A hiring process can be a daunting time for businesses. For whatever reason an employee vacated their position, it now lays unclaimed, and while the company efforts to fill it, money is lost. There are two options for filling an open position: hiring from within, and hiring externally. There are many factors to take into consideration before committing to one option or the other. Many of the benefits associated with hiring from within a company are tied to employee morale.
Employee Morale
Hiring internally is quicker because the candidate is already an employee with the company, and are therefore already familiar with operations and business methods. The training process will be quicker, and the transition will generally be smoother than bringing on a new employee. Hiring from within sends a message to other employees that there are real career opportunities with the company. Often, this boosts company-wide productivity, as it creates added incentive for increased productivity.
Trust
Companies like to hire from within because the candidate for the position is a known commodity; someone whom the company is already familiar with. They know the person’s strengths and weaknesses, and the candidate has already established relationships with employees in the company. The costs associated with hiring a new employee are also lower, meaning advertisements and time spent working with an unfilled position won’t accumulate, because of the speed of a quick hire.
New Outlook
Conversely, hiring a candidate externally introduces a fresh perspective to the fold. Bringing experience from outside the company can be a breath of fresh air, particularly in a struggling business. Hiring an external candidate means access to a larger, more diverse talent pool. Often times, the company only has one or two qualified candidates for an open position, hamstringing them into choosing between two under qualified candidates. Hiring externally gives a company a chance for a fresh start
While hiring a known commodity may appeal to many, it comes with its potential disadvantages as well.
‘Thinking Within the Box’ Syndrome
Hiring an existing employee for a position with more responsibilities can lead to a narrowing of ideas; more of the same. A struggling business that hires from within is less likely to receive the proverbial “shot-in-the-arm” of innovative concepts and ideas that comes with hiring someone outside of the company.
Jealousy
Even though there will be less training and need for orientation for an internal candidate, they will have to adjust to new expectations and responsibilities, just like an external candidate would. Internal politics also play a hand, as some fellow employees may not agree with the promotion, creating tension in the office, and hurting overall output.
Relying on the Unknown
When hiring an external candidate, all a company has to judge them is a resume, the interview, and perhaps some examples of work, depending on the type of position. This puts the hiring company at a disadvantage, known commodity also applying for the position.
Organizing a search for external candidate means spending money on advertising for the position, and means that the position is open for a longer period of time, draining the company of additional funds, and diminishing productivity. A person hired from the outside will take time to not only train, but to become familiar with other employees, and their respective strengths and weaknesses.
Unhappy Workers
Announcing to a group of employees that the position has been filled externally can hurt morale just as much as the news of a hiring from within can help it. Knowing that all of their hard work will lead nowhere except a paycheck hurts effectiveness, costing the company money in the long-term, as right now.
Weighing the pros and the cons for hiring internally, or externally, comes down to what the company is looking for. Is it looking for a fresh perspective for the position, or is it looking for stability, and a smooth transition? It’s an easy question to ask, but not nearly as easy to answer.
About the Guest Author:
Hilary L. Smith is a small business entrepreneur who enjoys topics involving mass communications, technology development and international relations.
FAQs
What are the pros and cons of hiring from within vs hiring from the outside? ›
While an internal employee may train to begin work in a new role, an external hire might already have the qualifications they need to succeed in the position. With their fresh insight and new skills, external hires can also solve problems within the company that an internal employee might not notice as easily.
What are the pros and cons of promoting from within the company? ›- Pro: Seamless Transitions. Transitions can be a challenge when you're bringing a person into a job. ...
- Pro: Proven Fit and Loyalty. ...
- Con: Negative Emotions of Other Workers. ...
- Con: Same Skill Set.
Internal mobility can help with retention and motivation
“When you promote from within, people see opportunity and become less likely to move around in their careers,” Chansler explains, elaborating: It's great for morale when employees can see an opportunity to grow within their organization.
Having someone from the outside brings in new ideas and new ways of doing things. This can shake up the business. You can cast a wider net to recruit the best workers with the most suitable skills. Relying solely on internal hiring means you could miss the chance to hire people with new skills and ideas.
What are the pros and cons of recruitment through outsourcing? ›- Lower business expenditures. In a nutshell, outsourcing is one of the simplest ways for an organization to quickly and significantly reduce its expenditure. ...
