Whether you are experiencing high employee turnover or expanding your business, finding the right person for your company can be challenging. Do you promote a member of your staff or will you consider hiring someone outside of the ranks?

To help you decide which one works best for your company, let’s take a look at the main advantages and downsides of internal vs external recruitment. 

What Is Internal Recruitment?

Internal recruiting means that you are filling in vacant positions in the company with current employees. Usually, the HR department will list the open positions for internal applicants only or start the recruitment process internally and then open it to other candidates as well. 

Sometimes, though, an existing employee may hear of an open position and apply directly or a team manager might feel that one of the members is well suited for that particular role and recommend them for the job. 

Typically, internal recruitment involves transferring an employee from one department to another, whether as a lateral move or a promotion. It could also involve offering permanent positions to contractual employees or moving part-time workers to full-time positions. 

Advantages of internal recruitment 

Here is a quick breakdown of how recruiting internally could help your company.

  • Reduces hiring costs

The costs of advertising the job and training a new employee are reduced to a minimum when you hire from within your own ranks, especially if you are promoting someone within the same department—they already know the ropes so there is no need for costly training and development programs. 

  • Less of a learning curve

Newcomers need some time to get used to an organization’s policies, culture, and values. While mistakes are inevitable throughout the training and onboarding period, they can significantly disturb the workflow dynamics within the company.

This can be avoided when you hire from within your ranks. There will be no further onboarding or a clash with the company culture and other workers as the candidate is already familiar with both, which, in turn, will ensure a smooth and effortless transition. 

  • The hiring process is faster 

Hiring can be a long procedure—the interviewing process alone takes up to 28 days. However, when hiring from within the company, you can skip the standard background checks, vetting procedures, and lengthy interviews, saving a lot of valuable time.

  • Boosts employee retention 

Giving your staff members possibilities for growth can encourage loyalty, morale, and employee retention. In fact, it is reported that US workers are 10% more likely to stay with their employer if offered proper career advancement opportunities.

On top of that, allowing someone to climb up the career ladder could act as a huge incentive to other workers—internal recruiting conveys a clear message that talent is appreciated and acknowledged, which contributes to the development of a healthy company culture.

Finally, hiring from within will have an impact on future external recruitment—job seekers would be more than happy to work for a company that offers workers the chance to rise through the ranks. 

Drawbacks of internal recruitment

Hiring from within has its perks as well as downsides. These are the factors to consider when thinking about hiring internally. 

  • Gap in the workforce

The obvious issue with internal recruitment is that filling one open position automatically creates another. This means that you once again have to go through the recruitment procedure, creating more work for the HR department in the process. 

  • You could pass up top performers

Another obvious issue with hiring internally is that you could miss out on new hires who may be better suited to the role, in terms of qualifications, skills, and personality. 

  • Innovation might suffer

Progress and innovation will suffer without new ideas coming in. Your current employees are likely to use the processes and methods they are accustomed to rather than coming up with something new. 

  • You may not have the talent among your current employees

You might have a position open requiring skills and knowledge that none of your current employees have. If this is so, external recruitment is the only option. 

  • Might affect morale 

If two or three internal applicants are up for the job, choosing one over the others might lead to feelings of resentment towards that employee or management. 

On the other hand, should you choose to only consider external candidates, there will be no reason for workers to think that one employee is favored over another and thus there will be no hard feelings.

Tension in the workplace can make or break productivity—collaboration statistics show that 60% of employees believe their coworkers are the biggest contributors to overall job satisfaction. 

What Is External Recruitment?

External recruitment involves hiring people from outside of your own workforce. Most organizations employ this hiring strategy, particularly small and medium-sized companies currently expanding their staff.

With external recruitment, the pool of possible candidates on the employment market is nearly limitless, allowing you to adjust your search based on the applicant’s skills, qualifications, and personality. 

These are the most common methods used in external recruiting:

Job postings: This is the simplest, yet most effective strategy to find qualified applicants. There are several sites you can use, such as Indeed and ZipRecruiter, to get maximum visibility from potential candidates. 

