Internal vs. external recruitment: Pros, cons and methods

December 3, 2024

 

Alex Oliver

7 min read

When someone refers to recruiting, most people think about the process of attracting job seekers, interviewing candidates, and making a final hire. This process is a common form of recruiting, but it represents only one type of recruiting — external recruiting.

Recruiting encompasses both external recruiting and internal recruiting, which is the process of filling an open role with an existing employee. When applied correctly, the two methods work together to provide organizations the talent they need to achieve their goals.

In this article, we’ll provide in-depth definitions of internal and external recruiting, describe the strengths and weaknesses of each method, and lay out the best practices associated with each approach.

Understanding internal and external recruitment

Internal and external recruiting accomplish the same goal — they place talent into open roles. Each method, however, comes with distinct benefits and drawbacks. Recruiters must decide which method to use based on the role they’re trying to fill and other details about their organization.

When to use internal recruitment

Internal recruiting is the process of hiring from within an organization’s existing workforce. An organization using internal recruiting doesn’t advertise open roles on career sites or job boards. Instead, the organization looks for candidates within its own ranks.

There are a few situations where internal recruiting is the preferred recruiting method:

• When a role must be filled immediately.
• When a role can be filled by promoting a current employee.
• When a role offers current employees development opportunities.

When to use external recruitment

External recruitment is the process of attracting and selecting candidates from outside an organization to fill job vacancies or add talent with in-demand skills.

External recruiting is especially effective when an organization needs to:

• Hire candidates with specialized skills.
• Broaden its talent pool to include candidates with a wider range of experiences.
• Add talent with fresh perspectives to its workforce.

Pros and cons of internal recruitment

Internal recruiting is often the cheaper, faster way to close an open role. It’s also an excellent method of retaining, developing and championing valued employees. For all its advantages, however, it presents some limitations, too.

The pros of internal recruiting

Here are the top benefits internal recruiting offers organizations:

• Cost effectiveness: Organizations forgo many of the expenses associated with external hiring when they hire internally. Internal candidates also come without the salary markups external candidates typically desire.
• Time savings: When an organization hires internally, it saves itself the time and effort usually spent on advertising, reviewing resumes, and candidate screening.
• Strong engagement: Organizations that promote employees to new roles show workers how much they value their growth and development.
• Easy onboarding: Internal hires don’t need 90 days to assimilate to new workflows, tools and processes. Instead, the onboarding period makes way for productivity and innovation.

The cons of internal recruiting

While internal recruiting is an effective hiring strategy, organizations should be aware of its drawbacks.

• Resentment and jealousy: When an organization hires from within, it should anticipate the possibility of resentment and jealousy from the employees who missed out on the position.
• Limited talent pool: Organizations hiring from within forgo the wide range of choices the open job market offers. Internal hires may lack the skills, experiences or requirements a position warrants.
• Leave vacancies: Vacancies are the most obvious drawback of internal recruiting. When an organization hires one of its own employees, it leaves behind an open role that must be filled.
• Lack of innovation: Internal candidates bring no new perspectives or skills to a role. Over time, organizations that rely on internal hires may miss out on fresh ideas that help their competitors get ahead.

Pros and cons of external recruitment

External recruitment may cost more than internal recruitment in terms of money, time and effort. But it allows organizations to place talent who offer many advantages.

The pros of external recruitment

Here are the best features external recruiting has to offer:

• New skills and ideas: A new employee brings fresh perspectives, skills and ideas — the building blocks of innovation.
• Competitive advantage: External talent offer up-to-date industry knowledge and expertise, helping companies stay competitive.
• Diversity and inclusion: When employers seek external talent, they tap into a much wider candidate pool than when they recruit internally. It’s a strategy that allows them to promote diversity and inclusion within their workforce as they onboard individuals with diverse backgrounds and experiences.
• Succession planning: External recruiting is an essential strategy for long-term succession planning, as it brings in new leaders who further a company’s growth.

The cons of external recruiting

External recruiting has its drawbacks, too. Here are a few that are essential to consider:

• Mismatches: Candidates may offer picture-perfect resumes and stellar job references. But until they’re on the job, their performance is unknown. Unfortunately, even the best candidates can sometimes disappoint.
• Costly process: External recruiting necessitates several significant expenses, like job advertising and recruitment marketing. One of the biggest expenses? The cost of a position lingering vacant for too long.
• Time-consuming: If a role is hard to fill, it can take months for recruiters to place a candidate. Recruiters can spend months generating candidate interest, screening applicants, interviewing job seekers and selecting the final hire.
• Dissatisfaction: A long-vacant role can cause burnout as employees wait on co-workers to share their workload. And a disappointing hire can perpetuate that stress as teams attempt to collaborate with an employee who’s not a good fit.