- Better quality candidates. ...
- Greater focus. ...
- Incompatible candidates. ...
- Security risks. ...
- Low quality firms.
The disadvantages of an internal job posting include: A) every qualified employee does not have a chance for transfer or promotion. B) it is rare that it is a difficult decision about which candidate to select; even if there are two or more equally qualified candidates.
Why companies do not promote from within? ›People know your system, and you know they get along with the team. But doing things your way and solely your way will eventually run into limitations. If you're not bringing in outside talent to keep new ideas coming in, you're missing a chance to keep your culture fresh and your company growing.
What are the potential advantages and risks of promoting from within in this situation? ›Promoting from within a company helps keep productivity high. New employees appreciate opportunities for advancement and the potential for growth. If your employees know there is a potential career path within the organization, you are less likely to lose promising staff to another organization.
What are the disadvantages of hiring and promoting from within? ›- It can increase failure rates. Not every internal promotion will be better than an external hire. ...
- It may limit outside knowledge or advanced skill sets. ...
- It may invite negative company politics. ...
- It may drive away a high-functioning employee.
- It's quicker. ...
- It's cheaper. ...
- It's less risky. ...
- It'll improve your employer brand. ...
- It'll boost your employee engagement. ...
- It could cause internal conflict. ...
- They may not be respected by others. ...
- Sometimes, you just need a breath of fresh air.
What are 3 disadvantages of recruiting internally? ›
It can have a negative impact on those employees who missed out on the job and, due to a smaller talent pool, an internal recruit may not be the best fit for the role. Transferring or promoting an existing employee can also cause gaps within the organisation, which must then be filled by an external applicant.
What are the advantages of hiring internal vs external candidates? ›Internal hires retain organizational knowledge and get up to speed in their new roles more quickly than external hires. “Hiring internally also increases engagement. And folks tend to refer others more frequently when their own career has grown within the organization,” Sonsino says.
Is it better to hire from within or outside your organization Why? ›Employees hired internally retain organization knowledge and can get up to speed in their roles much easily as compared to external hires. Internal hires are more likely to have served in an acting capacity in the vacant roles. They are well conversant with the organization's culture and policies.
What is the advantage of hiring from within? ›One of the biggest advantages of hiring internally is that it reduces your overall recruitment costs. Not only do you not have to invest in advertising your role on third-party websites or on social media, but it's also unlikely you'll have to set aside as much time for interviews.
What is a disadvantage of using external recruiting? ›It can take longer and cost more than hiring from within the organization. It also takes more time to train an external candidate on the systems the organization uses; It can be difficult to tell by a candidate's information whether or not he or she will fit in with the company.
What are 2 advantages of external recruitment? ›- Takes Pressure Off You and Your HR Team.
- Saves You Time and Money.
- Provides a Larger Pool of Candidates.
- Increases the Likelihood of Finding the Right Workers.
- Loss of control.
- Negative impact on staff.
- Data protection and confidentiality risks.
- Lack of consistency.
- Financial and reputation risks.
- Less flexibility.
- Insourcing pros. Higher quality control. Faster in-hand date. ...
- Insourcing cons. Significantly costly. ...
- Outsourcing pros. It is more affordable to outsource repetitive and small jobs. ...
- Outsourcing cons. Quality control is a challenge.
- Feeling A Lack of Control. For many companies, HR is the heart and soul of the organization. ...
- Cultural Changes. For many employees, their company's culture is what motivates them to come to work every day. ...
- Cost. ...
- Frequent Turnover. ...
- Data Insecurity.
Promotions from within can often lead to more work than you'd expect. Instead of simply finding someone suitable for a single job position, hiring from within can often mean filling two job positions – the managerial role and the original role of the employee you ended up.
What is advantages and disadvantages of promotion? ›
| Advantages | Disadvantages |
|---|---|
| Helps to Differentiate from competition | Increased sensitivity to price change |
| Creates opportunity for communication | Might tarnish brand image |
| Promotes word-of-mouth | Sales promotion is only a short term strategy |
Most academics will tell you that external promotion (getting promoted by applying for a higher-level job at another institution) is “easier” than internal promotion (getting promoted by putting in a promotion application at your own institution). For one thing, it is generally much less work.
