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Advantages And Disadvantages Of Internal Recruitment

Asavari Sharma

August 28, 2023

A non-negotiable criterion for any company's success is having a pool of qualified employees and a steady talent pipeline to fill emerging needs. That talent could come from anywhere, so a structured outreach and recruitment program is essential.

Quite often, however, the perfect candidate for a job could be an existing team member. Internal recruitment is rapidly gaining popularity as a way to cut down on onboarding time and help existing team members explore new avenues.

Like any recruitment strategy, though, it has its advantages and disadvantages - which we can discuss as follows. But first, let us get the basics out of the way:

What is internal recruitment?

Internal recruitment involves identifying and interviewing suitable candidates for a job from within the organization itself. The HR team advertises the opening on an internal job portal and designs an appropriate shortlisting and selection strategy. Internal recruitment can be used to:

  • Promote employees to more senior roles
  • Convert part-time employees or interns into full-time hires
  • Enable lateral hires for employees who want to switch departments

If no suitable people are found within the company, the HR team may open up the job to external talent pools. According to LinkedIn, organizations with active internal career management programs observe 41% higher staff retention rates.

What are the advantages of internal recruitment?

Internal recruitment allows employees to grow in new directions within the same company while giving the company easy access to motivated talent. The benefits include:

1. Quicker onboarding

When hiring an existing employee for a new role, there is no need to onboard them from scratch or have to test them for cultural fit because they are already a part of the company, which means the employee can get to work as soon as possible. This saves the company both time and money.

2. Less resource-intensive

Internal recruitment is a seamless, efficient process. There is no need to send out job postings or sift through thousands of resumes - sometimes, managers with specific needs could just ask other department heads for recommendations and get the hiring process going.

3. Shorter learning period

With an internal employee, the bulk of the training will consist of job-specific requirements. Things like tech training or workplace rules would not need to be covered, as the employee already knows them. Team bonding becomes much easier too.

4. Enhanced employee morale

Every employee wants to feel valued and appreciated in their organization. Promoting from within and matching employees with roles that align with their passions boosts their morale and enhances job satisfaction. This, in turn, has a positive impact on the overall performance and productivity of the company, ultimately benefiting its bottom line.

5. Decreased employee turnover

High employee turnover is often a sign of underlying problems within the company. By matching internal candidates with roles that fit their passions and unique skill sets, the company can increase the chances of long-term employment.

This helps reduce unplanned turnover, which is usually a negative event in an organization. By retaining its existing employees, the company can save time and resources that would have been spent on finding and training new hires.

6. Reduced job posting and screening costs

Recruiting from within eliminates the need for the hiring manager or recruiter to write and post job descriptions and screen unqualified candidates. This saves time and resources and ensures that the company only considers highly qualified internal candidates for new positions.

What are the disadvantages of internal recruitment?

Any recruitment strategy has its downsides. Here are some of the negatives that come with internal recruitment:

1. Unfair practices

There is a risk that employees may resort to unfair practices to try and get a role, such as playing favorites with the hiring manager. On the other hand, managers may also do unscrupulous things like promoting someone they personally like or deliberately keeping back someone they cannot let go of, even if they want a change.

2. Inefficient hiring

Knowing the organizational culture does not guarantee that the internal employee will be the best fit for a new job.

3. Frequent vacancies

When internal recruitment becomes the standard, it also creates more vacant positions left behind by those who moved into the new role. Sometimes those old roles become redundant. However, at other times they need to be filled with external recruitment, which creates extra work.

4. Employee resentment

Internal hiring can create workplace resentment if someone gets chosen over others, especially for competitive roles.

5. Possibility of stagnation

Companies that welcome fresh perspectives and new types of talent in a rapidly-changing world will do their best. By only filling up new roles with internal hires, the company risks having a senior team filled with people who all think the same way. It also risks presenting an external image of the company that is not open to new ideas and approaches.

