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Internal vs. external recruitment: 13 pros and cons to know

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When it comes to filling a job opening, companies have two options: internal recruitment vs. external recruitment.  

Each method has its own advantages and disadvantages, so it's important for companies to carefully consider which is best for their specific needs. In this blog, we'll explore each method, providing insight on how to make the best decision for your organization. 

What is internal recruitment? 

Internal recruitment means filling job vacancies from within a company by promoting or transferring current employees to the desired position rather than hiring externally. Internal recruitment can take various forms, such as: 

  • promoting employees to higher positions; 

  • transferring employees to different departments or locations; or  

  • encouraging employees to apply for open positions within the organization. 

One benefit of internal recruitment is that it provides opportunities for career development and advancement for current employees. By considering internal candidates, organizations can motivate and retain their workforce by demonstrating a commitment to employee growth and progression within the company. Internal recruitment also allows companies to leverage their employees' knowledge, skills and experiences, which can lead to increased employee engagement and productivity. 

Internal recruitment often results in shorter hiring processes and lower costs compared to external recruitment. Since internal candidates are already familiar with the company’s culture, processes and values, they require less training and onboarding, leading to quicker integration into the new role. Additionally, internal recruitment can contribute to a positive company culture by promoting a sense of loyalty and continuity among employees. 

What is external recruitment? 

External recruitment means filling job vacancies within a company by hiring candidates from outside the organization. In contrast to internal recruitment, external recruitment involves seeking candidates through various channels, such as: 

  • job portals; 

  • social media platforms like LinkedIn; 

  • recruitment agencies; and 

  • professional networks.  

By looking for outside candidates, companies can tap into a broader talent market and attract individuals who bring in new ideas, experiences and expertise. External recruitment also offers the opportunity to infuse the organization with a diverse workforce that can contribute to creativity, problem-solving and overall growth. 

External recruitment processes typically involve screening resumes, conducting interviews and onboarding new hires. While this is more time-consuming and costly than internal recruitment, it's a strategic investment for companies looking to expand their talent pool, enhance their capabilities and stay competitive. Additionally, external recruitment can provide career growth and advancement opportunities for people seeking new challenges and opportunities outside their current organization. 

Desk with paperwork

4 pros of internal recruitment 

1. Cost-effective 

Since the organization is not hiring someone from outside, there are no costs associated with advertising the job opening, conducting interviews or onboarding a new employee. This can save the company significant costs, especially if it is looking to fill multiple positions. 

2. Faster hiring process 

Since the company is already familiar with the skills and capabilities of its current employees, it can quickly identify potential candidates and make a decision. This can be especially beneficial for urgent job openings that need to be filled quickly. 

3. Boosts employee morale and retention 

When employees see that there are opportunities for growth and advancement within the company, it can boost their morale, motivation and job satisfaction. Employees may also be more likely to stay with an organization that offers opportunities for career development. 

4. Knowledge of company culture and processes 

Internal candidates are already familiar with the company's culture, processes and values and can quickly adapt to their new role and start contributing to the company's success. They also better understand the company's goals and objectives, which can lead to better alignment and performance. 

3 cons of internal recruitment 

1. Limited pool of candidates 

Internal recruitment may not make sense, particularly for smaller organizations. Recruiting internally can be especially disadvantageous if the company is looking for specific skills or experiences that are not currently present within the organization. 

2. Potential for internal conflict 

Employees who were not chosen for a position may feel resentful or demotivated, which can negatively impact their performance and relationships with their colleagues. This can also create a sense of favoritism within the company and damage company culture. 

3. Stagnation of ideas and innovation 

Since internal candidates are already familiar with the company's processes and procedures, they may be less likely to bring fresh perspectives and ideas. This could hinder the company's growth and competitiveness in the market. 

Woman smiling

3 pros of external recruitment 

1. Access to a larger pool of candidates 

If done effectively, casting a big net has its payoffs, even if it means that filling a position will take longer.  

For example, an organization may get to interview people with a variety of skill sets and better determine who would best fit the role. This contrasts with having a role to fill and selecting someone internally out of need who may not have all the skills required. 

2. Innovation and growth 

Hiring someone from outside the company can also bring in fresh perspectives and ideas. They may have experience from other companies or industries that can be valuable to the company. This can lead to innovation and growth within the organization. 

