Recruiting from Within: Advantages and Disadvantages of Internal Recruitment

Did you know that nearly half of your employees are actively searching or keeping an eye out for new job opportunities? 47% of U.S. employees and 51% of workers globally said that they’re seeking out or watching for new job opportunities. Younger workers are most likely to say they want to quit — 38% of Gen Z and 37% of millennials. And it’s not all talk — one in two companies has a turnover rate of 15% or more, while one in five reports a rate of 30% or more.

But why do so many employees want new jobs? A LinkedIn report showed that three of the top five reasons people look for new jobs are related to their professional growth. If your employees don’t see that opportunity at your company, they’re looking elsewhere.

One of the ways your company can combat this trend is with internal recruitment. In addition to increasing retention, hiring from within your company has lots of other benefits. In this post, we’ll explore those advantages, and touch on some of the disadvantages, too.

🌟 Is your organization finding the right balance between internal and external talent? 🔄 Explore the pros and cons of internal recruitment and discover expert tips on using talent management software effectively.

What Is Internal Recruitment?

Internal recruitment is the process of filling vacant roles by hiring individuals who already work for your company. It also encompasses any efforts by your HR team to leverage your existing workforce to fill a role. For example, imagine you need to hire a new director of customer service. Both asking for recommendations for the position and promoting a customer service manager to the director role are internal recruitment strategies.

Businesses utilize many types of internal recruitment:

• Promotions
• Departmental transfers
• Hiring part-time or contract employees into full-time positions
• Employee referral programs
• Internal job boards
• Talent pools or skill inventories

The variety of internal recruitment strategies gives your team options for how to kickstart or revamp your program. If you’re doing a great job gathering internal candidates but failing to make many internal hires, you may need to strengthen your skills inventory to understand where your organization is lacking.

5 Advantages of Internal Hiring

The upsides of internal hiring are many, especially as employee retention and development take center stage for HR teams this year. Take a look at some of the benefits of ramping up internal recruitment efforts.

1. Motivate, Retain, and Engage

A recent study showed that employees promoted from within are far less likely to quit, especially if they’re high performers. More research from Josh Bersin found that promoted employees are 70% more likely to stay long-term, while those who make horizontal moves are 62% more likely to stay.

Internal hiring shows your employees that your company values their skills and the work they do. Giving your employees real opportunities to grow or move to a role that better fits their strengths motivates and improves overall employee engagement.

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2. Hire and Ramp Faster

Internal hires can be brought on board much faster than external candidates, reducing your time-to-hire by up to 20 days. These hires bring their existing knowledge of the company, clients, processes, and culture, which means there’s a reduced learning curve. You can onboard them quickly since they’re familiar with your company culture and already understand how things are done.

Hiring internally is also less disruptive to their team members. When you have open roles where you need employees to be productive as soon as possible, internal recruitment can help you get there.

3. Grow Your Own Talent

There are lots of highly motivated, talented people working at your company. Internal recruitment can help you tap into their skills to develop your company’s future leaders. If you’re using a complete talent management system, it’s easy to monitor performance and spot your highest performers. You can then work with those employees to define career paths, develop their strengths, and help them grow professionally — all within your organization.

When you grow your own talent, you’re motivating your entire workforce and helping your company become future-proof. You won’t need to scramble to fill leadership positions — you’ll already have the next generation of leaders prepared and ready to move up the ladder.

4. Save Time and Money

External recruitment is expensive and time-consuming, which is why retention is such an important initiative. It’s also a great reason to develop internal hiring strategies. Typically, when you have a job opening, you need to create a job post, advertise it, and maybe even work with a recruiting agency to find candidates. That’s before you even start screening and interviewing.

Internal recruiting is much more cost-effective, coming in at three to five times less expensive than the traditional route. Your recruiters won’t need to spend nearly as much time sourcing candidates, and your HR team will save tons of valuable hours on onboarding tasks. You’ll also save on other hiring expenses like equipment costs, employment verification, and background checks. Hiring managers will even save time during interviews and onboarding thanks to internal candidates’ built-in knowledge of culture and processes.

5. Establish a Learning Culture

When employees know they’re not stuck in their roles, they’re more inclined to pursue the learning opportunities that your company offers. And when your people are motivated to learn and grow, that permeates your company culture. You’ll discover new talents you didn’t even know your employees had, you’ll nurture a culture of learning that helps you attract more candidates and retain your people.

The Downsides of Internal Hiring

It’s important to understand the disadvantages of internal recruitment so you can guard against them or make the decision to hire externally. Not every position is best filled by an internal hire, and hiring teams need to take care to avoid bias toward internal candidates. Let’s take a look at some downsides to recruiting from within.

1. Limits Diversity and Fresh Perspectives

When you hire internally, you don’t increase the diversity of your workforce or add new perspectives to your teams. That raises the risk of stagnation while bringing in new employees can stimulate more innovation and creativity.

Down With Downsides: If your organization already has policies promoting diversity, equity, inclusion, and belonging (DEIB) built into the existing hiring process, you’re in good shape. Prioritize DEIB in the hiring process, and you’ll build a diverse workforce from the start. Your company can then establish strategies for ensuring your employees have equitable opportunities for promotions and career development.

2. Bias Toward Insiders

When your hiring team is considering a pool of internal candidates, they may have an unconscious bias toward the people they know best. If external candidates are also being considered, it’s even more likely that the hiring team has unconscious bias in favor of their colleagues. It also raises the risk of favoritism or preferential treatment, which could lead to your organization missing out on the best candidates.

Down With Downsides: Use a structured interview and evaluation process for objective hiring practices. One of the many benefits of recruiting software is the ability to build this process and replicate it for any candidate. With the help of interview guides and scorecards, hiring teams have the tools they need to evaluate and rate internal candidates fairly.

3. Overlooking External Talent

If you’re only recruiting from within, you could end up settling for an internal candidate who almost fits the job description instead of finding the perfect fit for the role. You won’t have the benefit of a new employee with a unique skill set and the added knowledge from outside your organization.

Down With Downsides: Don’t consider either external or internal recruiting to be the default. Carefully consider each open role to decide if you’ll hire internally or if you’ll bring in outside candidates.

Internal Recruitment Done Right With Software

With the help of an ATS system, you can execute your internal hiring strategy with ease. For the best results, you want to look for a recruitment platform that’s part of a talent management system. When the entire employee journey is managed from one system, it’s far easier for your team to perform internal recruitment tasks.

Here’s how a complete talent management system like ClearCompany powers internal recruitment:

• Evaluate the success of current internal hiring efforts with reports showing the rate of promotions, retention among employees vs. those who were hired into new roles, and more
• Create Talent Communities where you can scout internal candidates based on their skills
• Use your ATS’s Interview Guides and Scorecards to ensure internal hires go through the same interview process as external candidates
• Get insights from Performance Management, including performance reviews, Shout Outs from colleagues, and goal history to inform smarter internal hiring decisions
• Make more accurate predictions and plan for the future of your workforce more effectively
• Build your ideal Talent Management system with modules for Recruiting, Onboarding, Performance, Engagement, and Workforce Planning

Learn how your company can make smarter internal hiring decisions when you use ClearCompany Talent Management. Sign up for your personalized demo now.