What are the disadvantages of promoting? ›- Promotional activities last for a short period.
- The promotion has many hidden costs associated with it.
- Decreases brand loyalty and can have a conflict with the actual product.
- Promotions are sensitive to price changes.
To access a wider talent pool
External recruitment methods opens up your company to a larger pool of applicants than if you decide to hire internally.
- Internal Promotion Eliminates the risk of the unknowable. ...
- Speeds up hiring. ...
- Saves money. ...
- Increases employee engagement. ...
- Increases retention rate. ...
- Improved performance and productivity.
Internal recruitment is when the business looks to fill the vacancy from within its existing workforce. External recruitment is when the business looks to fill the vacancy from any suitable applicant outside the business.
What are disadvantages of internal and external recruitment? ›| Internal Recruitment | External Recruitment | |
|---|---|---|
| Disadvantages | Small recruiting pool Training could be required Geographic mobility constraints Jealousy and tensions | Higher recruitment costs Screening process can be tricky Risk of making a poor choice Longer onboarding process and integration |
- The pool of people the role is aimed at is smaller than if it was advertised externally.
- You may be missing out on the best person for the job if they're not already employed by you.
- Reduced cost. One of the prime benefits of using an RPO is its cost-effectiveness, and it is often cited as the primary motivation for organisations to adopt this model. ...
- Scalability. ...
- Reduced time-to-hire. ...
- Improved candidate quality. ...
- Analytics and reporting.
- Access to more candidates.
- Offers fresh perspectives. ...
- Improves efficiency. ...
- Enhances company diversity. ...
- Access to specialized candidates. ...
- Encourages referrals from employees. ...
- Improves competition. ...
- Reduces employee tension.
What are three advantages to hiring from within the organization? ›
- It helps you keep your best people. Promoting from within your own business sends a really strong message to the rest of your team. ...
- It's less time, effort and money. ...
- Shorter learning curve. ...
- Proven cultural fit.
Employees hired internally retain organization knowledge and can get up to speed in their roles much easily as compared to external hires. Internal hires are more likely to have served in an acting capacity in the vacant roles. They are well conversant with the organization's culture and policies.
Is it better to recruit internally or externally? ›Internal hires retain organizational knowledge and get up to speed in their new roles more quickly than external hires. “Hiring internally also increases engagement. And folks tend to refer others more frequently when their own career has grown within the organization,” Sonsino says.
What are the disadvantages of hiring from within your organization? ›It can have a negative impact on those employees who missed out on the job and, due to a smaller talent pool, an internal recruit may not be the best fit for the role. Transferring or promoting an existing employee can also cause gaps within the organisation, which must then be filled by an external applicant.
What are the pros and cons of hiring internally? ›- It's quicker. ...
- It's cheaper. ...
- It's less risky. ...
- It'll improve your employer brand. ...
- It'll boost your employee engagement. ...
- It could cause internal conflict. ...
- They may not be respected by others. ...
- Sometimes, you just need a breath of fresh air.
Outside hires require more training than internal employees on general company policies and procedures. This can cost the company additional time and money. Training for external employees can also result in reduced productivity during the training period and as new employees get familiar with their responsibilities.
What is the difference between internal and external hiring? ›Internal recruitment is when the business looks to fill the vacancy from within its existing workforce. External recruitment is when the business looks to fill the vacancy from any suitable applicant outside the business.
Why do employers prefer internal recruitment over external recruitment? ›Internal hiring should be preferred to external hiring when knowledge and skills specific to the firm are important, when promotions are crucial for motivating current workers, when the costs of a hiring mistake are particularly large, and when an additional vacancy (created when a worker switches jobs internally) is ...
What is one of the biggest disadvantages of using external recruiting? ›What are the disadvantages of external recruiting? It can take longer and cost more than hiring from within the organization.
What do you believe the value of promoting from within a company vs hiring externally for managerial positions? ›Promoting from Within
You'll save the costs that go into hiring and recruiting, such as advertising on job boards, websites and in print. Promoting internally also could speed up the hiring process; it's usually faster and easier to identify and interview existing employees than to recruit outside candidates.