3. Creating a more well-rounded organization 

External recruitment is one of the best ways to build resilience. If you think of your organization as a sports team, you don’t want to have too many people in one position or qualified in one area, as this creates knowledge gaps. Instead, you can use external recruitment to develop balance across skill sets. The more useful skills you can inject into your company, the more resilient you will be to emerging trends or cutting-edge technologies. 

3 cons of external recruitment 

1. Costly and time-consuming 

Companies must invest time and resources into advertising job openings, reviewing resumes, conducting interviews and onboarding new employees. This can be a significant expense, especially for small businesses. 

It's also risky. When you hire externally, there’s a chance that employees will not stay. Organizations may find themselves wasting time and resources to train new employees who don't make it through the onboarding process. This could be caused by the new employee not adjusting to the company culture or the demands of the position or receiving a better offer elsewhere.  

2. Longer onboarding process 

Since external candidates are unfamiliar with the company's culture and processes, it can take longer to adapt and become productive in their new role. This can lead to a longer onboarding process, which can be a disadvantage for companies looking to fill urgent job openings. 

3. Potential for cultural misalignment 

The new hire may not share the same values or work ethic as the rest of the team, which can lead to conflicts and a negative impact on company culture. 

People looking at paperwork

How to make the best decision for your company

When deciding between internal and external recruitment, it's important to consider the specific needs and goals of your company. Here are some factors to consider: 

  • Company culture: If your company has a strong and unique culture, it may be beneficial to hire from within to maintain it. However, if your organization needs to gain new skills or diversify its culture, you may want to consider external recruitment. 

  • Urgency of the job opening: Internal recruitment may be the best option if the job opening needs to be filled quickly. However, if there is no immediate need to fill the position, you may want to take your time interviewing a mix of internal and external candidates to determine the best fit for the position. 

  • Budget and resources: Internal recruitment may be the more cost-effective option if you have limited resources. However, if you have the budget and resources to invest in external recruitment, this could be a valuable option that brings in new talent and skills. 

How to approach your recruiting strategy 

Recruiting top talent is crucial for the success of any organization and having effective recruiting strategies in place can make a significant difference in attracting the right candidates. One of the best recruiting strategies is to focus on employer branding. Building a strong employer brand that showcases the company culture, values and opportunities for growth can attract top candidates who align with the organization's vision. 

Using social media platforms and professional networks to promote the employer brand can help reach a larger audience of potential candidates.  

Additionally, implementing employee referral programs can be a powerful strategy. Employees are often the best advocates for the company and can help identify and recommend candidates who are a good fit.  

Another effective strategy is to use data-driven recruitment techniques. Analyzing data from previous recruitment processes can provide valuable insights into what has worked and where improvements can be made. Leveraging technology such as applicant tracking systems and artificial intelligence-powered recruitment tools can streamline the hiring process and improve efficiency. Maintaining open communication with candidates throughout the recruitment process is essential.  

To help attract and retain top talent, you should consider: 

  • developing job posts that accurately reflect the needs and demands of the organization; 

  • providing clear and timely feedback; 

  • keeping candidates informed about the status of their applications; and  

  • creating a positive candidate experience.  

A combination of employer branding, employee referrals, data-driven recruitment techniques and effective communication can form the foundation of successful recruiting strategies that drive your organization's growth and success. 

How employee benefits can improve your recruitment efforts 

As a human resource specialist, improving your recruitment strategies is the first step to attracting talent. The best way to recruit and retain talent starts with your organization’s employee benefits plan. Your benefits package reflects your company’s culture, signaling how much your organization prioritizes and values employee work-life balance and well-being.  

Benefits could be the deciding factor for potential candidates when they review your job offer versus competitors. It could also be the reason why employees avoid jumping to job alternatives, whether it's your competitive health plan or generous time off package. 

Some examples of benefits employers can offer to improve employee retention include: 

  • voluntary benefits

  • flexible work options, e.g., special hours or hybrid work; 

  • educational assistance; 

  • career development; and 

  • mental health and wellness. 

There are many budget-friendly employee benefits strategies available for you to choose from. 

Ramp up your recruitment with TruePlan 

It's important for companies to carefully consider their specific needs and goals when deciding between internal and external hiring. By considering the factors mentioned in this blog post and their own unique circumstances, companies can make the best decision for their organization and ensure successful talent acquisition. 

While TruePlan doesn’t offer recruitment services, we can help you attract and retain talent through customized employee benefits offerings. Our experts will supply you with a variety of benefits plan designs, ensuring that you find the best fit for your organizational goals.  

Contact us today for a professional employee benefits consultant’s opinion. Get ready for business growth through better employee benefits offerings

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