Are Internal Hires a Company’s Best Move for Open Positions?

The efficiency of the hiring process can determine whether a company is well-staffed with quality employees. Companies use two hiring methods when selecting new candidates for open positions:

• Promoting from within
• Recruiting new, external talent

Before deciding whether to promote someone internally or hire someone new from an externally qualified candidate pool, Human Resources personnel should understand the pros and cons of internal and external hiring processes.

Internal hiring defined

Internal hiring is a process by which a company chooses to transfer or promote someone who works for the company into a new role. When a company hires someone internally, it typically involves transferring a person to a new department or promoting them to a more senior position within the same department. The professional may show interest in filling the new job, or management may determine that the person is a good fit for an open position.

Sometimes HR professionals share open positions internally before advertising them publicly. This process allows people already employed with the company the opportunity to apply and be considered before anyone else.

External hiring defined

In contrast to internal hiring, external hiring recruits professionals from outside the company for open positions. This method allows companies to seek growth by providing career opportunities to new players in the workforce. The external process requires posting notifications to job search websites and other advertising media before interviewing potential candidates.

External hiring allows companies to seek growth by providing career opportunities to new players in the workforce

The pros of internal hiring

Both hiring processes have pros and cons, and we’ll go through them in this article. Let’s start with some of the pros involved with internal hiring.

Reduced hiring costs

Choosing to hire internally allows companies to allocate the funds they would have used for hiring an external candidate to a different budget item, such as employee development. There is no need to use external sources for advertising open positions, so the cost of hiring a candidate can be reduced.

Although there are exceptions, internal candidates typically won’t need extra money for relocation or pre-employment checks.

Shortened hiring process

Typically, when a company hires internally, the process is less involved than when they must recruit and hire from outside the company. Those internal interviews are often more concise and less time-consuming than those for external candidates. Therefore, HR professionals can streamline their interviewing process and usually conduct fewer interviews.

Also, the human resources team probably already knows the potential internal applicant, so they can adjust their interview techniques accordingly.

Shorter adjustment periods due to familiarity

Companies that hire internally choose to allow someone already familiar with policies and culture to transition into a new role. Typically, that means there will be a shorter adjustment period for the person transitioning and for other team members.

Hiring people from within allows people already familiar with policies and culture to transition into a new role and require a shorter adjustment period.

Internal hires can reach productivity goals quicker, which also benefits the company.

Performance history is clear

When a company hires internally, they are already familiar with the candidate’s skills and performance history. Human resource professionals take less risk when they hire internally because they already know the candidate’s achievements and level of productivity.

Additionally, hiring an internal candidate can be a reward for an employee’s performance within the company.

Career development opportunities for company professionals

Hiring from within provides built-in career development opportunities for someone who already works within the company. Providing career development opportunities can increase employee satisfaction and retention. Many professionals are happier at a company that offers growth opportunities.

When a company establishes an internal hiring practice, it can encourage employees to remain with the company and work toward promotion opportunities.

Cons of internal hiring

As with anything, there are disadvantages as well as advantages to internal hiring. Here are some of the drawbacks to internal hiring.

Creates another empty role

When a company promotes or transfers an existing employee, it creates a vacancy in their previous role. That leaves HR looking for someone to hire for that position, whether that results in moving someone else or hiring someone new.

The upside to having the transferred individual’s role available is that it typically leaves a lower-level position open, making it easier to recruit appropriate talent.

Employee morale can be affected

Hiring internally has the slight potential to be somewhat detrimental to employee morale. This is especially true if more than one current employee wants the open position. That can cause competition or jealousy, which can cause issues in the overall work environment.

Sometimes, an employee who doesn’t receive a promotion in favor of a coworker will become disgruntled and leave the company. Even so, sometimes, that works to the company’s benefit.

Pros of external hiring

Just as internal hiring has advantages, so does external hiring. Here are some of them.

Staff diversity

Hiring external recruits brings fresh insight and ideas into a company. Bringing new insight and ideas into the company can also enrich the company culture. This is particularly impactful if the company needs a change of direction, even a slight one.

Add new skills to the company profile

When a company hires externally, they add new people with new skill sets. Qualifications the new hire has may differ from anyone already employed by the company. Internal employees may need additional training to fit the new role. In contrast, external hires might already have the exact qualifications the job needs. Also, external hires might recognize issues within the company faster than internal hires.

If the company is experiencing change, hiring an external candidate could be especially valuable.

If the company is experiencing change, hiring an external candidate could be especially valuable. For example, if the company has implemented a new computer system, and the external candidate is already proficient, it would be beneficial to consider that person over an internal transfer who needs to learn the system.

Allows company growth

Hiring externally provides opportunities for company expansion and career opportunities for other professionals. Hiring in this manner can allow HR managers to locate multiple qualified people for the positions they need to fill. Often professionals will apply for one job and be offered a different position than the one for which they applied. Placing more than one candidate in an open role can increase productivity and efficiency.

Management of employee workload

Hiring an external candidate helps to manage the workload of current employees. A company’s employees won’t need to accept more responsibilities at work because the external candidate takes on some of the duties. Additionally, external hires bring different skills to the job than internal candidates, which means that an external candidate may more easily complete some tasks.

A more extensive selection of talent

An external hiring process brings a larger talent pool to a company. Companies are more likely to receive more external applicants than internal ones. The larger talent pool can allow a company to find the perfect candidate without sacrificing the qualifications they’re looking for.

Cons of external hiring

External hiring has its drawbacks, just as internal hiring does. Here are some of the possible disadvantages of hiring externally.

Increased hiring costs

External hiring requires more time, effort, and money than internal hiring. More orientation and training are needed to position someone appropriately within the company. Interviews also take more time and effort when a company hires externally.

External hiring requires:

• Advertisement
• Job posting
• Other external expenses

Determining the hiring costs will help the HR department select an appropriate hiring budget.

Longer training periods required

Typically, an external hire needs longer to train and become familiar with the company culture and policies. A company must ensure its training programs are effective and efficient so that new hires can acclimate as quickly as possible.

Exceptional training programs lead to confident employees who work more efficiently toward productivity goals more quickly.

Final thoughts

Internal and external hiring practices each have advantages and disadvantages. The company’s goals, values, culture, policies, and hiring budget should determine whether HR recruits internally or externally.