The Pros and Cons of Internal Recruitment

Employees come and go, and there are various ways you can find a suitable person to fill a vacancy. External hiring, advertising, head-hunting – the list is long – but some companies don’t realize what might have been staring them in the face all along. The perfect person may be sitting just down the corridor.

By filling vacancies from within the organization, businesses can reduce hiring costs and enhance team morale and productivity. It feels rewarding to see somebody who has worked hard rising through the ranks, but like any method, internal recruitment comes with unique advantages and challenges. In this article, we’ll go through the pros and cons of internal recruitment, as well as some of the different types and how it all works.

What is Internal Recruitment?

Internal recruitment is the process of filling job vacancies with candidates from within the organization instead of sourcing candidates externally. Candidates may come from another division or even another office on the other side of the world, but the company already employs them in some capacity or another. 

This approach involves assessing and promoting existing employees who have the skills or potential to take on new roles. By prioritizing internal talent, companies hope to capitalize on employees already familiar with the business operations, culture, and values, meaning a more streamlined transition period and fewer integration challenges. 

If everything goes smoothly, it can be much easier than casting the recruitment nets out far and wide and waiting for the perfect person to arrive.

What Are the Different Types of Internal Recruitment?

While the idea of internal recruitment is straightforward, it can often include several different strategies:

• Job Postings – Companies may advertise open positions on internal job boards or via internal communications. This internal hiring method ensures transparency and gives all interested employees a chance to apply.
• Talent Pools – Organizations often maintain a database or a ‘talent pool‘ of employees who have previously expressed interest in advancement opportunities. These pools are useful for quickly identifying potential candidates for promotion.
• Succession Planning – A bit more proactive and involves identifying and developing employees to fill key business leadership positions in the future. It’s typically reserved for senior-level positions and might be years in the making.
• Employee Referrals: Although this method may involve external candidates, it’s included here because internal employees initiate referrals. An employee may see a job posting advertised on an internal server and pass on the details of a potential candidate outside of the company, either to the recruitment manager or by speaking with the person directly and having them apply. 

The Pros of Internal Recruitment

Internal recruitment has several notable benefits that can make the entire process significantly more straightforward than other recruitment sourcing strategies. This approach enhances workforce morale and offers significant strategic advantages to an organization. Here are some of the key benefits:

Reduced Hiring Costs

One of the most apparent benefits of internal recruitment is reduced hiring costs. External recruiting processes can be expensive, involving advertising, recruiter fees, and candidate interviewing expenses. In the U.S., the average hiring cost per hire is now nearly $4,700 for high-level positions, but you can reduce this substantially by finding somebody from within. 

Shorter Onboarding and Training Periods

Internal candidates are already accustomed to the company’s culture, processes, and systems, which means significantly less onboarding and training than external hires. As a result, they can reach full productivity more quickly, reducing downtime and the resources typically devoted to training new employees. 

Of course, a shorter training period is necessarily a given. The option might come down to an internal hire you need to train or an external hire you don’t. 

Increased Employee Morale and Retention

People love a feel-good story about an employee climbing the ranks, and promoting employees from within can significantly boost morale. It demonstrates to employees that a clear career path in the organization is available to all, enhancing job satisfaction and loyalty across the company. 

This, in turn, boosts employee retention, as workers are more likely to stay with an organization that invests in their growth and development.

Lower Risk

While completely mitigating risk is impossible, hiring an internal candidate should come with lower risks than hiring someone from outside. Internal candidates have a known track record, making it easier to predict their success in a new role within the company. You might have years worth of evidence as to why they’re the right employee, whereas external hires can sometimes be a gamble regarding how well they’ll adapt to their new environment and perform in their roles.

Enhanced Succession Planning

As HBO’s smash hit series Succession told us, passing the mantle along to the next generation can be difficult. Away from television, it’s often a carefully thought-through process over many years. By developing talent from within, companies can prepare for all eventualities, including the sudden departure of key staff. A ready pool of capable employees prepared to step up ensures continuity and stability within the organization.

The Cons of Internal Recruitment

While internal recruitment is a valuable strategy for many organizations, relying solely on it can present several challenges and potential drawbacks. Companies need to consider these limitations when developing their recruitment strategies. Here are some of the key disadvantages associated with internal recruitment:

Limited Pool of Candidates

Only so many people work for a company, and limiting your choice to the internal means a limited pool of candidates. This may not matter if your team is filled with superstars in the waiting, but that’s not always the case. 

This limitation can be particularly challenging when the job requires specialized skills or expertise that current employees do not possess. As a result, companies may miss out on hiring potentially more qualified candidates who could bring fresh perspectives and innovations from outside the organization.

Employee Inbreeding

Frequent reliance on internal recruitment can lead to organizational inbreeding, where the diversity of thought and innovation diminishes over time. When new ideas and perspectives aren’t introduced from the outside, growth and adaptability can stagnate, potentially causing the organization to fall behind in a rapidly changing market environment.

Employee Resentment

Not all internal recruitment decisions go down well. Even when most generally agree that the person in question deserved the position or the promotion, there’s sometimes a degree of resentment among those left behind. This can create a competitive or hostile work environment, where employees may be more focused on competing for promotions rather than collaborating for the company’s success.

Creation of Skill Gaps

When you plug one vacancy with an internal hire, the obvious knock-on effect is that another position becomes vacant. Continuing to hire from within can lead to a domino effect of skill gaps and positions within the organization, particularly if multiple internal recruitments occur simultaneously. 

Each move can require additional training and adaptation, potentially disrupting productivity until the new equilibrium returns.

Reduced External Networks

Companies primarily relying on internal hiring may become isolated from external networks and industry developments. External hires often bring with them valuable insights and connections from other companies and industries, which can be instrumental in driving innovation and strategic partnerships.

Frequently Asked Questions

Is Internal Recruitment Quicker?

Yes, hiring internally will be faster than hiring externally in most cases. Since the candidates are already familiar with the company and its procedures, both the selection and onboarding processes can be expedited.

Final Thoughts

There’s rarely one right way to do anything, and recruiting is the same. Internal recruitment has benefits such as cost savings, faster integration, and increased employee morale (in theory), but it also comes with tangible negatives that need to be considered. Companies need to weigh these factors carefully when moving forward with recruitment decisions.

Some might be wary of diving back into the unknown that comes with hiring from outside the company, but ScoutLogic provides a detailed and comprehensive background screening process that ensures you’ve found the right person. Even if you decide to go with internal recruitment but feel additional checks are needed, we’ll do all the heavy lifting and deep-diving, leaving you clear-headed that you’ve made the right choice.

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.