruit both internally and externally. Decide whether you want to recruit internally, externally, or both when you need to fill a position. You should base your decision on your company’s needs for a culture addition and the job requirements.

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