Internal vs. External Hiring: Which One to Choose?
The hiring process is essential for a company to thrive and meet the engaging demands of its business. In order to do that, the recruiter will use various methods of hiring to find candidates for the position. In that regard, it is important to understand the distinction between internal and external hiring, and leverage their pros and cons.
When it is time to fill a new job role, make sure that you look into every part of the talent pool to seek the ideal candidate for your vacancy.
New employment opportunities should not only be limited to those outside your company. It should also consider the current employees.
Sometimes, the ideal candidate you search for may be present in your organisation.
Internal hiring and external hiring both come with their benefits and disadvantages. It is better to understand them before deciding your hiring practises.
Internal hiring is the process of filling a job role by searching for a suitable candidate from the organisation’s existing workforce.
Internal hiring is preferred when an existing employee has the appropriate skills, and the candidate should fill the new role soon.
The Pros of Internal Hiring
Saves Time and Money
Sourcing candidates, sorting through applications, conducting interviews, and hiring a suitable candidate takes a long time. Not to mention that it is also a costly process.
Finding suitable internal candidates may significantly reduce your time and save money since the candidate is already someone from your company.
There is a significant reduction in time taken to search for candidates on various job boards and the time to screen them and conduct interviews.
Proven Fit to the Organisation
An existing employee has been a part of your company for some time. They understand the work environment and how to fit culturally within the team.
An external candidate would likely not be aware of such things. They would need some time to adjust to the culture and work environment, while an internal recruit may have a smooth transition.
Boosts Employee Morale
Once employees know that your company adopts the internal hiring style, they will be motivated to improve their performance to strive for promotion.
The employees are most likely to stay at your company longer to work towards a promotion. This will help in reducing the employee turnover rate.
The Cons of Internal Hiring
Stagnant Work Environment
Hiring internal candidates might inhibit your company from getting a new perspective. The existing employee would only be changing roles, not bringing a new vision to your company.
While the internal recruit might be a right fit, it can make the work dynamics stagnant, which can lead to rigid work culture. Existing employees may get too comfortable with how the company works and may not contribute to significant development.
Internal hiring works only when an employee matches your new job description and has the necessary skills to make the transition. There is no guarantee that an employee would be able to scale up to the role.
This seriously puts a limit on your pool of applicants. Looking only for internal hires can disrupt the workflow of your company. The ideal candidate might not be someone from your company, so it is better to keep your options open by including external hiring.
Difficulty Balancing Roles
When an existing candidate takes a new role, it creates a vacancy in the old position of the candidate. An external candidate may be needed to fill this vacant role. This needs time and resources.
Though possessing the necessary skills, training is required for the internal hire to promptly take the new role. It might take some time for the candidate to get comfortable with the position.
External hiring is looking for a suitable candidate to fill the role by searching for them outside the company.
External hiring is preferred when the company needs to bring in new talent or expand the organisation. It is also usually preferable for bulk-hiring.
Pros of External Hiring
Brings New Ideas
An external hire may have experience working with a different organisation and offer a new perspective to your company. This provides a chance for growth and helps identify areas for improvement.
External hires also help keep the company fresh and contribute to the flexibility of the company’s culture.
Larger Talent Pool
In external hiring, there will be many candidates wanting to be a part of your company. Even if only a few candidates are suitable, the numbers are still better than internal hiring.
Increased chances mean you get a better chance of getting a more qualified candidate with the relevant experience for your job role.
Rather than internally hiring and promoting existing employees, taking the other way and going for external hiring can increase your chances of bringing in more diverse candidates to your organisation.
This ensures that you are being fair and giving equal opportunity to more people to be a part of your company. This also improves the employer branding of your organisation.
Cons of External Hiring
The candidate sourcing process is already a hectic one. But, once the company has found the perfect candidate for their job, they must present them with a competitive package.
The salary package should be competitive enough for the candidate to refuse all other offers. Refusing to stay competitive puts the company at risk of repeating the hiring process or settling for the second-best candidate.
The major drawback of external recruitment is that it is time-consuming. From posting the job advert to filling the open role, it takes a lot of time to recruit an external candidate.
The recruitment process is repeated for all qualified candidates, exponentially increasing the time taken to fill the role.
Increases Risk of a Bad Hire
Creating a recruitment process that checks every aspect of the candidate is a tough job. The candidate might not have the necessary skills needed for the job, but might be an excellent cultural fit.
There is an increased risk of making wrong decisions in external hiring. It is hard to avoid this risk as it is a natural part of the external recruitment process.
Which Hiring Style Works for You?
As mentioned earlier, each recruitment style comes with its advantages and disadvantages. It is not wise to choose one among them and stick to it all the time.
As a recruiter, you should be able to choose which one you prefer over the other before allocating the resources to the recruitment process. As a general practice, if the open position is small and the budget is limited, check if the recruiter can source the candidate internally.
For bulk recruitment, it is not usually possible to go for internal hiring, since the requirement is large. Increasing roles for your company means that there may be a need for new employees. Plan a recruitment strategy and go with external hiring.
There might be an open position that requires significant knowledge of the company to work effectively. In such cases, recruiters should give internal hiring top priority.
Frequently Asked Questions
1. When should a recruiter go for internal hiring?
Internal hiring is better when the roles need to fill faster and an existing employee possesses the necessary skills to fill such the role.
2. When should a recruiter go for external hiring?
When there are no employees to fill your current opening and when the company needs to hire in bulk it is suitable to go for external hiring.
3. How do you ensure that you hire a culturally fit candidate externally?
To hire a culturally fit candidate externally, you need to go for an employee referral program. The employee will have a strong idea of the company’s requirements and the employee will have this in mind while searching for the right candidate.
Consider every factor before getting into your recruitment process. It is better to understand the various methods that can help you make a more informed decision. Knowledge of the different hiring methods can help you save time and money whenever possible. It can help you plan your recruitment strategy according to the needs of your job role.
Award-winning recruitment software that will find, attract, hire and analyse the way you want to work. At LogicMelon, we have experienced software recruitment marketing specialists to help you build effective recruitment solutions supported by the best customer service you’ll find anywhere!
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