Internal vs External Recruitment

Every business wants to attract and hire the best talent. But companies should also be aware of the talent they already have and perhaps have yet to fully tap into. This is why it’s best for businesses to be open to both internal and external recruitment.  

Are you deciding between the two and not sure which should take priority? Well you’ve come to the right place, as this guide provides all the information you need to make reliably great hires, whether from your own staff or the world at large. First, let’s have a look at the comparison table below.

	Internal Recruitment	External Recruitment
Definition	Process of hiring from within the organization.	Process of hiring from outside the organization.
Time and Cost	Typically faster and less expensive as you’re dealing with known candidates.	Can be time-consuming and costly due to advertising and extensive screening processes.
Skills Availability	Limited to the skills of current employees.	Greater pool of skills and experiences to choose from.
Innovation	May offer fewer opportunities for fresh ideas.	Brings new perspectives and ideas to the organization.
Morale Impact	Can boost morale as employees see opportunities for advancement.	May impact morale negatively if internal candidates are overlooked.
Training and Onboarding	Requires less training and onboarding as employees are already familiar with company culture and processes.	Requires more extensive onboarding and training to integrate new hires into the company.

Definition of Internal Recruitment

Let’s say your chief financial officer (CFO) is moving on. If your HR team or hiring manager sends out a company-wide email urging interested staffers to apply, that would be internal recruiting. 

Now, why might this be a good idea? Because your employees need no onboarding, for one thing – they’re already familiar with your company mission, vision, and culture, as well as the dominant communications tools, databases and so on. Internal hires can hit the ground running, unlike external hires, who require a period of familiarization. 

The best way to ensure your internal recruitment succeeds is to consistently gauge employee performance and weigh their strengths and weaknesses. Maybe a relatively new hire exhibits integrity and professionalism and is competent and works well with others. 

You can’t just promote her straight away, but it’s a good idea to make a note and be sure to consider her for available managerial positions down the line. That’s staying ahead of the game. 

Definition of External Recruitment

Returning to the example mentioned above, after your CFO informs the boss that he’s leaving, the hiring team and recruitment manager would jump into action: scouring career sites and talking with headhunters to find and recruit the best external talent. 

Next, they’ll craft a detailed job description and post it on major job sites like Indeed and LinkedIn. The hope, of course, is that great candidates will see your strong employer brand, great employee reviews, and a job title that sounds like the perfect fit, and submit their CVs. 

But that’s not always what happens. Sometimes, candidates see a company’s poor reviews and decide not to apply. Former employees may have advised them to avoid working there. If you’re in that situation, getting top talent to apply will likely be a challenge. 

You could turn to social media, networking events, and industry conferences. Start by digging into LinkedIn, and be sure to check out how Facebook and Instagram encourage business collaborations. Facebook allows job listings, and you can adjust your company’s Instagram bio to highlight your hiring page. This is a common marketing tool for influencers and businesses.

Universities, organizations, and large businesses may be organizing networking events in your area and your industry – a great opportunity to find talent. Fortune 500 companies regularly host career fairs at which smaller companies can also find candidates for open roles.

In the end, it’s often good planning and preparation and a well-executed strategy that lead to successful external recruitment. It’s much more difficult to do on the fly than internal recruiting. 

Importance of Recruitment for Businesses

Companies that don’t hire well tend to fail. That’s the reality of the business world. But if you’re willing to invest time, energy, and resources into finding talented people, you’ll have a much better shot at growth and success.

Just remember that you can’t do everything yourself, so you’ll want to delegate some work to reliable staffers.

Advantages of Internal Recruitment

By identifying and developing existing staff, you can create a pool of talented and ambitious employees who understand your culture. It also helps with employee motivation and retention. When staffers see the potential long-term career development, they’re more likely to stay and work hard to serve your business.

Familiarity With Company Culture

As mentioned above, a key advantage of internal recruitment is that existing employees are familiar with your culture and expectations. They understand what’s expected in terms of performance and behavior, which all but eliminates the need for onboarding.

By recruiting internally, you can help new employees quickly adapt to their work environment and integrate into their teams with ease. Newly promoted or transferred employees will probably already be familiar with the relevant tools, policies, and procedures. 

Cost-Effective

The result of all this is considerable savings in terms of time and resources. Internal hires significantly reduce hiring costs and have the potential to maximize return on investment. 

Internal recruitment saves money on advertising, background checks, training, onboarding, and more. You’ll likely also see higher retention rates, once your employees grasp the very real internal opportunity for advancement. This again means more savings. 

Employee Retention and Motivation

Internal recruitment encourages employees to develop their skills and succeed in their current role in the hopes of being noticed and chosen for career advancement. This increases engagement and loyalty.

