More organizations see the value of internal recruiting. LinkedIn reported that 73 percent of hiring professionals said internal recruitment is becoming increasingly important. And the frequency of hiring internally has increased by 10 percent.
As a recruiter or HR manager, you are not only going to fill open roles faster when recruiting from within. You would also boost employee engagement and retention as employees moved up and across the organization.
This article will discuss the different types of internal recruitment, the advantages, and disadvantages of having one when considering internal recruitment versus external hiring, and internal hiring best practices.
What is internal recruitment?
Internal recruitment is the process of filling roles within the company and recruiting employees from different teams, departments, job functions, locations, and lines of business.
Unlike external recruitment, sourcing people inside the organization provides the advantage of the person having an insider’s view of the company. It also promotes loyalty and growth in the workforce.
What are examples of internal recruitment?
There are different types of internal recruitment:
Promotions - a favorite internal recruitment process among employees because it rewards exemplary performance and motivates them to excel. It is also used to grow employees into new roles as part of their career development.
Promotion usually corresponds to a new job title and responsibilities with a new salary range. For example, an HR specialist is promoted to HR supervisor in 2 years.
Transfers - usually involve an employee moving to the same role at a different location or department. This is common for big companies with multiple locations, because of business requirements or at the employee’s request, due to personal reasons like moving residences.
For instance, an IT specialist residing in CA may transfer to the NY office to perform the same job. It could be the employee having the same authority but working in a different role, which is effective for individuals exploring career changes.
Company restructuring - business changes like mergers and acquisitions result in a company reorganization. Economic events like recession, pandemic, and inflation can drive organizations to shift gears.
An example could be the company’s poor retail sales resulting in-store employees performing e-commerce functions to support the company’s growing online business.
Employee referrals - a cost-efficient recruitment technique when employees refer their friends to work for their company.
Apprenticeship - when the company absorbs an intern in a contractual position for a full-time regular position.
Benefits and disadvantages of internal recruitment
There are numerous benefits to hiring people within your company:
Low cost per hire
Hiring people internally can save the company money because you don’t need to spend on the usual recruitment expenses like:
- Job advertising - paying Google or LinkedIn to feature your vacancies on top of search results or homepage feed.
- Job boards - instead of paying Monster or Indeed to announce your job openings. You can inform your staff about upcoming positions via email, newsletter, text, holding a team meeting, or posting on bulletin boards within the company premises.
- Background checks - you’ve already conducted a background check on your employees on the first time you’ve hired them, so you can ask the manager or their peers to know if the employee is qualified for the job
- Staffing agencies - if you’re struggling to find the person for a hard-to-fill role, seek agencies specializing in your niche. Agencies might be expensive, especially if international recruitment and migration are involved. However, you can provide apprenticeship training with more experienced employees to prepare them for the niche position.
Reduce time to hire
Likewise, you’ll also cut down on time and effort when hiring internal candidates because you bypass sourcing, resume screening, and conducting background checks.
Employees are already considered culture-add within the organization. You can easily access records to evaluate their performance and see if they’re qualified. There is no need to conduct a lengthy interview process (if they’re moving within the same department).
Less time to onboard
Every time a person starts a new job, there is always an adjustment period. However, internal candidates' onboarding period is shorter than external hires because they are already familiar with the company's policies, practices, and culture.
They may already know the people they’ll be working with even before they officially begin with the new position, which is true if it's a small company.
They may also have few insights into the new job, especially if they’ve moved to the same team or similar department (for example, when a retail assistant is promoted to retail supervisor).
Boost employee morale
A Jobvite study revealed that nearly two-thirds of employees believe promoting within beats hiring externally, while 56% believed promoting from within is better for morale.
If you want to keep your company’s top employees, recognize their performance by promoting them. Internal recruitment allows them to learn new things and try new challenges. It also benefits the company by retaining their expertise rather than losing them to competitors.
Reduce employee turnover
It's human nature to desire growth and improvement. People want to work for an organization that gives them purpose and something to look forward to.
If the company doesn’t allow its employees to grow, they will not hesitate to seek these opportunities with other organizations.
