Internal vs External Hiring Process and their Pros & Cons

In today’s world, companies spend a lot of time and money on talent acquisition, which has led to a relentless search for the best and most diverse types of recruiting.

This means that finding the best types of recruitment is significant to achieve effective hiring, which allows your company to streamline the process and save costs at the same time. 

Just as the newer generations have different customs and ideas when it comes to work, the recruitment methods have also diversified, with more effective ways to reach top talents in the market.

Internal recruitment

The first type of recruitment strategy is internal, which looks at existing employees to fill vacancies. Ideally, this method should be the first choice when it comes to filling vacant positions. 

The organizational culture is retained and the professional growth of the employees is encouraged, giving them the possibility of making a career path within the organization. Internal recruiting includes some options that are worth considering:

1. Promotion

The most common form of internal recruiting is to bring growth to employees who have shown the skills and abilities necessary to occupy higher positions within the company.

2. Referrals

Some companies have referral programs that allow their employees to recommend known people who may fit in the organization for a vacant position.

3. Rehiring

This is often an excellent way to attract talent since they are people who have already been collaborators of the company, so they know its values, culture, and way of working.

External Recruitment

Another type of staff recruitment is external, which combines techniques and different tools, in order to reach as many potential candidates as possible.

As the name implies, it is about attracting talents that have not collaborated or do not have any previous relationship with the business but have the experience and skills required to join the team.

Currently, there are many tools that can be very useful, such as professional networking sites and independent consultants that provide professional recruitment services. 

Another highly effective solution for external recruitment is the implementation of specialized software in human resources, which allows real-time monitoring of the processes of various candidates and streamlines the selection stages.

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Advantages of Internal Recruitment

1. Motivation: Internal recruitment allows existing employees to learn, grow, and progress in their career. This helps to keep employees motivated and competitive. 
2. Cost and Time Savings: By not having to start a process from scratch and pay external parties, the company does not have to invest as much money and time compared to external recruitment.
3. Training: The money that is not invested in the talent search can be used for other initiatives, such as the education and training of employees. Resources  can be used to upskill the workforce.
4. Adaptation: As the employee is already part of the organization and is familiar with the working culture, assimilating them into the new team is much easier than through an external recruitment
5. Talent: Through internal recruitment, the company is able to retain its qualified talents.

Advantages of External Recruitment

1. New Perspectives: A fresh, unbiased view outside the company. The induction of a new employee through external recruitment can encourage the birth of innovative ideas.
2. More and Specialized Talents: Looking only at internal candidates can limit your option for your talent search. Searching outside your company can allow you to find talents that have more experience and training for the vacancy.
3. Diversity:  External recruitment promotes diversity and integrates learnings from other businesses into the company. The new addition to the team comes with different backgrounds, experience, and previous training.
4. Reduce Tension: Especially for more senior or managerial roles, external recruitment helps to reduce tension between employees that compete for the same position.
5. Competitiveness: Bringing in outside talents means bringing new insights and keeping up with trends can keep your employees competitive. 

Disadvantages of Internal Recruitment

1. Limited Talents: Hiring from existing employees limits your talent pool. While your employees might be high-performers, they might not have everything you are looking for. 
2. Stagnation: Internal recruitment does not allow new fresh perspectives from different experience and industries. Especially in a fast-paced industry, there is a risk that your talents could stagnate. 
3. Damage to the Team Dynamic: If it is not well developed, opening the recruitment process within the organization can generate rivalries that affect the work climate between the chosen employee and those who are not. This can also be a problem if the new employee, selected through external recruitment, does not meet the skills or the appropriate professional profile.
4. Risk to the Employee: If the internal candidate is unable to meet the standards for the new role, it is rare for the organization to return them to their previous position.

Disadvantages of External Recruitment

1. Timely and Costly: External recruitment typically costs more than internal recruitment, and also takes up more of your HR’s time to bring in the new employees.
2. Additional Training: Outside hires require more training than internal employees on company core policies, procedures, and culture. 
3. Adaptation: If the new recruits do not mingle well with internal talent, the addition of new staff can brutalize the work environment. 
4. Employee Morale: Hiring outside your company may affect existing employees that expect to progress for the same position. 

Streamlining the Different Types of Recruitment

It is important for a company to maintain efficient communication throughout the recruitment process, especially if you opt for external recruitment. Tools like Shortlyst can be utilized to manage the communication channel.  

HR professionals can rely on technological tools to help streamline an automated, efficient, and, above all, timely communication. This will result in the improvement of the employer branding and will also make your hiring process more fluid and shorter without losing quality. Shortlyst ensures that recruitment is effective with precision techniques such as AI collaborative recommendations, which allows only candidates who meet the competencies and requirements that the position needs to pass the phase.