Recruiting employees isn’t an easy process for any business type. Spending money and time on hiring and training an employee to then discover that they don’t really match the job description can substantially harm business growth and profits. As a business owner, something to majorly consider is whether to hire internally or externally.

Internal recruitment: when an employer hires somebody within its organisation to fill a vacancy.

External recruitment: when an employer hires an applicant outside the organisation to fills a vacancy.

Below is a list of advantages and disadvantages of internal and external recruitment to consider when employing your next member of staff.

Internal recruitment

Advantages

  • Less costly and quicker to search as there generally isn’t any need to advertise.
  • The employer would have more valuable information about the employee and how reliable they are in the workplace.
  • The internal employee would already be familiar with the organisation policies, how it is ran, the culture or it, and more – they would be much quicker to train.
  • Showing employees that there’s a chance of promotion in the company would boost employee morale and organisation loyalty.
  • They are less likely to make major changes and are more likely to work better with the staff in the company as they have already worked together.

Disadvantages

  • There could be discontent or resentment in the organisation for any rejected applicants.

External recruitment

Advantages

  • New ideas and fresh thinking in the team – an external employee can bring new insights from their experiences in a different size company or different industry.
  • It can reduce the training needed by hiring horizontally rather than vertically (promoting) internally.
  • By hiring somebody outside the company there is more diversity – diversity can also mean diverse personality types, educational backgrounds and thinking styles.
  • There would be a wider talent pool and it can increase the number on the shortlist if necessary.

Disadvantages

  • A study by a US university professor states that external hires are 61% more likely to be fires and 21% more likely to quit.
  • It takes much more time and money to recruit externally – there are more CVs to go through and people to interview, and advertising would need to be done in most cases.
  • The incentive for current employees to strive for promotion wouldn’t exist. Employing somebody outside the company could hurt employee morale and loyalty, which could lead to conflict.

As you can see there’s a lot to consider when thinking about recruiting internally or externally, and this is only one sector of the recruitment process. We have a workshop coming up on recruitment and team leadership, where you can gain knowledge from expert business coaches in the best way to recruit in your organisation, and how to be an effective leader for your team. Click here to view our upcoming workshops.