Social media is another powerful resource for finding suitable applicants—word spreads fast on social networks, plus it’s cheap and accessible. No wonder 84% of companies use social media platforms to recruit workers.

Recruitment agencies are usually used for hiring senior or technical roles, although if you are struggling to find the right candidate through social media and recruitment websites, headhunters and recruitment agencies are the way to go. 

Referral programs—believe it or not, this is still one of the most efficient way to find candidates as confirmed by 82% of companies that have integrated referrals into their recruiting strategy. 

Careers events provide the chance for in-person meetings, thus giving recruiters more insight into an applicant even before an interview is scheduled. As such expos and job fairs are valuable for HR professionals and job seekers alike—a staggering 85% of open positions are filled through some form of networking, the latest statistics on job searches reveal. 

Advantages of external recruitment 

Here is what makes external hiring better than internal recruitment. 

  • Bigger talent pool 

Unlike internal recruitment which restricts your applicants to your current employees only, hiring externally gives you access to an unlimited number of skilled and qualified candidates. 

It also provides the chance to find workers from varied cultural and professional backgrounds which can boost revenue and productivity—according to the latest statistics on diversity, inclusive organizations make faster decisions and generate more innovation revenue. 

  • Fresh ideas & strategies

Sometimes a company needs some new energy and a different approach to doing things and addressing challenges. A fresh perspective that only an outsider can bring may help you update current (often outdated) corporate operations for far better workflows and protocols.

  • A new set of skills

External hires come with their own set of skills and qualifications that your current employees might be lacking. This is particularly true for rapidly developing industries, such as web development, manufacturing, and medicine, where up-to-date knowledge of software, tools, and procedures is a must if you want to stay ahead of the game. 

Taking on someone already familiar with the latest updates in the business will save you weeks or even months of training an existing employee. 

  • Boosting brand awareness

Advertising your company through an open job post is a great way to attract more attention to your brand and company values.

Disadvantages of external recruitment 

While external hiring can inject some fresh blood into the company it is not without downsides. Here are a few of the cons of hiring from outside the company. 

  • It’s a long process

Finding the right candidate for a job takes a lot of time since it involves several steps. The HR department first needs to post the job, then sort out applications before interviewing and running background checks on potential recruits. 

After that the new employee needs to be onboarded, which contrary to popular belief is more than simply welcoming someone into the company. The onboarding process involves a great deal of structured training, as well as regular checkups over time—both of which take a lot of time and patience. 

  • Can increase costs 

External recruitment is not only longer but can be more expensive as well. From hiring third-party agents to find potential candidates to training, you will be spending much more on introducing a new employee to the company than you would an existing member of staff to a new position. 

  • Comes with some risk

You can run background checks on candidates and call references (which 87% of companies do), but you can only be sure of the quality of work they do once you see them in action. 

Another risk is employee turnover. It is reported that 75% of employees leave within the first five years, so if your new recruit quits after some time, you will have to go through the hiring process again. 

Conversely, you already have a well-established relationship with the people that work for you, making internal recruitment a safer choice. 

  • New recruits might not be able to start right away

Depending on the terms of their previous contract, it might take a month to two before a new worker can start the job, leaving you with a gap in your workforce. With internal hiring, on the other hand, an employee can hit the ground running, so there will be no stagnation in the workflow or a dip in productivity

Internal vs External recruitment: Which One is Right for Your Company?

Whether you opt to promote someone from within your organization or bring in new talent depends on the vacant position, your management style, and your company culture. 

Internal recruiting is cost-effective, fast, and safe—your employees are already a good fit for your company, and you are simply giving them a chance to contribute even more to its growth. 

External recruitment may be more expensive and riskier, but it is a great option for a company that has been stuck in a rut. Hiring new recruits can bring unique ideas that will update and improve certain procedures, possibly taking your organization in a whole new direction. It also gives you access to qualified professionals who can ensure your company adapts to changing business trends.