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Internal recruitment and external recruitment: All you need to know

Recruitment | 10 Min Read

Internal recruitment and external recruitment: All you need to know

Introduction

What is internal recruitment?

 

Internal recruitment refers to recruiting from within the organization. It is an effective way to quickly fill open job positions by developing and promoting the existing workforce. There are several advantages of this recruiting method. This blog elaborates those, while offering a comparative overview of alternative forms of hiring.

 

What is external recruitment?

 

External recruitment refers to recruiting from outside a company’s existing workforce. It is an excellent way to bring fresh perspectives into an organization while exploring a broader talent pool. This blog delves into the process, various methods, advantages and importance of external hiring in detail.

 


Section 1: Internal hiring

Chapter 1: The why and how of internal recruitment

 

When you promote people internally, one of the biggest advantages is that they already know how to work in the environment.

Eric Krell
Weighing Internal vs. External Hires, SHRM

 

Why organizations should prioritize internal sources of recruitment

 

Even though new talent is necessary for the growth of an organization, internal sources of recruitment are indispensable for efficient talent management. On the one hand, they boost the existing workforce’s morale and on the other, ensure employees’ growth. Moreover, internal recruitment is cost-effective and less time-consuming. Hiring internal candidates is a wonderful way of filling the positions conveniently and encouraging employee loyalty.

 

How to initiate an internal hiring process

 

Below are the steps involved in a typical internal hiring process:

 

typical internal hiring

Step 1: Job identification and coordination between hiring and HR managers

The HR manager determines if the position can be filled internally and discusses the same with the hiring manager. Internal and external sources of recruitment are evaluated before settling on the final method.

Step 2: Communication

The job is communicated internally along with its requirements. HR managers post the job within the organization through intranet, emails or noticeboard to circulated information and invite interested candidates.

Step 3: Application and screening

The HR manager then receives the applications from interested employees. These employees are screened against the requirements of the job and shortlisted.

Step 4: Feedback and shortlisting

The HR manager shares the shortlisted profiles with the hiring manager. The HR manager should also communicate the feedback to every internal candidate as it helps in maintaining an environment of trust and loyalty. Even though such discussions are difficult, they can be conveyed in a manner to enhance the morale of employees.

Step 5: Interviews and internal movement

The manager interviews the shortlisted candidates and selects the most suitable ones. After selection, it is the job of the HR manager to facilitate smooth internal movement of the candidates from their existing profile to the new role/department.

 


Chapter 2: An overview of internal recruitment methods

 

There are several internal recruitment methods. However, the one you choose should ensure fairness and equality. Examples include:

 

internal recruitment methods

Internal job posting:

In this method, the job is advertised internally and all the employees are allowed to apply for the position. It provides an equal opportunity to all interested individuals. Moreover, it is a great way to encourage employees to explore vertical/horizontal movement within the organization. Interested employees apply for the job and if they match the requirements of the job they are shortlisted for the interview.

In case the company is unable to fill the position through internal job posting then it needs to explore external sources of recruitment.

Promotions:

Promotions are the most used method of filling job positions by evaluating the performance of employees within the organization. It involves identifying high potential individuals in the workforce and promoting them to higher positions with more responsibilities and a higher pay package. It furthers employee development and growth. Organizations also use succession planning to identify and develop the employees for promotional roles.

Internal transfers:

A transfer involves geographic relocation of the existing employee within the same job role. Transfers are often used by the organization to retain employees in case of life changes. For instance, if employees relocate to another city due to personal commitments, they can request for a transfer. The transfer is also used to fill in positions at a new location with an experienced employee who understands the role and culture of the company.

Manager nominations:

Under this method, the job position is filled based on nomination by supervisors or managers. The managers are asked to nominate the high-performing employees or the individual whom they believe to be fit for the job. This is an informal system of internal recruitment used in smaller organizations where the employees are familiar with the nature of work across different departments.

Temporary to a permanent position:

This internal recruitment example involves hiring interns or temporary employees and then moving them to permanent positions based on their performance.

 


Section 2: External hiring

Chapter 3: The why and how of external recruitment

 

When recruiting external talent, the recruiting function is very similar to the marketing function, in that the organization is promoting both itself and employment opportunities to potential candidates. Adapting marketing principles to employee recruitment is a proven way to bring discipline to the process.

Recruiting Internally and Externally Toolkit, SHRM

 

Why is external recruitment important?

 

In addition to bringing in fresh perspectives, external recruits have the potential to challenge norms and reinvigorate a company’s culture. Their problem-solving abilties, novel ideas and strategic innovation is essential for growth and keeping up with the trends. The importance of external recruitment extends to the way it encourages cognitive diversity in the workforce, positive change and expansion of the candidate pool. Moreover, external sources of recruitment are essential to building a stronger employer brand and sustaining employee loyalty.

