Companies that make it to ‘The Best Companies to Work With’ list have the same problems as companies that don’t – employee attrition. Even Google with its enticing perks like free cafeterias and nap pods also has the problem of bright minds going elsewhere. The fact is that all of us are looking at career growth and doing the same thing even with all the perks can get repetitive. To deal with this, many companies usually turn to internal recruiting when positions go vacant. This saves time as well as cost and can build employee morale.

All this is true but together with the advantages , there are also disadvantages to internal recruitment.

Internal Recruiting Advantages

1. Makes Hiring Faster

One of the biggest internal recruiting advantages is that it cuts down on downtime. Recruiting external candidates will have to factor in the time taken for interviewing candidates, checking references and then waiting for them to get onboard. If you have a good HR Software, you will be able to identify the high performing employees who would fit into the new role. Software makes it easier to keep a tab on performing employees, particularly when it comes to cross-department hires or even hires from different regional offices. To get the best candidate for the role, many organizations open positions to both internal and external candidates. This way they know that they have got the best fit.

2. Internal Recruitment Reduces Cost-to-Hire

While some HR might not factor in costs for each new hire, those companies that do, know it can total up to a lot. The cost of advertising for the job position, the cost of making reference checks, the list can go on. Over that add the risks of losing new hires within the first 6-months of joining. 50% of new hires, put in their papers within the first 6 months to a year because of not being a culture fit or not being able to live up to the expectations generated from a successful interview. Internal recruitment’s don’t have this risk.

3. Improves Employee Loyalty

Career progression is one of the 3 main reasons why employee quit a company. So, apart from quickly filling the position, your organization is also sending out a positive message with internal recruitment.  On the other hand, if positions are usually filled from outside, it tells your employees that however hard they work, they might not get the recognition they need and to get it they have to look elsewhere.

4. Shorten the Time to Onboard

It is understood that when a new employee joins a company, it will take at least 1to3 months for them to start showing full productivity. This will not happen with internal recruitment.  It is easier for internal recruited candidates to quickly fit into the position and start showing results. They already know the company culture and the expectations and might even know the team. Also, there is very little paperwork needed as well, such as ID cards, policy agreements etc. When say a Sales Associate moves up to an Assistant Manager’s role, they already know what is expected of them, the new responsibilities are easier to take on. The disadvantage is that many of their erstwhile peers must now get used to reporting to them.

Disadvantages of Internal Recruitment

If internal recruiting advantages are so good why do companies still look externally for new candidates? Here are a few reasons why it might be risky to have an exclusively internal recruitment policy.

Lack of diversity: sometimes it is good to get fresh new ideas into a team. People with different backgrounds, gender or age can infuse a new perspective to a team

Roles new to your business: When businesses decide on new roles, they might not have people with the experience to fit it. In such cases, it is always better to recruit from outside.

Leaves a gap: When employees are hired internally, it leaves a gap in the existing workforce which will need to be filled.

Hiring is an important part of HR responsibility and knowing when to hire externally and when to decide on internal recruiting is a fine balance. It is important to create an internal recruitment policy as this will pay off in better productivity and employee morale in the long run.