Internal or external recruitment.

Internal or external recruitment. Which one gives you more bang for your buck?

Recruiting employees isn’t an easy process. Spending time and money on hiring and training an employee to discover that they don’t match the job description can substantially harm business growth and profits. Something to majorly consider is whether to hire internally or externally.

Internal recruitment: when the business fills a vacancy with somebody within its organisation.

External recruitment: when the business fills a vacancy with an applicant outside the organisation.

Here is a table of pros and cons of internal and external recruitment, which may give you as a business owner a better idea of which route to take.

Internal recruitment External recruitment
Advantages

Less costly and quicker to search as there generally isn’t any need to advertise.

The employer would have more valuable information about the employee and how reliable they are in the workplace.

The internal employee would already be familiar with the organisation policies, how it is ran, the culture or it, and more – they would be much quicker to train.

Showing employees that there’s a chance of promotion in the company would boost employee morale and organisation loyalty.

They are less likely to make major changes and are more likely to work better with the staff in the company as they have already worked together.

Advantages

New ideas and fresh thinking in the team – an external employee can bring new insights from their experiences in a different size company or different industry.

It can reduce the training needed by hiring horizontally rather than vertically (promoting) internally.

By hiring somebody outside the company there is more diversity – diversity can also mean diverse personality types, educational backgrounds and thinking styles.

There would be a wider talent pool and it can increase the number on the shortlist if necessary.

Disadvantages

There could be discontent or resentment in the organisation for any rejected applicants.

The time would need to be taken to find somebody to take the internal employee’s old position.

The organisation would be missing out on fresh ideas introduced from an outside person.

There would be a more limited number of applicants for the vacancy – as an employer you could be missing out on some great external candidates.

Disadvantages

A study by a US university professor states that external hires are 61% more likely to be fires and 21% more likely to quit.

It takes much more time and money to recruit externally – there are more CVs to go through and people to interview, and advertising would need to be done in most cases.

The incentive for current employees to strive for promotion wouldn’t exist. Employing somebody outside the company could hurt employee morale and loyalty, which could lead to conflict.

There’s a lot to consider when thinking about recruiting internally or externally, and this is just one aspect of the recruitment process. We have a workshop coming up on recruitment and outsourcing, where you can gain knowledge from expert business coaches in the best way to recruit or outsource in your organisation.

We hold regular workshops covering this and other topics.

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