 

Why is external recruitment important?

 

Below are the steps involved in a typical external hiring process:

 

typical external hiring

Step 1: Identifying talent needs

The first step in the external recruitment process begins with identifying or highlighting the talent needs, preparing job descriptions and shortlising specific vacancies that need to be filled.

Step 2: Posting the vacancies

The vacant positions along with their job descriptions and relevant details then need to be advertised. It is essential to get the word out to ensure suitable candidates feel drawn to the company and the roles. A variety of platforms and channels can serve as ideal media for such postings. Examples include social networks, newspapers, career pages, popular job portals and so on.

Step 3: Exploring additional sources of external recruitment

Additional sources of recruitment can help reduce the hiring time and streamline the talent hunt better. As a boost to the usual job postings, these sources include reputed HR agencies, consultants, recruiters, etc.

Step 4: Preliminary testing and interviews

As candidates begin responding to your hiring efforts, it is time to start scheduling tests and interactions that help assess the available talent pool.

Step 5: Candidate selection and offers

The assessments in the previous step help pave way for final shortlisting and hiring. Once you are convinced about candidates’ aptitude, potential, experience, expertise, culture-fitment and other vital factors, you can extend an offer and wait for them to join your team.

 


Chapter 4: An overview of external recruitment methods

 

There are a variety of tactics that help execute external hiring strategies. Examples of such external recruitment methods are:

 

1. Partnerships

Parterning with various experts is a smart way to expand your talent outreach efforts. Such partnerships could include one or more of the following:

  • Traditional headhunters or third-party recruiters
  • Temporary firms and placement agencies
  • Educational institutes for campus hiring initiatives, internship programs, etc.
  • Government and community-based hiring programs
  • PR (Public Relations) professionals who can help boost your employer brand

 

2. Media promotions

Media outlets like conventional billboards, newspapers, radio and television continue to be valid and relevant in boosting your external recruitment efforts. From low-cost poster ads to cinema and transit, media promotions play a vital role in enhacing external hiring strategies. Add internet, social media and LinkedIn to the mix and a balanced concoction is ready to use.

 

3. Direct-to-candidate outreach

Making direct contact with prospective applicants and targeted candidates is a great step up from conventional hiring approaches. Direct sourcing, customer recruiting, workplace recruiting and direct mail/door hangers are a few interesting choices.

 

4. Incentives

Incentives like employee referral programs are amazing ways to connect and hire talented professionals. It includes sign-on bonuses and other rewards that encourage your existing employees to do the job-hunting for you!

 

Employee referral programs are among the most common external and internal recruitment examples in the modern workplace. Through the employee referral method, the employees are asked to refer their friends, family and acquaintances for open job positions. Most referral programs offer a monetary reward to employees whose referrals are selected and hired.

 

5. Boomerang employees

Another interesting external hiring method is to hire ex-employees. These boomerangs could be traditional, life-event related and planned.

 

Boomerang employees have insider organizational knowledge from their previous employment, and the company is familiar with the individual's skills, potential and cultural fit—much more information than typically known with a new hire. Embracing this talent pool rather than sticking with outdated no-rehire policies can be beneficial, from lower recruiting and onboarding costs to higher employee morale and fresh perspectives.

SHRM

 


Section 3: Internal vs. external recruitment

Businesses recruit for new roles from both existing employees (inside the business) and potential employees (outside the business). These methods are referred to as internal recruitment and external recruitment.

Internal and external methods of recruitment
BBC guide

 

Chapter 5: Difference between internal and external recruitment

 

Internal recruitment involves hiring from internal sources of the organization while external recruitment involves hiring from external sources. One often wonders which method is better and recruiters often face the dilemma of choosing between the two. Each type of recruitment has its own applications. For instance, internal recruitment may be suitable for improving morale but will not add any new perspectives to the organization.

 

Image 01

 

External hiring involves recruiting the best professional available from the large pool of candidates. It helps in infusing new talent and ideas into the organization. The choice between internal and external recruitment depends on the position to be filled and the organizational objectives.

  • If the company is expanding, it might need new skills and external recruitment may be more suitable. On the other hand, if the company feels that it has an effective team and does not want to disturb the culture, it may use an existing employee to fill in.
  • Time and costs involved in recruitment may also influence the decision. The existing research indicates that external sources of recruitment produce the majority of interviews- 62%. On the other hand, internal recruitment is considered highly effective due to the better quality of internal applicants.
  • The choice of recruitment method depends upon the benefits and shortcomings of each. Additionally, the recruiter needs to evaluate the needs of the position and organization to determine which type of recruitment works best for them.

 


Chapter 6: Pros and cons of internal and external recruitment

 

Advantages and disadvantages of internal recruitment

 

73% of talent acquisition professionals say internal recruiting is increasingly important to their company.

