Unlocking Success: The Complete Guide to Hiring Internally vs. Externally

Discovering the perfect people to join your company is the foundation of success. 

Tapping into a talented and skilled workforce can transform your business and boost your profits. 

Unfortunately, hiring managers often struggle with talent management. Choosing the approach that best suits your organization's specific needs is crucial when deciding between internal and external recruitment. 

Are you unsure about the merits of recruiting internally versus externally? 

Which approach is quicker and more cost-effective? 

This article will:

• Compare internal and external hiring.the differences and between hiring internally and externally 
• Discuss proven recruitment methods to engage external recruits and employees effectively.
• Help you determine the best approach for your company.

👩‍💼 What is internal recruitment? 

Internal recruitment refers to filling vacant positions with the company's current employees. It involves promoting them to higher positions or transferring them to different roles, departments, or offices. Overall, it's more cost-effective, fast-paced, and encouraging to the workforce.

Internal recruitment is similar to traditional hiring, where candidates undergo interviews. 

However, its primary difference is that internal interviews don't dwell too much on how employees would fit the company's values, company policies, company mission, and vision.

Instead, it focuses more on their skills, reasons for applying, and what they've done for the organization. 

It also involves the following steps:

• Pinpoint the vacant position and its qualifications and responsibilities.
• Determine your internal recruitment strategy.
• Screen the candidates.
• Always provide constructive feedback.

➡️ Discover how to set up a productive and successful internal interview with our guide for the best internal interview questions to ask your current employees.

 👨🏻‍💼 What is external recruitment? 

External recruitment refers to hiring new employees from outside the organization. There are many methods organizations can use for recruiting external talent such as job advertisements, recruitment agencies, job fairs, or online job portals.

External recruitment opens a larger pool of diverse skills, experiences, and ideas.

Compared to internal recruitment, the hiring process for external recruitment takes longer. 

A standard external recruitment would have these steps::

• Posting a job advertisement.
• Screening resumes and portfolios.
• Having a skills and knowledge assessment test.
• Conducting one or more interviews with different members of the organization.
• Making an offer to one of the candidates (which they may or may not accept). 

Many companies outsource hiring and onboarding procedures to specialized experts or recruitment agencies to streamline these processes. This way, businesses can navigate the challenges of external recruitment more efficiently while ensuring the highest quality candidates are considered for the role.

🆚  Pros and cons of hiring internally vs. externally

Costs

Internal recruiting doesn't require setting up job advertisements, unlike external recruitment. It also doesn't involve extensive onboarding and training, costing external recruitment more than internal recruiting. 

Because of these, you can reach qualified candidates internally at a lower cost.

Time to hire

External recruitment takes longer than internal recruitment. 

In this type of recruitment strategy, you'd need additional steps in the hiring process, like setting up a job posting online, assessing an applicant's resume and portfolio, and conducting an online assessment test, background checks, and interviews.

Talent pool

When hiring externally, you'll have a more extensive and diverse talent pool. 

You won't be restricted to your current workforce and can gauge whether a potential candidate fits the role and aligns with the company's mission, vision, and goals.

Culture fit

External recruitment involves gauging whether a new employee fits the organizational culture well. 

They're new to the organization and their colleagues and supervisors, so they need time to adjust. 

However, internal recruitment involves current employees accustomed to the company culture.

Onboarding time

Recruiting internally makes onboarding much faster because the candidate knows the company's mission, vision, goals, and operations.

Instead, you'd only need to brief them on the role's responsibilities, which will translate into a faster time to productivity.

 ➡️ If you're having trouble with onboarding, check out our guide on onboarding challenges and how to tackle them.

Employee morale and engagement

If existing employees know they can get promoted to a senior position with better career opportunities, their employee morale and engagement increase. And having internal recruitment within the company can be a significant motivator and booster for the workforce. 

Access to new skills

Hiring externally opens you to a more diverse talent pool than recruiting internally. Because of this, you'll have better access to new skills and ideas from external recruits.

Innovation potential

Current employees have adapted to the company's operations and often overlook possible improvements. But hiring new employees outside the company can increase innovation potential and bring positive changes to the company.

Risk

Selecting the wrong candidate may happen more frequently with an external hire compared to internal hires. 

When hiring externally, it involves assessing the skills and experiences of strangers. Meanwhile, hiring internally is less risky because you already know their track record.

Potential for workplace hostility

Internal recruiting increases the possibility of workplace hostility, especially between successful and unsuccessful candidates. 

When this happens, candidates that get rejected may look for new and better opportunities outside the company.

🔍 Internal vs. external recruitment: Which one is the best for your company

When internal hiring is better

In essence, recruiting internally is better when filling higher positions. 

For instance, a leadership role in the organization is better suited for someone with insider knowledge.

You can also opt for internal hiring to encourage and motivate the workforce to perform well. It's also wise to use this strategy if you have open positions that meet your current employees' skills and talents.

However, there are also instances where you can hire internally because you lack the resources to cover job board fees and time to conduct job training.

