This past year has been a wild ride for a lot of reasons, but it’s easy to argue that the workforce has seen the most disruption in the past 12 months. Diversity hiring has, rightfully, been a massive topic of conversation as well as remote working and hiring during the pandemic.
But one question that recruiters have always faced continues to weigh heavily when discussing hiring best practices: Should you recruit internally or externally?
In January, we surveyed over 500 small to midsize business (SMB) owners and executives on what they are prioritizing for their businesses and whether they anticipate those priorities to be temporary or long-term.
A quarter of respondents said “hiring for new roles” is a temporarily increased priority, and 31% say the same about “retaining employees.” This tells us that a significant number of SMBs are prioritizing hiring this year, but recruitment has recently become more complicated.
In this article, we’ll define internal recruitment and cover the benefits and drawbacks of hiring from within your organization in order to help you determine if it’s the right HR strategy for you.
Internal recruitment is, quite simply, the practice of filling open roles with existing employees. It can include promotions that elevate current employees and advance their careers as well as lateral moves.
There are plenty of advantages and disadvantages to the practice of internal recruitment that any HR professional should consider. In this article, we’ll cover the top benefits and drawbacks of internal hiring as well as tips for avoiding some of the pitfalls that can be associated with internal recruitment practices.
1. Shortens the hiring timeline. This one is an obvious benefit of internal hiring when you compare it to the timeline of external recruitment. When you hire from within, you have the advantage of already knowing the candidates—their skill sets, strengths and weaknesses, and experience level. That saves a lot of time in vetting candidates. On top of that, you don’t have to go through the full recruitment process, including listing a job posting on public forums and job boards. It’s much faster to internally communicate the responsibilities and details of the new job opening.
2. Simplifies the onboarding process. Once you settle on your chosen candidate, hiring an existing employee saves additional time by eliminating the need to conduct certain onboarding training. For example, an employee who was already set up with payroll won’t have to go through that process again from scratch when moving into a new role.
3. Saves money. This is a natural consequence of the first two benefits on this list. If you’re filling roles faster, you’re spending less time and fewer resources on searching for and interviewing candidates. Likewise, if your new internal hire is able to get through onboarding faster, they’re also able to start fulfilling the responsibilities of their new position sooner.
4. Creates a positive work culture. When done the right way, internal recruitment can be a great tool for promoting a positive work environment and increasing employee engagement. Promotions are an excellent way to reward employees with strong track records. Promoting from within can even have a positive impact on the employees who aren’t hired for the new position because it demonstrates that your company is interested in the development and growth of your own employees.
5. Retains strong employees. Speaking of career growth and development, internal recruitment is a fantastic way to ensure your employees stick with you rather than seeking out other opportunities at different companies. Promoting qualified employees is one of the best ways to reward strong work and reduce employee turnover, and it has the added benefit of positioning your best employees to have a bigger impact on your business.
1. Could create conflict among employees. You won't always face this issue if you choose to promote from within, but it is something you should be aware of. When elevating a current employee above others—especially into a management position—there is potential for conflict. For example, asking employees to report to someone who was once a peer could put both parties in an awkward position. Additionally, there may be hard feelings if multiple employees apply for the new role and only one gets hired.
The fix: Go into the situation with open eyes and do all you can to address it in advance. For example, if you’re promoting an employee to a management position, try to avoid putting them directly in charge of employees they were once on equal footing with. If done right, this drawback is an easy one to avoid and should not keep you from deciding to hire from within.
2. Could create a stagnant culture. One benefit of bringing in an external candidate is that you’re adding a new perspective to your workforce. That can impact business ideas and strategies as well as the general culture of your workplace. When you hire exclusively from within, you face the risk of losing that fresh perspective and stagnating.
The fix: Again, this one’s pretty easy to avoid if you simply stay mindful about it. Exclusively hiring from within isn’t a good idea, just like exclusively hiring from outside isn’t a good idea. The best recipe for success is to mix it up.
3. Leaves a gap that will still need to be filled. Promoting an existing employee is going to create a vacancy in their old position (except for those specific instances where you’re eliminating their old role for whatever reason—in which case, you’re gold!)
The fix: You always have the option of filling the new vacancy with a different internal hire, but that starts to create a cycle of promotions and backfills. Ultimately, a good strategy could be to promote existing employees to more executive positions and fill their empty seats with outside hires. This solution helps head off that danger of stagnation as well.
4. Limits your pool of applicants. When trying to fill a new role, it’s entirely possible that you don’t have a perfect internal candidate within your current pool of employees. That’s not necessarily saying your current employees aren’t great at what they’re doing, it just means you’re looking for a candidate with a different skill set.
The fix: Carefully consider your recruitment process and hiring strategy (e.g., internally vs. externally) before you announce a job opening. Manage expectations by making it clear to all potential applicants what you’re looking for to fill the new role in question.
The benefits of internal recruitment definitely outweigh the drawbacks, especially when you realize many of those drawbacks can easily be overcome with a little foresight and effective communication.
Make sure promotions aren’t the only way you invest in employees. Promotions can be few and far between, and it’s a good idea to make sure employees who deserve recognition are getting it in a timely manner. Beyond that, you want your employees to know you care about them and their success within your organization. Consider offering more accessible options for training to help grow your employees’ skill sets.
Be transparent. Few things create resentment among employees faster than withholding vital information, and that definitely applies to this process as well. If you’re hiring from within your workforce, make absolutely sure your employees understand what you’re looking for and how you’re going about hiring for the new role. This becomes especially important for employees who apply for the job but don’t get it. You can head off a lot of angst by being clear about why they didn’t get hired, and also supporting their growth in their current role before applying to other positions in the future.
Don’t announce open roles that aren’t actually open. If you have a candidate in mind already, for example, it’s a bad idea to post a job as if every employee has an opportunity to get it. Similarly, if you’ve already assessed your current employees and determined none have the specific skills you’re looking for, you’re probably looking for an external hire. In these cases, it comes down to communication and, once again, managing expectations.
Finally, make sure you’re using the best recruitment tools to help manage the entire process. Digital recruitment apps are your friend when it comes to hiring qualified candidates, and investing in these tools can also help you reap a lot of the benefits we’ve covered in this article.