Methods for effective internal recruitment

Internal recruitment is a fast, simple way to fill an open role. But it doesn’t happen on its own. Recruiters can implement a few different methods to make internal recruitment an effective talent strategy.

Career development

When employers offer career development opportunities, they’re not only enriching the skills of their current employees. They’re also equipping employees to take on new roles within the organization.

An employer that prioritizes internal mobility may make leadership training readily available. Employees who have taken advantage of the trainings will be more prepared for management positions when they arise.

Employee referrals

Employee referrals act as a bridge between internal and external recruitment. When employees tap into their professional networks, they provide reliable recommendations for candidates with strong potential. What’s more, employees’ willingness to recommend their employer to former colleagues signals a strong workplace culture.

Internal job posting

Employers looking to implement internal recruiting can apply many of the best practices they use for external recruiting. They can, for example, post positions to an internal job board to make sure employees are notified of the vacancy. This practice democratizes internal recruiting, ensuring that employees are afforded equal access to new opportunities.

Succession planning

Talent pipelining is an important recruiting strategy, and it’s a useful way to bolster internal recruiting efforts. Some positions follow a clear progression, where entry-level talent climbs an established ladder to more senior positions. These talent pipelines are fairly easy to build, as career pathways make way for an upward flow of talent.

Succession planning is slightly more complicated, but it is best understood as a form of internal recruitment. When employers invest in the development and engagement of current employees, they gain access to an internal network of talent who are prepared for senior roles that benefit from strong institutional knowledge.

Methods for effective external recruitment

When recruiters need to bring in external talent to fill an open role, they typically use a combination of strategies to draw the interest of strong applicants.

Career sites

Career sites are one of the most crucial elements of an employer’s external recruitment strategy. It’s often the first place job seekers go to learn more about a potential employer. That said, it’s important that career sites effectively showcase an employer’s employee value proposition.

Recruitment platforms

A recruitment platform is one of the most important tools in a recruiter’s toolbox, especially when recruiting externally. It centralizes the many processes involved in external recruiting, allowing recruiters to manage, automate and streamline their hiring workflows.

Networking events

In the virtual age, an organization’s in-person presence can make a powerful impression on candidates. Recruiters can use these opportunities — which range from career fairs to networking events — to cultivate connections with job seekers, build their employer brand and strengthen their presence.

Recruitment agencies

Recruitment agencies excel at supplying talent and come as an important strategic tool for organizations that lack strong recruiting departments. Some employers with talent talent teams still tap agencies to search for specialized talent or executive-level candidates.

Balancing internal and external hiring

It’s up to recruiters to create the right blend of internal and external hiring — one that connects organizations with the hires they need without sacrificing on important factors like candidate quality or workforce diversity.

Start with succession planning

Succession planning makes a helpful introduction to internal recruitment. By preparing employees to take on a more advanced position over time, recruiters and managers learn to spot potential in employees early on. Then they hone the skill of developing employees gradually, positioning them for success in their new role.

Choose recruiting methods carefully

When it comes time to fill an open role, talent teams must use contextual clues to choose the right recruiting method. Internal recruitment yields hires who bring deep company knowledge. External candidates offer sharp skills and fresh perspectives. Recruiters should weigh their needs and choose between the two approaches appropriately.

Ensure diversity and inclusion

An over-reliance on internal recruiting may slow an employer’s progress toward cultivating a diverse workforce. Employers who use internal recruiting methods should be sure to prioritize underrepresented talent pools when they do recruit externally, so that they bring diverse talent into the company whenever possible.

Diversify sourcing channels

To make sure external candidates are as diverse as possible, talent acquisition teams should get creative with sourcing methods. They can find candidates through multiple channels such as referrals, job boards, professional societies, social media and career fairs.

Offer career development

To encourage a blend of recruitment methods, it’s essential to offer career development opportunities to internal talent so that they’re prepared to take on more advanced positions or make lateral moves to different departments.

Wrapping up: Building a recruitment strategy

Internal and external recruiting are two distinct methods of talent acquisition that offer two different sets of benefits. Thankfully, recruiters don’t need two tools to implement both approaches.

With the help of tools like iCIMS Talent Cloud Platform, recruiters can execute internal and external recruiting in one centralized location. The platform allows recruiters to track external candidates, promote internal roles, and make data-driven hiring decisions.