Hiring the right talent can be tricky. That’s why many companies use internal hiring as a recruitment strategy to fill job openings with their current employees. This blog will discuss the benefits and drawbacks of internal hiring.
What Is Internal Hiring?
Internal hiring is the process of filling open positions with current employees. It involves strategies like promoting or transferring someone already within the company to a new role or team. One of the main advantages of internal hiring is that internal candidates are familiar with the team, culture, and processes.
This process saves time compared to external recruiting. Jobs are often posted on an internal job board or shared directly with suitable employees. Companies may use internal promotions or lateral moves to find the best fit for these roles.
Promoting from within boosts morale and builds loyalty.
Advantages of Internal Hiring
Internal hiring speeds up and saves time in the recruitment process. Another big advantage is that it can improve team morale, as current employees feel valued and trusted when promoted or moved to new roles and teams. This builds loyalty and boosts retention.
Shorter Time to Hire
One of the most evident benefits of hiring within your company is that it saves time. Your existing employees are already familiar with the company culture, processes, and systems. You may skip steps like background checks or job board ads, which are otherwise necessary when hiring externally. Roles are often filled faster because internal candidates don't need to go through many interview rounds or an extended onboarding process.
Promoting a current employee also reduces delays in the hiring process and benefits your team as a whole in terms of productivity. With new members joining from within the company, teams can move forward without waiting for external candidates to join and be fully onboarded and trained. This helps maintain productivity within your organization while filling gaps quickly.
Lower Recruitment Costs
Hiring internally can save you money on job ads, recruitment platforms, agencies, and background checks. External recruitment often requires these extra expenses to attract and screen new candidates.
Internal recruiting also reduces the cost of a lengthy interview process. When you know which skills internal employees can bring to their new roles, you can make the right hiring decisions - and you can make them faster!
Faster Onboarding
Internal hires are already familiar with the company’s policies and culture, so they can skip lengthy onboarding and training sessions and need less time to adjust to the work environment than external hires. This reduces onboarding time compared to external recruits, as internal candidates already know team members and workflows.
Recruiters who hire internally spend much less time performing background checks as these may not be necessary for existing employees. Skipping background checks significantly speeds up the recruitment process and enables internal candidates to transition quickly and smoothly into their new roles and teams.
Higher Employee Engagement
Promoting employees boosts team morale—it's a fact! Employees feel valued and motivated to grow within the company and develop their careers without having to leave to seek opportunities. Hiring internally gives you the chance to show that you trust your people, which keeps employees loyal. Trust and employee loyalty are essential components in increasing retention.
Because employees already know the company's culture and goals, you save time on training them and increase their engagement. Promoted employees often inspire their colleagues to perform at their best to get similar opportunities within the company in the future.
Drawbacks of Internal Hiring
Despite its many benefits, internal hiring has also a few drawbacks that you must be aware of. For instance, it may limit the flow of fresh ideas and varied experiences from people with diverse backgrounds and can lead to gaps when other roles are left vacant.
Limited Diversity in Perspectives
Current employees often share similar views shaped by the organizational culture and norms, which may limit creativity, problem-solving, and innovation.
Bringing in an external hire is beneficial as it allows you to introduce new perspectives and knowledge in the organization, which are foundational elements of innovation. A variety of backgrounds can help teams think differently and improve strategies. Companies that rely solely on internal recruitment might miss these benefits.
Potential for Internal Bias
Internal hiring may lead to bias. Managers might favor employees they know or like, which can cause more qualified candidates to be overlooked for the job and result in missing fresh ideas from outside hires.
Bias in promotions could hurt morale within the team and lead to decreased motivation. If employees suspect favoritism, they may feel unfairly treated. A transparent and fair promotion process is necessary to help reduce these risks.
Risk of Creating Workforce Gaps
Promoting from within may leave open roles behind. These gaps can disrupt other teams or delay projects.
Hiring internally can also shrink the talent pool for other positions. If too many shifts occur within the same team or department, critical tasks might lack essential skills.
Is Internal Hiring the Right Choice for Your Organization?
While internal hiring works well for many companies, it might not be the best choice for all. It suits businesses that have clearly defined succession plans and growth paths, as current employees already know the company’s processes and are used to the culture. This familiarity can save time during training and lead to faster results.
Promoting from within may also reduce costs associated with job postings or background checks on new hires. Teams often feel more motivated when they see opportunities for growth in their roles.
On the other hand, internal recruitment can limit fresh ideas and hinder innovation. Hiring externally brings diverse views that can help improve problem-solving and creativity. Filling a role internally might create gaps elsewhere, especially if positions within small teams stay uncovered too long.
Companies should assess their workforce needs before deciding whether internal hiring is the right recruitment strategy. A good mix of internal mobility and outside candidates brings balance and ensures your organization is set for long-term growth. Evaluate your hiring team’s goals and talent acquisition priorities to decide what's best for your organization.
Final Thoughts on Internal Hiring
Hiring internally can be an effective recruitment strategy, but it is not always the best choice. It can save time and money while keeping employees happy, but it might limit new ideas. Each company must weigh the pros and cons based on its needs.
Sometimes, looking outside brings fresh talent that current staff cannot offer. What matters is finding a balance that works for your goals and fits your talent acquisition strategy.
If you're unsure whether internal hiring is the right strategy for your company and are keen to explore innovative, tech-enabled recruitment solutions to source the best talent faster and more efficiently, why not book a demo today to see how Workfully can help?
