Pros and Cons of Internal Recruitment

by Aqui Team

It makes sense to hire employees from your company, as new hires are already part of your team and know your culture and politics well. But despite the advantages of internal recruitment, relying too heavily on promotions and lateral job changes can have negative side effects.

Here are eight advantages and disadvantages of internal recruitment and how you can ensure that your process works when you recruit internally:

Pros of Internal Recruitment

Hiring internal candidates can be more efficient than external recruitment because it can:

Reduce the time needed for recruitment

In external recruitment, recruitment teams find candidates (either through sourcing or job posting), evaluate them and, if all goes well, convince them to join your company. All this takes time. Conversely, internal candidates are already part of your workplace, so the time you need to find and hire these candidates is much shorter. It is also easier to assess internal candidates because:

  • They are tested in advance for their cultural suitability
  • Their track record is easily accessible
  • You do not always have to conduct full interviews with managers (for example, if they move within their department, the head of department already knows the candidate)
  • All this reduces the time needed for each recruitment phase and your overall recruitment time

Reduction of the training period

Everyone needs some time to get used to a new role, but internal settings are on board faster than external settings. This is because they:

  • They know how your company works and are familiar with most of your policies and practices
  • Maybe they are familiar with the people in their new team, especially in smaller companies
  • They may already know the content and context of their new role when they move within the same team or to a similar team (e.g. when a sales representative becomes a category manager)

Reduced costs

Research has shown that external settings can cost 1.7 times more than internal settings. This is because you usually don't need to do this if you set it from inside:

  • Place ads on job boards. It is easy to inform internal candidates about open positions via e-mail or your company's internal newsletter. You could also post printed job ads on a notice board if all your employees work in one place
  • Subscribe to resume databases. Instead of searching passive candidates in CV databases, ask managers for their team members or look into your HRIS to find employees who might fit into your open positions
  • Pay for background checks. You may have already conducted background checks on internal candidates when you first hired them. And you know if they are in good standing based on their manager's input or employee data

Increased employee commitment

Promotion from within sends out the message that you value your employees and want to invest in them. Giving employees more opportunities to advance their careers, or even letting them move to other positions of equal rank that might be of interest to them, is good for morale: employees who change roles develop professionally, and others know that they may have similar opportunities in the future. This helps to build a culture of trust that encourages commitment and employee retention.

Cons of internal recruitment

Despite all the advantages of internal recruitment, there are a few things to consider. Recruitment from within your own ranks can:

Generate resentment among employees and managers

Employees who have been considered for a position may feel annoyed when a colleague or external candidate is eventually hired. Managers, too, often feel uncomfortable losing good team members, and may even go so far as to hinder the transfer or promotion process.

Leave a gap in your existing workforce

When you promote someone to fill a vacancy, their old position becomes vacant. This means that there may be a number of moves and promotions that could disrupt the operation of your business. Ultimately, you may need to use external recruitment in addition to your internal recruitment.

Limit your pool of applicants

Even if your company may have many qualified candidates for certain positions, this may not necessarily apply to every open position. For example, if a position in your company is relatively new, your employees may have other areas of expertise and may not be able to fill the skills gap. If you rely solely on internal hiring, you may miss the opportunity to hire people with new skills and ideas.

The result is an inflexible culture

If you do most of your hiring within your organization, this can lead to a stagnant culture. This is because employees are too familiar with the "way things are done" and have difficulty identifying inefficiencies and experimenting with new ways of working. An inflexible culture will be more problematic in leadership positions where employees may need to commit to change and improvement rather than relying on established, inefficient practices. External recruitment is essential to shake up the culture and provide a new perspective on existing problems.

What could you do to mitigate the disadvantages of internal recruitment?

To avoid resentment, cultivate trust and ensure that you hire effectively, you could do this:
  • Ensure that promotions or job changes are not the only way to recognize employees or help them advance their careers. Consider offering opportunities for training, job shadowing and job rotation. Also lay the groundwork for frequently rewarding employees (e.g., encourage supervisors to praise employees or give out performance-based bonuses)
  • Ensure a transparent process. Ensure that internal candidates understand your hiring process and understand why they were not selected. It would be good to give them feedback or point out what skills they may need to develop in order to be successful in the future during job interviews
  • Train managers to prepare the career paths of their team members. Help managers think about possible career steps for their team members and ask them to participate in the formulation of your company's succession plan. This way, when a position becomes available, you could immediately consult your plan to see which employee might be a good fit
  • Avoid announcing an open position if you already have a candidate in mind. Communicating an open position means that you are giving employees the hope that they could be hired for that position. However, if hiring teams already have a preference for a particular candidate, it is best to contact them directly first rather than encouraging others to apply
  • Use a balanced mix of internal and external recruitment. Decide each time you want to fill a position whether you want to recruit internally, externally or both. Base this decision on the job requirements and the skills your current employees have, as well as your company's need for an additional corporate culture
  • Whether you focus on internal or external recruitment, it is ultimately important to structure your hiring process to ensure fair and effective recruitment. Use screening tests and structured interviews to help you assess candidates more objectively and communicate well with all candidates. These practices will help you make good hiring decisions and will also build confidence in your hiring process

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