While internal recruitment is relatively less expensive than external hiring, there are some disadvantages to using this hiring strategy:
You would still need to hire to replace them in their current position
When an individual is promoted or transferred to a new department, they will, in turn, vacate their old role. Recruiters must hire someone internally or externally to fill the open position.
Hence, HR must be strategic in their timing of promoting people from within while at the same time having a steady pipeline of available candidates to replace those resigning to ensure there’s no disruption of business operations.
You might be enforcing biases and issues by not hiring externally
People spend most of their time at work, so it's inevitable that close relationships are formed. And biases can occur when one employee is favored over another.
It creates resentment over those equally qualified employees who also applied for the position but were ignored. And sometimes, managers may feel uneasy letting go of their team’s top members, so they unconsciously block their member’s career advancement moves.
Limit your pool of applicants
Relying on your own workforce to source your next candidate may hurt your business, especially if the required competencies are lacking in your current workforce. You may shortchange your organization if the skill is critical to staying competitive. Yes, you can resort to upskilling, but that takes time which could cause delays in achieving goals.
Create a homogeneous workforce
Hiring people from within could risk bypassing external candidates with fresh ideas. Internal recruitment creates homogenous teams, which could cause you to miss out on the benefits of a diverse workforce, like creativity, innovation, and improved performance and decision-making.
Factors to consider when deciding on internal recruitment
Choosing between internal recruitment or external hiring depends on various factors like timing, budget, and skills requirement. Here are some things to remember:
- Ensure you have different policies and guidelines when considering sourcing internally or externally so you don’t mix up your process. You would treat an external candidate differently from an employee who already has experience in the ins and outs of your company.
- You have decided that an insider perspective is critical to the role; someone who already understands your organizational culture and business goals.
- Employee engagement and retention is an important business strategy, so you first announce job openings inside the company to create a path of growth and development for your workforce.
- You have determined that the pool of internal candidates qualifies for the job opening. And you can guarantee you’ve followed the appropriate selection process (skills assessment, interview with the hiring manager) to hire the right employee for the role.
- Your time to fill: Does the role need to be filled immediately? Or can the company afford the time to really look for an external candidate that fits the role perfectly?
- Recruitment budget: How much are you willing to spend on job advertising versus employee referrals? Are you willing to use a staffing agency for a hard-to-find specific skillset?
- Quality of candidates looking for - more than the qualifications, you’d like to see the hired person stay in the role for at least a year.
How to recruit internally
So, you’ve decided to include internal recruitment in your overall hiring strategy. Here are some best practices for a successful internal hiring process:
Create a policy for internal hiring
Before anything else, it's important to establish an internal hiring policy for HR and hiring managers, which includes:
- Eligibility: criteria for employees interested in applying like tenure in the company, current performance grade or job standing, geographic location
- Selection process: describes the procedures for submitting applications, screening of applicants, interview with the hiring manager, and the expected timelines for the responses and completion of the hiring process
- Communications: outlines the campaign to promote the job opening, like how supervisors can engage their team members to apply for the open role and how managers from different teams can talk to each other to promote each other’s vacancies
Create internal recruitment pages
Next step is posting the available jobs within the organization’s intranet dedicated internal careers page, company’s message board, or Slack.
The job description you’ll post for internal candidates will also have the same information for external hiring: position overview, responsibilities, and qualifications.
However, in the internal job description, you’ll also provide information like key products that the employee will manage or sell, the customer base to support, the hiring manager or immediate supervisor, the team, and the KPIs for the role.
Update candidates on every step of the hiring process
Just like how a recruiter would communicate with external candidates on the status of their applications, it's also essential for HR to provide regular updates to internal candidates.
Doing this strengthens your employer branding, company culture, and candidate experience.
Another thing to remember is to get in touch with employees not considered for the role. It may be challenging to have these conversations when you already know them.
However, you can still make it a positive experience by informing them about their strengths and what they can do to prepare them for future openings, like suggesting mentorship, training, and other learning opportunities.
Evaluate your internal recruitment procedure
After a successful internal recruitment campaign, it's time to review the results for improvement. Some considerations to include:
In searching for the perfect candidate, recruiters must not ignore the available talent already within the company.
There are advantages and disadvantages when recruiting internally. However, carefully assessing the organization’s open roles and available HR resources, and establishing internal and external hiring policies are keys to a successful internal recruitment process.