Internal vs. External Recruitment

Internal recruitment is where a company hires employees from within the organization that are already working there. External recruitment is where a company hires employees outside of the organization that are not currently working there.

When recruiting for a new position, recruiters must evaluate the needs of the company, the costs associated, and the benefits involved. These considerations often present a question to recruit candidates internally or externally or both. However, as we examine, is one choice better than the other?

Jobvite’s Recruiting Benchmark Report, which examines published recruitment metrics provided by companies, indicated that approximately 80% of new hires were from external sources including Career Sites (e.g., Monster, LinkedIn), Company Job Boards, Referrals, Executive Recruiters, and Agencies.

Comparatively, internal hires accounted for just 8%. However, internal applicants scored considerably higher when they applied an effectiveness score, which is Jobvite’s method for evaluating the quality of an employee. The higher the effectiveness, the better the source is at driving new hires.  

Internal Recruitment

Internal candidate

An internal candidate is a prospective employee who is recruited from inside the company. They can apply for the job voluntarily or receive a recommendation from another hiring manager. Internal candidates possess enormous value for hiring managers as they are already accustomed to company procedures, culture, and onboarded to the company (e.g., receiving benefits, have a badge, IT logins). Internal candidates move positions for a variety of reasons, including career advancement, new challenges, changes in life situations, and many others.

Internal recruitment methods

There are two primary forms of internal recruitment – promotions and transfers.  A promotion is the most common form of recruitment; it allows an employee to advance their skill set while the company retains talent. Internal transfers also allow employees to advance their skill set in a more lateral manner that doesn’t involve increased responsibilities. As we discussed in our article “Working with Millennials,” these lateral moves are more sought after with incoming generations of employees.

External Recruitment

External candidate

An external candidate is a prospective employee who is recruited outside of the company.  External candidates make up the majority of job applicants for most positions. They are expected to bring defined skills, based on the position being recruited for, as well as new perspective and approaches from which the team can benefit. External candidates search for new jobs for many reasons, including career advancement, better benefits, a change in life situation, such as relocation, and more.

External recruitment methods

There are numerous methods for external recruitment that all job seekers should consider. Here is a sample list from the Society of Human Resource Management:

• Company Websites
• Employee Referrals
• Job Boards (Paid and Free)
• Networking (Informal, Formal)
• Job Fairs (Online and Virtual)
• On-campus college recruiting
• Print, Radio and TV Advertising
• Social Media
• Staffing Agencies (Temp, Direct-to-Hire)

Recruiters follow procedures to source candidates from this list and then begin the selection process. Depending on the importance and demand of the position being filled, certain sourcing methods may be utilized more than others to help generate candidates with required backgrounds and experience.

Internal and External Recruitment Advantages and Disadvantages

When both internal and external candidates are recruited, human resources must evaluate the advantages and disadvantages of hiring from each source. Preference to one source or the other is often based on the situation, the hiring managers preference or the company’s outlook. Both offer a variety of benefits, depending on the situation.

Advantages and disadvantages of internal promotion

Advantages: Companies that aim to fill open positions with internal promotions have considerable advantages in doing so. A primary advantage is that they can fill the role quicker than they would if they hired externally. Employees typically need less onboarding, training, and other resources than they would externally. This saves both time and cost for the company. Other advantages include increased assurance from the employee, resulting in better productivity, morale, and loyalty.

Disadvantages: A key disadvantage is the need to backfill the position that was lost. While costs and resources may have been saved from hiring for the previous position, this now creates a cycle where a new position will need to be filled. If no positions were eliminated, this would likely mean that at some point a hiring manager will need to hire externally. Other disadvantages include losing out on new perspectives and experience that could be valuable from people outside the company.

Advantages and disadvantages of external recruitment

Advantages: Companies looking to recruit externally are providing new opportunities to invigorate their teams with fresh perspectives, ideas, and culture. Recruitment from competitors sought after companies, and specific schools can add value to their organization through talent acquisition.

Disadvantages: External recruitment poses an inherent risk. Risks can include lack of employee fit, inability to perform job tasks, and lack of desire to perform to their new companies standards and objectives. Other disadvantages can include workplace resentment. When new positions are available internally and externally, and internal employees lose out, jealousy can ensue.