What is internal recruiting?

When you have an open position, you can use external or internal hiring. External recruitment means you look for candidates from outside the company—people who don’t yet work for you. Internal recruiting is when you look at your existing talent pool—the employees who are already on your payroll—when you need to fill a position.

Ways to promote internally

An easy way to do this is by promoting your current employees to a more senior position. For example, you might move a shift supervisor into an assistant manager position at your retail store. Not all instances of using internal talent are upward moves. Some employees might want to transfer to a similar position in a different department. For example, an executive assistant in your sales department might move into an executive assistant position in HR.

Another option is offering someone a different position type. For example, you might offer a seasonal or temp employee a regular position, or a part-time employee might move into a full-time position. This can help you retain those employees when they show promise.

Employee referrals can also be considered a type of internal recruiting , since you’re finding new employees through your existing staff. This method is easier on your recruiting team because the candidates come to them without doing any advertising or promotion of the vacancy. Your trusted employees may also be more likely to refer skilled people who will perform the job well.

Benefits of internal hiring

Tapping into your existing roster can simplify and speed up the hiring process. Here are some benefits you gain when you hire internally:

• Proven track record: Since you’re already familiar with the employee, you know their skill level and work ethic. You’re not taking a gamble like you do when you hire someone who’s unknown to you.
• Familiarity with the company: When you promote a current employee, they come with lots of knowledge about your company and how things work. They might need to learn some new skills directly related to the position, but you don’t have to teach them all the unwritten rules about the workplace.
• Lower recruiting costs: Finding someone internally cuts the costs associated with advertising and recruiting. You also save on training costs for that position.
• Increased satisfaction and retention: Internal promotions can boost morale and employee satisfaction. It shows employees that you recognize their talents and efforts, and it can encourage your staff to stay since they might have a chance to move into a different position.
• Saves time: Finding, interviewing and hiring external candidates is often a long process. You can move internal candidates into new positions much faster in most cases.
• Culture compatibility: An employee who already works well with your company culture can transition easily into the new position without issues.

Disadvantages of internal hiring

You also need to be aware of potential problems with internal recruiting . This can help you watch for those issues and deal with them if they arise. Some potential drawbacks include:

• Additional vacancies: Moving a current employee solves one vacancy, but it creates another one. You’ll still need to hire someone for their old job. The exception is an employee referral, which doesn’t pull from your current staff.
• Internal conflict: You can create resentment if you choose one employee over another for a position. People who get passed over for promotions might feel frustrated when they see coworkers being promoted.
• Lack of new talent and ideas: Hiring internally means you don’t get any new skills, ideas or diversity. While a current employee could be qualified for the position, hiring someone fresh could inject the team with innovative thoughts and new skills that no one else on your staff has.
• Missing skills: Sometimes, you might not have an internal candidate who meets the minimum requirements of the job. This can be true in a highly skilled or specialized position.

How to use internal recruitment

You might have internal employees who apply for vacancies whether or not you actively recruit them. However, making some changes to your process can ensure you’re equipped to actively recruit from your current staff and increase the number of internal applicants. Here are some steps to prepare your company for internal recruiting :

1. Establish goals for your internal recruiting efforts. For example, you might aim to increase employee satisfaction and retention by promoting internally, or you might want to reduce hiring costs and onboarding time. Track metrics to measure your success.
2. Write a policy that describes your hiring, promotion and employee referral processes. This creates clarity for hiring managers and employees to reduce resentment or inconsistencies.
3. Create internal recruitment processes. Determine how you’ll recruit internal candidates, such as creating an internal job board that only current employees can see or having a process for managers to recommend current employees.
4. Track internal vs. external candidates. It’s beneficial to know when you have an internal applicant versus someone from outside the company. Using applicant tracking software can help you easily identify internal applicants, external applicants and employee referrals.
5. Communicate with employees. Even if you have an internal job posting page, announcing vacancies to your staff can increase the number of internal applicants you get. Communicating the vacancies to managers in other departments can get them involved in recommending strong candidates.
6. Screen applicants. Determine how you’ll evaluate your internal applicants compared to your usual process for screening external applicants. In general, they should go through a similar process. However, you can likely eliminate some steps, such as a prescreening phone interview and reference checks. Create a checklist for evaluating internal applicants to ensure the process is the same every time.
7. Respond with care. Giving every internal applicant a personal response, even if they don’t get the job, can help make the process positive. Getting a canned rejection letter can make the employee feel undervalued. You might explain why you went with someone else and give the employee suggestions on how they can become more qualified the next time a vacancy opens.

Tips for making internal recruitment more effective

The following tips can make the recruitment of internal candidates more effective:

• Incorporate recognition: To avoid resentment among staff, implement an employee recognition system, so you have ways besides promotions to reward your team members. This can help employees feel valued.
• Use both recruitment methods: Don’t rely solely on internal recruiting. By also including external recruiting methods for the position, you can find the best match for the job, and you get a larger candidate pool.
• Develop your current staff: Investing in employee training and development can better prepare staff members for new positions. It can help you overcome missing skills and give your employees a better career path with your company.
• Implement succession planning: When you use succession planning, you look at your current employees and identify potential candidates for leadership roles that might open in the future. This can help you develop those employees now, so they’re prepared when you need to create a new leadership position or a current leader leaves the company.
• Create career path plans: Work with your employees to discuss their career goals and map out a career plan. These conversations tell you what types of positions you might be able to move employees into. You can also support employees in gaining the skills they need for those positions, so they’re ready when a job opens.
• Evaluate internal candidates critically: While hiring a current employee can be easier, make sure you’re not offering them the job for that reason alone. They should be held to the same expectations and requirements as you would an external candidate.
• Avoid talent hoarding: Some managers avoid recommending their team members for positions in another department because they don’t want to lose them. However, when employees feel trapped in their position with no room for growth, they might decide to leave the company. Coach your managers on the risk of this practice.

When does external recruitment make more sense?

You can use a mix of internal and external recruitment, but one might be better than the other in some situations. Here are some situations in which an external candidate might be a better match:

• Your current staff lacks the skills, licensing, education or other must-have requirements for the opening.
• Improving workplace diversity is a top priority.
• The company is growing rapidly, and you don’t have enough internal candidates.
• None of your current employees are interested in the position.
• You want fresh perspectives and ideas.

Whether you choose external or internal recruiting methods, it’s important to have solid hiring processes in place to help you find the candidate who best fits your needs.