6. Lack of innovative thinking

External recruitment offers the opportunity to bring in new employees with fresh ideas and unique perspectives that can drive innovation for the company. Recruiting solely from within may limit the diversity of beliefs and miss out on these valuable contributions.

How to build an internal recruitment strategy

To effectively support internal recruitment, it is crucial to have an apparent reference for making informed hiring decisions. Here is how you can make the most of hiring internally:

1. Leverage a competency framework

To assess an employee's potential, understand their skills and experiences. Create a skills matrix and evaluate the workforce based on this framework. This will allow you to match the skills and competencies required for each role with the skills and competencies of your current employees.

2. Design succession plans

Meet with all the department heads in the company and design clear succession plans for each role. Outline the milestones and perks that one can expect when advancing, as well as the necessary criteria for each promotion. Succession plans also involve fixing a budget for each role and a hiring/promoting frequency, such as every quarter.

3. Provide learning opportunities

Make it as easy as possible for your employees to grow with ample learning and development opportunities on the job. This can include an internal learning platform, reimbursement for courses taken externally, shadowing opportunities with senior team members, projects with other departments, and so on.

How to make internal recruitment work for the organization

Internal recruitment is a strategy like any other - it must be tuned to a company's specific requirements. Here is how to make it work for you:

1. Have a clear and simple hiring process

Employees should know exactly what to expect when moving internally, and the process should be as simple as possible for all concerned. Paperwork and formalities should be kept at a minimum, and the employee's new team and the old team should both be kept in the loop.

In addition, be sure to regularly update the employees about new internal requirements via a company newsletter or job board. You could also encourage referrals where employees recommend their colleagues for a suitable role. Having these organized in advance will save time and prevent future issues.

2. Utilize an ATS

When implementing an internal recruitment strategy, there may be a significant increase in internal applicants. An Applicant Tracking System (ATS) will help keep track of the entire hiring process for internal and external candidates. Make the most of built-in employee referral features as well.

3. Screen your candidates carefully

Internal candidates should still undergo a thorough resume screening process despite being current employees. Ensure they have the appropriate skills for the role and that their transfer would benefit the company. That is where a pre-employment assessment tool can come in handy.

3. Ensure fairness

Avoid negativity in the workplace by having multiple stakeholders involved in the interview and promotion process. This ensures transparency and fairness during candidate selection.

4. Provide feedback

Not every internal candidate may be suited for a particular role. Offer constructive feedback, such as advice on skills to improve or other roles that may be a better fit, to help ease the disappointment.

When is it right to hire internally?

To ensure successful internal recruitment, it is crucial to choose the right moment. Here are some tips to determine if your company is ready for an internal hiring process:

1. Having a system in place to distinguish between internal and external candidates will help avoid sending a negative message to valuable employees and reduce the risk of them looking elsewhere.

2. Determine if an insider's perspective would significantly impact the role more than a fresh perspective.

3. Ensure current employees have access to a clear understanding of available positions and the next steps in their career path at the company.

4. Carefully assess internal candidates to ensure they are qualified and not being favored for improper reasons, avoiding any perception of unfairness among coworkers.

5. Work with the management team to determine logistics for the internal hiring process, such as who should encourage employees to apply for open positions.

Over to you

In conclusion, a big part of investing in your top performers is providing them opportunities to grow, even if it is in a different direction than what you hired them for.

Strategic investment in L&D, clear hiring processes, technology to track internal movements, and constant communication will ensure that internal recruitment happens smoothly and works optimally for everyone.

And if you cannot quite find a match internally, recruit someone from the outside. Assess the on-the-job skills of candidates with Adaface to identify the most qualified individuals for the job. A mix of seasoned perspective and fresh eyes is always ideal in any organization.

Asavari Sharma

Asavari is an EiR at Adaface. She has made it her mission to help recruiters deploy candidate-friendly skill tests instead of trick-question based tests. When taking a break, she obsesses over art.

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