The Pros and Cons of Recruiting Internally

After spending enough time in a recruiter or HR role or any position overseeing these roles, you realize that hiring never stops. Even in a dream scenario in which people never quit, get fired, or move on, there would still be hiring to do. Companies grow, and needs evolve, so the demand for better and more skilled workers—just more workers—is constant.

Internal recruiting is a strategy many companies choose to circumvent the toil of recruiting, researching, background checking, and interviewing. If you’re hiring from within a pool you’ve already vetted, you can’t lose, right? Unfortunately, it’s not that simple. Do your research, understand your needs, and weigh the pros and cons to determine what kind of recruiting is right for you. What follows is a complete guide to the advantages and potential disadvantages of recruiting internally.

Types of Internal Recruitment

Internal recruitment doesn’t just mean promoting employees. There’s a wide range of decisions you can make as a hiring manager that fall under the umbrella term “internal recruiting” that might not feel “internal” at all.

Some of the most popular types of internal recruitment are:

• Promotions: This approach means you identify your best employees for advancement when well-suited positions open. Promoting is a strategic game, as we’ll discuss when we get to the disadvantages of internal recruitment — so play your cards carefully.
• Internal Transfers: You may not think an employee in marketing would make a good fit at the tech desk, but if your HR leads are doing their jobs correctly, they should identify transferable skill sets that could benefit the company.
• Employee Referrals: According to research conducted by Indeed, employee referrals constitute 30% of all hires and 45% of all internal hires. If you have a close, trusted advisor, listen to them when they tell you to promote someone. They have your best interest at heart. At the very least, be willing to review their suggestions.
• Temp to Permanent: Temping and interning are great ways to test new talent. Bring in prospective employees who might be a little green but are super dedicated and passionate. See how they work with the team and make your decision from there.
• Freelance to Full time: Looking first to your freelance pool when you’re hiring for a full-time position isn’t a bad idea. You know the quality of the contractor’s output, how they work, and their availability. Some states are even passing laws around just how ‘permanent’ you keep freelancers in the permanently freelance space.
• Reincorporate Retired Employees: Just because an employee steps out of the workforce doesn’t mean they wouldn’t reconsider returning. Retirees may welcome the opportunity to return in a limited role that benefits both themselves and the company.

The Pros of Recruiting Internally

Think back to the last time you were hired externally. Remember all that work? The research, the vetting, the interviews, the second interviews, the third interviews. It’s the ongoing process of onboarding.

Why would you go through that again if there is a viable alternative? Maybe there is—internal recruitment.

By recruiting internally, you may not eliminate the interview and onboarding process.

No matter what, any person selected to fill a vacancy needs to undergo training to perform their duties.

But the benefits of internal recruitment can be, as you’ll see, pretty awesome.

Save Time and Money

The first benefit is the most obvious and the most enticing. By recruiting internally, you’re simply saving time and money in many, many ways.

First, you’re saving the time it takes and the money it requires to pay recruiters to post jobs, review resumes, construct and manage interviews, and create onboarding experiences.

Second, internal hires are less likely to continue to negotiate, and threaten to walk away if the company doesn’t meet all their demands.

Optimize the Hiring Process

Aside from all the time and money you could potentially save by hiring internally, you’ll also save a lot of effort. Hiring and onboarding candidates externally creates extensive paperwork, spreadsheets, email chains, and post-it collages.

There is a lot to keep organized, and never enough time to do it. Cut back on all of that by hiring candidates whose prior experience with the company helps drive every step of the process.

Move Through Onboarding Faster

Once you get through the recruitment, interviewing, and hiring stages, you must onboard your new hires. An advantage of internal recruitment is that often the candidate is familiar with the company culture and policies, which helps during the onboarding process.

You don’t need to familiarize employees who’ve been with the company for years with where the water cooler is and how to file an expense report. Of course, they’ll need individualized training from their direct superiors for the new role, but you can still skip many of the menial aspects of onboarding.

You can minimize many of the onboarding points if you recruit internally.

Strengthen Interconnections in Company Culture

Giving employees promotions and moving them up the company ladder of power and pay are big morale boosters. A substantial part of this comes down to company culture. A recent study by Joblist showed that employees prefer to work with colleagues promoted internally rather than from outside the company.

When you recruit internally, you promote a positive work culture because you show that your employees’ hard work matters. Even if an employee isn’t the one who gets the promotion, knowing that it’s a possibility could encourage them to work harder and feel a sense of loyalty.

The Cons of Recruiting Internally

If you’re thinking, “Alright, that’s it. I’m only recruiting internally from now on,” take a pause. For every day, there is a night, and for every pro on this list, unfortunately, there is a con. But only you can decide for yourself which approach works best for your organization.

Read on for the potential cons of recruiting internally, and assess whether it might negatively impact your hiring.

Can Generate Resentment Among Existing Employees

Could internal recruitment bring your employees together with a shared sense of ambition, dedication, and loyalty? Of course, and it frequently does.

Some people view internal hires as hand-picking individuals out of the pool of dedicated hard workers and bestowing on them a pay raise, better benefits, and more power. However, it also can have the opposite effect. It can create resentment and competition amongst their peers.

Internal Hires Face Credibility Challenges

Because of the resentment and jealousy that can be provoked by internal hiring, once those candidates begin their new position, they may face pushback from their former peers.

Why not me? Why them of all people? Someone I used to do the same share of work with now tells me what to do? These are all questions that employees could potentially ask.

Or they may not ask directly, but they may be thinking it internally. And these doubts and resentments could create a big credibility problem for your new hire.

New Perspectives are Invigorating

Not all the cons to recruitment are outright negatives. Some are missed opportunities to collect on positives. External hiring can be extremely rewarding for companies. Yes, the process can be more arduous, and yes, the candidates you bring in may take a while to assimilate into the flow of company culture.

But outside perspectives are the x-factor that all savvy business owners utilize to navigate around obstacles. External hires may even identify areas of potential growth that you aren’t aware of until someone shows you through a fresh set of eyes.

You May Not Be Able to Avoid Training

For all the talk of internal recruits allowing businesses to skip the timelier, costlier portions of training and onboarding, the crucial emphasis here is portions.

You aren’t able to avoid training altogether with new hires. And company policies change so often that you may not even be able to skip the parts that you assume the internal recruit understands intuitively.

Worst of all, if you skip aspects of the onboarding process, you may come to regret it. If saving time and money are your biggest concerns, hiring externally may end up being the better option, especially if you’re transferring an existing employee from one department to another.

Hire Smart and Grow Your Business

If, after weighing the pros and cons of recruiting internally, you decide to look outside your existing talent pool, administering background checks for prospective new hires is a crucial early step.

Nobody delivers better, faster, more reliable background checks than ScoutLogic.

ScoutLogic will change how you hire with our dedicated Scout service model, a unique approach to background checking. You receive a dedicated team member who oversees the entire process, from outlining to onboarding.

Discover the difference quality background checks can make. Get a quote from ScoutLogic today.

David Garcia

David Garcia, co-founder and CEO of Scout Logic, is an industry leader in the bulk background check world. With his strategic acumen and expertise in the HR sphere, specifically in hiring, recruiting, legal compliance, background checks, and resume screening, he’s an invaluable asset and consultant.

David's counsel extends across the boards of ScoutLogic, YipitData, and Supplier.io, drawing from his impactful stints on the boards of Infutor and Avetta. With an extensive 25-year journey, he champions unparalleled B2B commercial leadership within data & analytics, significantly shaping the HR landscape.