A Guide to Internal Recruitment (With Pros and Cons)

By Indeed Editorial Team

Published June 26, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Human resources (HR) departments typically rely on sourcing and employing new external candidates to fill vacant job positions. These departments can also turn their search inward, where they can find internal candidates that can fill the organizational gaps. Understanding what internal candidate recruitment is and how to incorporate it into an HR process can help you design better and more effective recruitment strategies within a company. In this article, we discuss internal recruitment, share some advantages and disadvantages of the system, explain how it works, and provide some tips to help guide you.

What is internal recruitment?

Internal recruitment is a human resources strategy that switches a company's hiring search from new external candidates to internal candidates who are already company employees. The company's HR department prioritizes current employees and sources the talent the company requires from other departments. Companies often use this strategy to promote or transfer people into higher positions and give them more responsibility within a specific department.

Recruiting internally may also offer several benefits to the company, as it allows it to focus more on developing the necessary talent internally. It also enables a company to save resources it may have spent on organizing an external recruitment exercise. Some companies may also use this strategy to attract and retain employees and as an incentive to promote effectiveness and improve performance.

Read more: Recruiting Methods to Help Get the Best Job Candidates

Pros of recruiting internally

There are several benefits of recruiting for new positions internally, and some of them are:

Reduces hiring process time

Hiring internally means that the company searches for candidates for new positions from existing employees. Doing this can help save the time the HR department may normally spend placing job advertisements and contacting potential candidates. It can also reduce the number of stages in the interview and vetting process, as HR is often already familiar with the internal employees. Those stages might not even be necessary if the employee only changes positions within their current department.

Reduces the training and onboarding time

Current employees usually require minimal training and onboarding when they move roles within a company, as they already know the company's processes and policies. They also usually have solid, established relationships with other employees. By hiring current employees, the company spends less time and resources on the onboarding and training process. Hiring internally can also increase the chances that the individual understands the new role's context, content, and requirements faster.

Improves employee retention and engagement

Sourcing current employees for new positions can help them grow and advance in their careers and show them how the company values their time, skills, and work ethic. The new opportunities can increase employee morale, motivate them to work harder, and build a culture that encourages employees to stay within the company because they know there are growth opportunities. With this culture, the company can achieve a higher employee retention rate, which can help company growth and development.

Saves money

Hiring for new positions internally can reduce the resources the company uses in its usual recruitment process. The HR department may usually pay for job board services or post openings on recruitment sites and media outlets when hiring externally. Conversely, recruiting internally may only require sharing open positions in company newsletters or team meetings. This recruitment strategy also saves costs, like background screenings and checks to verify if the employee applying has up-to-date credentials.

Related: What Are the Differences between Hard Costs vs. Soft Costs?

Reduces performance risks

Hiring for new positions internally can also give HR access to more in-depth information about candidates and their abilities. They can check employee records to assess the candidates' performance reviews and perform coworker assessments. The candidates' coworkers can give testimonies about their working experience with the candidate.

Read more: Guide to the Process of Recruitment (With Tips)

Cons of recruiting internally

There are also a few disadvantages that may accompany this type of recruitment, such as:

Limits the application scope

Restricting the options for new positions to existing employees can limit the application scope and cause companies to overlook external candidates who may be a better fit for the job. The missed external candidates may also have better skills and new ideas that existing employees don't have. Staying within internal candidates may result in employing someone who isn't the best fit for the position and may not handle the tasks of that role effectively.

Creates a stagnant company culture

Hiring internally can cause the company culture to become stagnant or lack innovation. Current employees may feel too comfortable with existing company practices and routines from their previous position. This comfort can be a problem when the company employs them for leadership positions or jobs that require new thoughts and ideas. Hiring external candidates may prevent this, as they often bring new ideas, skills, practices, and new perspectives to company issues.

Leaves a gap in the employees' previous team

Hiring an employee from one department into another may create a gap in the previous department. Such a situation may require the company to either eliminate the old position, hire another employee from a different department, promote an employee within that department, or hire an external candidate to fill the gap.

If they choose to hire someone internally, it can create another gap. These gaps can cause a lag in work and operations until the company fills them. The company may still resort to hiring an external candidate, which may negate the money and effort they saved on the initial internal hire.

Creates internal conflict

Hiring employees internally can create conflict among employees. When multiple candidates apply for the same position, and only one person gets it, they may disagree with HR. This disagreement can generate an unfavourable environment, particularly if it involves a high-value position. It can also make managers uncomfortable during the hiring process because it requires them to choose one employee over the other candidates.

Related: The Advantages of External Recruitment to a Company

How does internal recruitment work?

If you have an interest in a company that hires internally for new positions or work in the HR department, here are some steps companies may take when recruiting internally:

  • Establish an HR department. There's usually an established HR employee or sub-department responsible for making internal hiring decisions and job posting decisions.

  • Create internal guidelines. They outline an internal hiring policy that guides how to post job openings and transfer employees from one department to another.

  • Inform employees and release the details of the role. HR departments often use platforms like company e-mails, newsletters, and internal job boards to notify employees of open positions and their requirements.

  • Perform candidate assessment. Companies also perform thorough screening, interviews, and checks for internal candidates.

  • Give feedback. They also usually provide feedback to candidates who didn't get the job and advise them on skills and areas that may help them qualify for other positions in the future.

Related: How to Create an Effective Recruiting Plan Template

Tips to help when recruiting internally

Here are some tips to help when recruiting internally for new positions:

  • Establish and encourage a culture of communication. Managers and supervisors can create a culture where employees can discuss and share their career plans. This culture may make it easier to determine which employee is a better fit for specific positions.

  • Train managers and supervisors to look for specific skills. The HR department can teach team leaders how to recognize traits in their members that may fit very well in other positions. Their advice and recommendations can be beneficial when hiring internally for an open position.

  • Be open about the internal hiring process. Transparency in the decision-making process can reduce the possibility of conflict amongst employees. Giving feedback and tips for improvement to the rejected candidates can be very helpful.

  • Try a private internal hire. Before announcing open positions, consider if there are already candidates that fit the requirements and communicate privately with them to offer the job. If they reject the offer, you can then open the position to other employees to apply.

  • Consider internal and external candidates. Recruiting both internally and externally might be the right move to make when there are open positions. The company may prefer a culture change instead of a culture fit for the available role, so it's good to consider existing or new candidates.

Explore more articles