A Complete Guide to The Advantages And Disadvantages of Internal Recruitment

Internal recruitment refers to identifying and recruiting candidates for job vacancies in the organisation. The HR department can advertise open positions internally, and allow existing staff to apply. In case they do not find a suitable candidate, they invite external candidates to apply.

A company must constantly upgrade its talent pool if it wants to achieve success. There are no two minds about it. After all, the workplace is the essence of an organisation, whether it is a multinational corporation or a home-grown business. It is truly rewarding when an employer builds an amazing team from scratch and works together as a family.

Of course, one might wonder if they should hold external recruitment interviews or have someone from the team itself? There are advantages and disadvantages of internal recruitment.

Several organisations prefer internal recruitment as the employees are already familiar with the work culture, team and regulations. However, it could lead to stagnancy, boredom and office politics as well. And that is why they prefer to outsource their recruitment needs to agencies like OLX People.

Internal recruitment – what is it?

As the name suggests, internal recruitment refers to identifying and recruiting candidates for job vacancies in the organisation. The HR department can advertise open positions internally, and allow existing staff to apply. In case they do not find a suitable candidate, they invite external candidates to apply.

Internal recruitment is popular as the recruiting team can employ candidates who are suited to a particular position based on their views, goals and culture. It is seen as an efficient method to fill up vacancies as money, time and resources are saved. It also encourages career success and company loyalty for the employees.

How does internal recruitment happen?

Internal recruitment can take several forms:

  • Part-time to full-time employment: Promoting an intern or a contractual employee to a full-time position.
  • Promotions: Employees are interested in promotions due to higher responsibilities and salaries.
  • Transfers: Employees move to a higher position, different department or location in the same organisation.
  • Employee referrals: Ensures qualified candidates to be hired by the recruitment team.

Internal recruitment and its advantages:

Internal hiring offers a chance to present employees to advance in their careers in the same organisation, which implies that their performance is appreciated. Internal opportunities for higher positions or in different departments will help employees develop their professional skill set, which will benefit them in the long run.

The advantages and disadvantages of internal recruitment include keeping your top talent in the team, as they would not be pressurized to apply to competitors for advancement. Their peers will also be motivated to apply for internal vacancies.

The advantages of internal recruitment are listed, as follows:

  1. Proven work capacity

When it comes to internal recruitment, employers know the applicants by nature. They are familiar with their work approach and know that there would not be any culture clashes within the company. On the other hand, a couple of hours in an interview does not give anyone the chance to know the candidate well enough.

  1. Shorter learning period

An internal candidate is well-equipped with the organisation’s working practices, goals and policies. Thus, they learn quicker and offer important insights on how to bind all the teams together as compared to a new hire.

  1. Fewer resources consumed

External recruiting is both time-consuming and expensive. It includes tasks like posting advertisements on portals, sifting through the resume database and performing background checks. On the other hand, internal recruitment is a surprisingly seamless process through the company email address.

Looking through thousands of resumes is not required as well. Hiring managers can ask the heads of the department for potential candidates. Let us not forget the extra resources needed for onboard, desk space and hardware.

  1. Less hiring and onboarding time

If a company is hiring through an external recruitment team, they will have to work with sourcing potential candidates on job websites, evaluating them and calling them in for an interview. Internal candidates have verifiable performance records, are a good cultural fit and do not need formal interviews.

As a result, internal hires do not need to be introduced to the company culture, values and regulations. They are familiar with the new team, or will not consume much time in gelling well with them either.

Internal recruitment and its disadvantages

The disadvantages of internal recruitment are listed out as follows:

  1. Leaves vacant positions in the workplace

Constant promotions and transfers to fill vacant spots can cause major disturbances in business operations as it leaves the previous spots empty. In these cases, it becomes necessary to resort to external recruitment, which defeats the entire purpose.

  1. Promotes stagnancy

Internal hiring can push the business to inertia, due to no fresh perspectives, skill sets and working styles. Thus, the staff might become inefficient and be unable to work with a new outlook. It might also affect the image of company advancement to an outsider. Employees can find it challenging to bring in new initiatives to leaders that rely on established but outdated practices. All In all, a new hire offers valuable insights to run a business in a new way.

  1. Creates resentment between employees

Nobody likes to be rejected, especially if their least-favourite colleague gets chosen for the superior position inside. Though many will see internal promotions as healthy competition, others will resort to unfair practices to get themselves hired instead. Managers are not happy to disappoint their top performers as well and can hamper the promotion or transfer process to maintain their team.

  1. Limits the talent pool

Companies have hired qualified candidates for certain positions, as per their education, work experience and career goals. Though they may be familiar with the company, they might not necessarily qualify for new positions. Organisational fit happens regardless of an employee’s tenure at the company, and new hires will be better for specific roles in the long run. For smaller companies, it is not feasible that internal hires stay there forever.

How to choose between the internal recruitment and external recruitment?

  1. What aligns with your business goals?

Planning a hiring process and sharing accurate prospects for the chosen candidate will help motivate other internal candidates to compete for the same. Having minimal paperwork for internal transfers, discussing changes when needed and transferring top performers will help a company in ensuring happier teams.

  1. Invest in your staff

Empowering the team with learning, development and training budgets set aside will help exponentially. Identifying areas that need improvement can be discussed as well. First things first, an employer should inspire the staff to develop their skill set, which in turn helps them be more engaged.

Communicating the requirements and hiring processes through company newsletters, and promoting the position as much as one can is essential. Emphasising the benefits that come with the new position, such as bonus, promotions and higher salaries are imperative as well.

  1. Create a career path

Succession plans show a list of open job positions for employees, and the HR department updates these plans as per their present and future company needs. Involving the managers and employees, and investing to prepare for their new roles with a new skill set can prove to reap good returns. Meeting with the different department heads to talk about training budgets and opportunities, with a Compliant Applicant Tracking System, referrals and email are effective measures.

Now that you know the advantages and disadvantages of internal recruitment, make an informed choice. To outsource your recruitment and staffing needs to the best hiring agency, contact OLX People.

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One of the prime contributors for this blog, Expertise in Staffing and Recruitment, Content Strategist by Profession. A Music Lover & Traveller by Choice.

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