When external hiring is better

External hiring is better than internal recruitment when you want a more diverse workforce and innovative ideas from the outside. 

New employees can bring possible improvements to your current operations and make them more efficient, cost-effective, and sustainable.

You should also opt for external recruitment if your current team doesn't meet the qualifications and skills of your open roles.

Tip: If you want a fast strategy to bridge skill gaps, you'll have a higher chance with a suitable candidate outside the company.

If your company doesn't have a consistent and successful succession planning strategy, you may benefit more from hiring externally than internally.

Once you decide to hire employees externally, you shouldn't stop at developing an onboarding plan. You should also have a plan to guide them in their career path, a welcoming and learning corporate culture to help them learn in the flow of work, and consistent and constructive feedback.

➡️  Onboard and develop your internal and external recruits with Zavvy

Recruiting internally or externally has the same goal: filling vacant positions with qualified candidates who can bring the company one step closer to success.

But regardless of the recruitment strategy you employ, employee enablement is always essential. 

• With Zavvy's employee onboarding software, you will create structured onboarding journeys for both internal and external recruits.
• Plus, with the employee development software and career pathing software, you will guide your people towards meaningful career growth.

With Zavvy, you get to keep your team's skills fresh and relevant. Our smart, AI-driven tools make it super easy to put together engaging training and development programs in no time.

📅 Book a demo to learn how Zavvy can help you drive 360° employee growth.

❓ FAQs

When do I use internal recruitment?

You can benefit the most from internal recruitment if the vacant position you're trying to fill requires someone already well-experienced with the company's operations. You can also recruit internally to motivate the current workforce and instill a sense of loyalty and career progression.

Is it better to recruit internally?

There's no absolute answer to whether internal recruitment is better than external recruitment because it depends on the company's needs. For instance, hiring internally is better if your vacant positions require insider knowledge. But external recruitment may be more helpful if you want new and innovative ideas.

How does internal recruitment get done? 

Internal recruitment gets done by sourcing vacant positions from your existing employees. It involves determining a role's qualifications and responsibilities and allowing internal applicants to undergo an internal interview.

There are different types of internal recruitment methods to promote vacant positions to your current workforce.

Internal job postings

Posting internal job advertisements is one way of opening vacant positions to everyone in the company. It involves announcements through email or on the office's bulletin board. 

Promotions

Another effective way of hiring internally is through an internal promotion, where lower-ranking employees get promoted to higher positions. 

While internal job postings are open to everyone, this strategy heavily relies on an employee's skillset, past performance, and feedback from colleagues and supervisors.

Internal transfers 

Internal transfers happen when an employee gets transferred to the same role from one department or company location to another. 

For instance, employees from one of the company's offices can move to another headquarter in a different state but still perform the same responsibilities of their current role.

Enlisting retired or former employees 

Hiring former employees is also a cost-effective strategy for internal recruitment. 

It lets you save resources and time because your prospects already have experience handling the role and achieving the company's mission, vision, and goals.

From freelance to a full-time employee

Hiring freelancers and making them full-time employees is a powerful internal recruitment method. 

These freelancers already have experience working for the company and won't need as much training as external candidates.

Do internal jobs have to be advertised?

No, recruiting internally doesn't require job advertisements because there are many other ways to fill vacant positions. However, internal job postings within the company's walls can be a key driver in motivating your employees to perform well.

Can you recruit internally only?

Yes, you can recruit internally only, especially if you're short on resources and time. However, you can also consider recruiting outside the company if there are still unfilled positions.

What are the 3 advantages of recruiting internally?

Recruiting internally is more cost-effective and quicker and creates a better work relationship in the workplace. In addition, it requires less training costs and advertisements and encourages existing employees to grow and progress in their respective careers.

What is an example of external recruitment?

Posting job advertisements on online listings is an example of external recruitment. It opens vacant positions to qualified talents outside the company.

What are some external recruitment methods?

Companies can reach out to a diverse talent pool by using different external recruitment strategies: 

Job boards 

The best way for potential applicants to see your job opening is to post an advertisement on online job boards and integrate it into an applicant tracking system. 

Note that posting on a job board requires a detailed description of the needed skills, qualities, and responsibilities for a better candidate experience.

Social media 

An engaging and robust employer branding on social media lets you quickly build relationships and connections with potential candidates. 

It also allows you to reach a wider talent pool, especially since younger job seekers are active on social media platforms.

Website 

Besides online job boards, placing job openings on the company's website can attract external recruits. 

This strategy lets them see other helpful details about the company, like its services, products, history, and goals.

Referral programs 

Networking is another powerful way of hiring new employees externally. For example, you can ask the company's current staff for possible employee referrals and get their contact details from their digital business cards.

You can also ask your clients or contact previous external recruits.

Recruitment agencies 

If you want to reach a more extensive and diverse candidate pool, collaborate with a recruitment agency. They can advertise your job openings and help you find qualified candidates. Compare the options with a site like AgencyReviews.

Career events 

Another traditional way of recruiting externally is through job fairs and other career events like mixers in schools or malls. 

You can assess potential talents based on their body language, confidence, and conversations.