Hiring internally also reduces costs in terms of screening and explaining the position. Existing employees will likely have some knowledge about the available job. This means fewer questions and a quicker hiring decision. 

Disadvantages of Internal Recruitment

Internal recruitment is not all roses and sunshine. There are a few disadvantages to consider. 

Limited Pool of Candidates

To start with, hiring internally severely limits your talent pool. This often means a more narrow range of skill sets, experience, and perspectives. It might also reduce your diversity. With fewer qualified candidates, you might end up settling for someone who’s not a great fit while never learning about fantastic external candidates. 

Limited Diversity of Skills and Perspectives

What happens to a company that loses out on fresh ideas, new approaches, and outside expertise? Reduced growth and innovation, most likely. 

A lack of diversity can create stagnant processes and procedures. This can lead to decreased quality and creativity due to the lack of unique insights. So, make sure to keep an eye on your company’s diversity.

Potential for Resentment or Favoritism

Particularly if your company only recruits internally, employees who are never chosen to fill the available jobs may come to feel slighted. Maybe they think they’re not being considered or are given less opportunity due to some perceived workplace issue. 

Whatever the specifics, this could impact morale, eroding engagement and even productivity.

Advantages of External Recruitment

External recruitment is all about bringing in new talent. You can find the right person for the job and ensure successful onboarding. If you recruit the right people, you can grow your company and increase your bottom line.

Wider Pool of Candidates

With external recruitment, you can cast a wider net, source more qualified candidates, and make sure that you’re hiring the right person for your company. This also reduces time-to-hire for roles that are difficult to fill, including positions for executive leadership and highly specialized talent.

Diverse Range of Skills and Perspectives

External recruiting results in a more diverse workforce and tends to eliminate potential bias in hiring decisions. External job candidates might come from backgrounds that may not have been considered otherwise.

Potential for Fresh Ideas and Approaches

External candidates present the possibility of new skills, perspectives, and problem-solving techniques. As a result, hiring externally can spur innovation and increase efficiency and productivity. 

Disadvantages of External Recruitment

Longer Training Period

Making an external hire tends to result in a longer and more involved period of training and onboarding, which of course is more costly. The new hire will need to acclimate and may face a gradual learning curve. These are costs that should be factored in when determining your recruitment budget.

Higher Cost

External recruitment is usually more expensive than internal. In addition to the added cost of training and onboarding, you might also pay for online job postings or to hire headhunters to help you find talent.  

Risk of Poor Fit

External recruitment means less control over applicant quality. When you recruit internally, you can look at CVs and skill sets, as with external candidates, but you can also check out employee reviews and performance reports and gain a better idea of the potential fit. 

External applicants are often totally unfamiliar at the start, and you could receive hundreds of applications from unqualified candidates. But of course, you’ll only know this after you’ve gone through them all. This is why recruitment is so important – if done well, it can sharply reduce the time spent narrowing down the candidate field to legit applicants. 

After that, it’s up to your hiring managers to decide whether they’re a good fit. 

Factors to consider when choosing between internal and external recruitment

Larger businesses tend to favor external candidates as they’re always looking to add fresh talent. Smaller businesses tend to find it easier, not to mention more cost-effective, to have employees wear many hats. 

For example, at a startup, the founder may be the account manager and salesperson. Similarly, the SEO specialist may also serve as the lead content writer.  

Again, when you recruit internally, your candidates already have a strong understanding of your existing workforce and culture. This reduces onboarding time and lowers the likelihood of turnover due to cultural fit.

1. Availability of Internal Candidates

Internal recruitment makes great sense for businesses that are stocked with talent – it cuts costs while boosting employee morale. But if you’ve got a few suitable internal candidates, the wise move is to look outside your business. 

Similarly, if you’re looking for specialized skills or knowledge, external may be the best option. 

2. Company Culture

Internal recruiting tends to strengthen company culture. Your employees are already familiar with your expectations, which means there’s no learning curve for new hires.

3. Time and Resources Available for Recruitment

If you’re deciding between internal and external recruitment, consider how long you have to fill the position and your expected budget. Internal recruitment generally results in speedier hiring, while external is more about a fresh injection of talent and ideas. 

Using external recruiters and social media ads will attract a larger pool of candidates, but hiring externally will likely take more time due to the increased screening, interviews, onboarding, and so on.   

Conclusion

Both internal and external recruitment offer benefits and advantages, and for most companies, it’s best to keep both options in your toolkit. In some cases, you’ll already have the perfect candidate in-house, while in others, you’ll need to look outside your company to find that ideal fit. 

Be sure to weigh your company’s needs, goals, and budget when choosing the optimal recruitment strategy. Whatever approach you choose, building a strong reputation as an employer will help you attract and retain the best talent.