Internal Recruitment: Advantages & Disadvantages

Recruiting internally can be a great way to quickly fill a position while rewarding your staff, but is it always the best option? 

The next time a role opens up in your organisation, will it be better for you to recruit from inside your company or to hire someone from outside? Often this seems like a simple choice, but it shouldn’t be made lightly. Internal recruitment can be a big money-saver, but it can also cause issues that are extremely difficult to fix.

Like any recruitment decision, this isn’t something that has an easy answer. Some businesses benefit from a solid culture of internal recruitment that allows them to go from strength to strength; however, others can find themselves opened up to conflict and lacking in fresh perspectives.

To understand whether internal recruitment is the right step for you, you need to consider the pros and cons to assess how they will apply to your business.

The Advantages Of Internal Recruitment

Cost efficiency

External recruitment can be an expensive process. You might get hundreds of applications that need to be assessed, as well as the cost of advertising the job or bringing in a recruitment agency. By hiring internally, you can bypass a lot of these costs, replacing advertising with a company-wide email and cutting down on the number of applications that need to be read.

Time efficiency

In a similar fashion, internal recruitment can save a lot of time. You already know the people applying for the role. You will hopefully have a good understanding of their strengths and weaknesses, so you will not need to take as much time assessing them. You also won’t need to have a lengthy onboarding process with your eventual hire, as they will already know the company.

Employee retention

Employees want to know they have prospects at their current job, and internal recruitment ensures this is the case. Knowing there is the possibility of promotion will give them a reason to stay, and this is the reason companies with strong internal recruitment keep staff 41 percent longer than average.

Familiarity with the company culture

A big risk of external recruitment is taking on someone who is a poor fit with your company culture. This is hard to assess at interview, and can lead to large problems down the line. Hiring internally means you know whoever gets the job will already be part of the company culture, so there shouldn’t be any issues in this area.

Increased employee motivation

A common problem with employee morale is not feeling appreciated. A company with a strong internal recruitment culture has a clear way to show employees that they are valued. Using internal promotions as a reward keeps your staff motivated and engaged with your business, ensuring you can get the most out of everyone.

The Disadvantages Of Internal Recruitment

All of the above advantages make internal recruitment an attractive prospect. However, your business could also find that hiring from your existing staff causes more problems than it fixes, so you should watch out for the following:

Limited pool of candidates

One major problem with internal recruitment is that your talent pool is much smaller than if you decide to hire externally. You’re limited to your current qualified employees, and even then only those who choose to apply for the role. This means you might miss out on skills, qualifications or experience you were hoping to bring to the position.

Risk of inbreeding

Some companies live and die on their ability to come up with new, creative ideas. These businesses will struggle if they do not bring in new blood from outside. While a cohesive company culture is fantastic for morale, it often leads to homogeneity and a lack of new ideas without new external hires to shake things up.

Potential for conflict

When a hire is brought in from outside the company, it’s unlikely anyone will be concerned with favouritism. However, when recruiting internally, the person who gets promoted might be the hiring manager’s best friend. This doesn’t mean they’re not the right person for the job, but your employees will likely be concerned about them getting hired for the wrong reasons.

Time to hire

Internal recruitment is often done to save money, but this can lead to it taking longer. Small teams with fewer resources will find it harder to schedule and conduct interviews, and it could end up being a more costly process than expected.

Should You Recruit Internally Or Externally?

Should you recruit internally or externally? The answer to this question is, of course, both. It’s important for every business to have a balanced recruitment strategy, and that means not relying too much on any single method. If you never recruit internally you will find staff retention suffers due to a dearth of promotions, while never hiring externally can easily lead to a stagnant workplace with no new ideas.

For each role, consider what is needed. Are there specialist skills required that others in your organisation don’t have access to? In that case, recruiting externally is probably the best option. On the other hand, do you have multiple employees who could perform the role, and want to improve morale and retention? It might be time to recruit internally.

Whatever you choose, remember to consider it within the broader context of your overall recruitment. You don’t want to focus too much on either type of recruitment for too long, or the disadvantages will begin to rear their heads. Consider everything as part of an overall strategy and you will be more likely to find success.

About Allen Recruitment

Allen Recruitment is an international recruitment consultancy with offices in Ireland, the UK, the Netherlands, Spain, France, Sweden, Belgium and Poland, providing recruitment solutions and job opportunities all over Europe. We have great experience in placing candidates in the right roles for some of Europe’s largest brands.