Source: Linkedin

 

Advantages of internal recruitment

 

Below are few of the most prominent advantages of internal recruitment:

Time & cost-effectiveness:

Internal recruitment is a highly cost and time-effective process. Internal jobs are advertised to a small pool of employees and take comparatively lesser time to fill in. For internal recruitment, HR does not need to pay for the job boards and resume databases to find potential candidates. Neither do they have to do background checks nor worry about paying higher compensation to external recruits. Besides, internal employees are easier and quicker to find.

Higher efficiency:

Internal job postings receive a significantly lower number of applications as compared to an external job posting. Additionally: - A greater percentage of applications in internal postings are relevant and match the job criteria, - Candidates’ performance records and organization fitness are easily available for evaluation thereby adding to the efficacy of the recruitment process.

Lower risk:

There is a prohibitive cost associated with mis-hiring in case of external recruitment. Contrarily, in internal recruitment, the organization has first-hand knowledge about the candidates and their capabilities. Thus, the risks are negligible.

Shorter induction period:

Internally hired employees are aware of the organizational culture, structure and processes. It saves the time spent on the induction and training. The new hires do not need time to get acquainted with the people, policies and practices of the organization. They already know a lot about their job responsibilities and roles. Therefore, candidates hired through internal recruitment become productive quite early as compared to the candidates hired through external recruitment.

Higher loyalty and engagement:

Internal recruiting helps in retaining high-performing employees through promotion and internal transfers. It sends a positive message among existing as well as potential employees, assuring them that the organization values their contribution and invests in their growth.

Disadvantages of internal recruitment

 

The advantages of internal recruitment aside, the method might not always be an ideal choice.

Some of the major limitations of internal recruitment are:

Limited pool of candidates:

Internal recruitment offers extremely limited choices to the recruiter. The organization may have many qualified potential applicants but there is a high probability that those applicants won’t meet the demands and requirements of the vcacant position.

Gap in the workforce:

When an internal employee is moved to a new position, the existing position falls vacant. Internal promotions and transfers can create significant gaps in the workforce. These gaps cannot be solely filled by existing employees. In that case, the organization needs to explore external recruitment methods.

Lack of novel perspectives:

Internal hiring does not add any new skills to the organization as it utilizes the existing skills and capabilities. Businesses must innovate and add new perspectives to survive in the dynamic markets. That is where external hiring becomes necessary.

Stagnation in the company culture:

Relying solely on internal recruitment methods often can cause stagnation to the company culture. This is because employees might get too comfortable with the organizational environment and fail to spot inefficiencies. External hires, however, offer a fresh outlook to existing practices.

 

Advantages and disadvantages of internal recruitment

 

To ensure a holistic comparison of internal and external sources of recruitment, it is essential to understand the pros and cons of each. This section highlights the major advantages and disasvantages of external hiring.

 

Advantages of external recruitment

 

  • Large pool of potential candidates: Unlike internal hiring, external recruitment allows recruiters to access a large pool of potential candidates. As a result, companies don’t have to be restricted to evaluating and choosing from a limited group.
  • Fresh talent: External recruitment induces fresh talent within the organization—external hires help shake up the organizational culture by offering a fresh perspective to existing practices.
  • New skills: External recruitment allows the organization to acquire new skills and to remain competitive. There are various roles within the organization for which it is critical to recruit candidates who can bring innovative ideas and competencies to the company.

 

Disadvantages of external recruitment

 

  • Increased cost and time: External recruitment is an expensive and time-consuming process. The organization needs to pay heavy prices for external databases and advertisements.
  • Additional training requirements: The recruits hired through external sources need additional training about the organizational culture and the job process. The employee recruited through external recruitment does not become productive immediately.
  • Elevated risk: The risk factor of external recruitment is slightly higher as the company does not have any first-hand information about the employee’s past performance.

 


Conclusion

Internal recruitment is a highly effective method of recruiting internal employees using various methods such as promotions, transfers and internal job postings. It offers multiple advantages like lower costs, less recruitment & induction time, lower risk, etc. At the same time, external recruitment remains an irreplaceable aspect of efficient talent acquisition. It is essential to find the ideal balance between the two to facilitate the building of high-performing teams.

Mercer | Mettl offers a holistic suite of assessments and platforms to ensure the efficacy of internal as well as external hiring processes.

Originally published April 4 2022, Updated April 20 2022

D'ipanjenah Ali

Written by

D’ipanjenah is a writer and marketing professional associated with Mercer Mettl since 2020. Her working style thrives on a balanced approach towards standard insights and novel trends. She utilizes creative content and digital strategies to help brands start important conversations. When not reading/writing, she enjoys art and parents a calico.

About This Topic

The primary objectives of recruitment and selection are to ensure high-quality candidates who are culturally fit and work toward shared organizational goals and vision.

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