6 Advantages and 5 Disadvantages of Internal Recruitment

Updated July 21, 2022

Choosing whether to hire internally or externally for an open position within your company may be one of the most important decisions you make during the hiring process. Understanding the advantages and disadvantages of internal recruitment may help you learn if the practice is right for you. In this article, we discuss what internal recruitment is, pros and cons of using it and give tips on how to avoid potential challenges.

What is internal recruitment?

Internal recruitment is a human resource strategy that prioritizes hiring current employees for new or open positions within their existing company. Companies often use internal recruitment to promote people to positions with more authority or responsibility within a particular team or department. They may also use it to allow employees to transfer to positions of similar authority in another department or a job with different responsibilities.

Related: Guide To the Recruitment Process

6 pros of internal recruitment

Companies may find benefits in using internal recruitment in areas such as:

1. Reducing hiring time

Internal hiring means you're choosing candidates who are already part of your workplace. This may allow you to look at their public schedules and see what times they're available to meet and discuss plans rather than engaging in lengthy phone or email exchanges. You may also conduct a shorter interview process, especially if the candidate is moving positions within the same department. You may also not need to complete background checks or other pre-hire tasks for current employees, as they may have passed them prior to being hired the first time.

2. Reducing onboarding

Current company employees may not need an extended onboarding or training period before starting a new position within the same company. They likely already understand most company practices and policies. They may also need to engage less in meet-and-greets or other get-to-know-you exercises with colleagues because they've been working together for some time. Hiring internally may also require less time for understanding the context and content of a new role, especially for promotions or job changes within the same team or department.

Related: 23 Tips for Recruiting

3. Saving money during hiring

Hiring internally can reduce the need for spending additional money on the recruitment process. Companies may save money paying for job board services or posting the listings with paid media outlets. They can instead share hiring news through company emails and newsletters or in-person at staff meetings. Internal recruitment may also help save on pre-hire costs like background checks or screenings if a current employee doesn't yet need to update their credentials.

4. Saving money long-term

Companies may also save money on an extended scale by hiring internally. If an employee likes their company, they may search for an internal position to do different duties or get more responsibility. Unlike external hires, they may be less likely to expect a large salary increase to move from one position to another, especially one with similar responsibilities or in a different department. For this reason, companies may offer a lower salary increase to an internal employee than they would to entice an external candidate.

Related: Recruiting Methods: What They Are and When To Use Them

5. Increasing engagement

Allowing current employees to change positions or advance in their careers may show that a company values their time, effort and skills. Providing these kinds of opportunities may increase morale, build a culture of trust and encourage employees to stay within a company rather than pursuing external offers.

6. Reducing performance risks

Hiring from within allows companies access to more information about their candidates. They can view current employees' records and performance reviews from their own files. Businesses may have access to more reliable references, such as coworkers and supervisors, and have an easier time contacting them. Internal employees are also already a culture fit for an organization and its likely their personalities or behaviors won't change based solely on a job change or promotion.

5 cons of internal recruitment

Companies may find some drawbacks to using internal recruitment, such as:

1. Creating jealousy

Hiring internally may create unnecessary jealousy among employees. Candidates who apply for a position but don't get the role may become angry with their new external hire coworker or supervisor. If two current colleagues apply for the same position, the one who isn't chosen may treat the person who got promoted differently. A newly appointed supervisor can also have trouble earning respect from former equals. In addition, mangers may feel uncomfortable during the hiring and promotion process because they don't want to offend or push away an excellent employee because of a hiring decision.

Related: Why Is Recruiting Important?

2. Making a hole in the team

Promoting or hiring from within may leave a gap in a team or department. Unless they eliminate the candidate's old position, the company must then hire an external candidate or promote from within to fill that job. If another promotion occurs, this leaves another gap. Doing this can disrupt business operations until a new hire fills the second position. Companies may not save any money if they have to hire for another position.

3. Limiting the application pool

Choosing only to recruit internally may cause companies to miss candidates with additional skills and fresh ideas that current employees don't possess. This could create stagnation in progress and innovation within the team.

4. Creating an inflexible culture

Hiring internally may promote a more standard or traditional culture. Employees who have been a culture fit in the organization may be too comfortable with current practices or become stuck in routines because their methods or systems worked in the past. This may be more problematic in leadership positions. Hiring externally may allow for new practices and schools of thought to enter the organization.

Related: 13 Recruiting Strategies To Help You Find the Best Candidates

5. Encouraging unfair promotions

Hiring internally may make it easier to promote a candidate who hasn't yet earned a management position or who could benefit from further training or mentorship. Current supervisors may do something like this out of loyalty to hardworking employees or because they think they're helping provide a chance at further career success. However, not all employees aspire to advancement in leadership roles. Candidates may feel uncomfortable rejecting a job offer for a position which they didn't apply if a supervisor feels they're a match for it.

Tips to prevent cons of internal recruitment

Use these tips to learn how you can avoid some cons of internal recruitment:

Provide other incentives

Provide incentives beyond promotions to recognize employee dedication and career advancement. Consider offering opportunities for job shadowing, training and job rotation. You may also create a praise or monetary-based rewards system to show your appreciation for hardworking employees.

Share the process

Be transparent during the hiring process when working with internal candidates. Explain from the beginning if you're also conducting external recruitment or how many internal employees are applying for the position. If you don't choose an internal candidate, meet with them face-to-face to explain why. Consider providing interview feedback and tips on skills they can develop to be considered for future positions.

Train managers

Train managers to look for prospective internal recruitment candidates on their teams. This may help when searching for the most qualified internal candidates to know who has what skills for what position.

Wait to announce job openings

Consider waiting to announce an open job position internally if you already have a candidate you'd like to pursue. Reach out to your first prospect and ask if they want the position before informing other potential candidates of the job. This may prevent other employees from applying and becoming disappointed if you don't choose them.

Use both types of recruiting

Use both internal and external recruiting when filling open positions. Review the job description and the skills of your current employees before deciding what type of hiring you'll use. You may also consider if you need a culture fit or a culture change for the role, which may help you decide which method to use. Sometimes you may choose to recruit both internally and externally for the same position at the same time.

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