When hiring for a new position, human resources departments can hire internally or externally. Often, the safe internal route is chosen because it’s easier from a processing perspective, and training may also be simpler.
However, there are disadvantages of internal recruitment, and it can be a mistake to limit the hiring pool to existing employees. Similarly, hiring from outside the company can be the wrong way to go. So, how do you make the right choice when hiring?
Advantages of Internal Recruitment
Hiring from within the company is both cheaper and easier to do since there is no need to pay for job ads, do hiring fairs, drum up referrals or shout the positions out on social media. Instead, it’s an internal announcement and can have a much shorter lead time before hiring because the application process is simpler. It also reduces staff turnover when they know there are positions for which they can compete both now and down the road.
Internal candidates come with built-in know-how for the company and the job already. They may need position-specific training, but they’ll understand the bottom line of what you’re trying to accomplish. They’ll also have a track record at the company and a history with some managers, who can all weigh in on performance, attitude and accomplishments. You’ll understand from a practical point of view how well they get along with others on the team and how flexible they are with people and tasks.
The shorter lead time, the reduced need for orientation and simplified training all come down to it being more profitable and less risky to hire internally. Those aren’t small things in a world where down time and complications affect the bottom line. If a company wants to maintain momentum and isn’t diversifying its services or skills, hiring internally may be the wisest move for some positions. Internal hiring can also make future external hiring more attractive to new candidates because you have a history of giving employees opportunities for advancement.
Disadvantages of Internal Recruitment
There are times, however, when hiring from outside the company is the best strategic move the HR department can make. Internal hiring is somewhat akin to looking for ideas inside an echo chamber – the candidates already know the corporate lines, and they have been trained and indoctrinated to the company perspective. It’s hiring from a limited selection and can sometimes be a “best of what’s available” versus getting someone who is truly great for the job. Sometimes, an outside perspective brings fresh blood, new talents, coveted skill sets and other desirable traits.
One aspect that companies sometimes don’t consider before hiring internally is the destructive element it can unleash when employees get competitive with each other. It can disrupt morale and cause unrest when someone else gets hired and even more so when those who lose out feel that the promoted employee is undeserving of the opportunity.
It may seem like you’re saving hassles by hiring someone internally and reducing the amount of training you’ll need to do, but it’s deceptive. You’ll have to replace the person who was promoted, and then they’ll need training, but the promoted employee will also need training in the new role. Instead, hiring someone for the new position means only one training situation is created. Besides, you could hire someone with more of the skill sets and talents needed who may have job-specific expertise and brings more to training than you may have expected.
Advantages of External Recruitment
Bringing in fresh blood can be rejuvenating for a whole department or even the entire company. They bring a different perspective and new ideas for getting things done. When looking to broaden services or create new products, sometimes having that new point of view can be extremely valuable.
Hiring from outside means not being limited in your candidate opportunities, and you may attract top-talent applicants. Top talent can give a boost to your overall team if they bring in better ideas for productivity and organization. They can have certifications and qualifications that help expand your offerings in the future too.
Disadvantages of External Recruitment
Time is always a huge factor in whether to hire internally or externally. When hiring outside talent, they’ll usually have to give notice at their current job, which delays the whole process by weeks. Plus, they’ll need to be onboarded and then trained, which means still more weeks, likely, before they’re contributing to the bottom line. All these delays hurt momentum and productivity, so while there are hard costs for advertising and recruitment, there are bottom line losses built into the delays and hiccups with training the new position.
There’s always the potential blowback from current staff too, who may have believed they were in line for a promotion or that they brought all the skills you needed. That may not just create workplace tension – it may result in those slighted employees looking for opportunities elsewhere and creating turnover, which could have even more dire costs and consequences.
When to Hire Internally
- You need to send a boost to current staff to show you’re focused on giving them the opportunities they’ve earned.
- An insider’s perspective is ideal for the new role and would have the biggest impact on the position.
- A current team member can make the case about why it’s the ideal job for him and has a plan for how he can shine in the role.
- You have a candidate who is perfect for the job, brings all the right talents and could be hired without employees thinking she was being favored over others.
- You’ve talked with other managers about potential cross-promotions to make the most of existing staffers who could perform better in a new role.
When to Hire Externally
- Your budget has room to hire top talent to shake things up.
- You’re expanding your operations, and you’ll need fresh players on the scene.
- You’re offering new services or products and want players who have worked in those areas to form that department.
- Your current team is competent and performing well, but you feel something is missing from the company dynamic.
- You anticipate turnover due to age or health conditions with current staff and want the future to be seamless.
- You're frustrated by a lack of certain skill sets due to your present limitations of staffing.
Last Words on Hiring
There’s an entire industry of staffing and recruitment companies that exist for the mere purpose of conducting external hiring for firms. However, they’ll tell you what you never thought you’d hear them say: Internal recruitment is critical to the future of your company.
Without internal recruitment and the potential of rising through the ranks, your company has zero appeal to new hires from outside. They’re likely not looking for a temporary job. They want a career with a company that will nurture them and encourage them to grow and improve and hopefully promote them down the line.
There are advantages and disadvantages to each kind of hiring, but they’re both necessary for success over the long haul. A savvy company is the one that knows how to give due consideration to existing employees no matter whether they’re hiring internally or externally.
Steffani Cameron is a professional writer who has written for the Washington Post, Culture, Yahoo!, Canadian Traveller, and many other platforms. Some writing projects have included ghost-writing for CEOs and doing strategy white papers. She frequently writes for corporate clients representing Fortune 500 brands on subjects that include marketing, business, and social media trends.