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Internal vs external recruitment: the pros and cons
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Need to make a new hire? Where should you start looking for candidates?

Start-ups obviously have no other option but to hire from the outside. However, when a company gets to about 20 employees or so, the best place to start looking might be internally.

In this post we’ll take a look at why it’s always worth considering opportunities to promote internally before looking outside of your organisation to recruit.

If you do decide you need to widen the net, however, it’s important that you also advertise internally and let any interested employees apply.

And even if you end up appointing an existing employee after interviewing external candidates, you’ll still have gained useful market insights from the process.

It’s also worth checking whether you have any obligations to advertise a vacancy externally as this can sometimes be a funding requirement in some sectors.

The benefits of recruiting internally

If you know you’ve got a superstar on the team, whether their sales are through the roof, they show potential to be fantastic in another area, or they’re just really hungry to learn and develop, internally promoting them could be a great option.

Here’s why:

They already know the ropes

They’ll have to learn how to perform their new role and responsibilities, but they’ll already be used to the culture, you’ll know they’re a good fit and you won’t have to do any kind of onboarding.

They know the rules

It takes some time for new recruits to get familiar with the rules of an organisation. Mistakes are part of the learning curve but can disrupt the flow of work and ruffle feathers of other team members whose work is affected.

By hiring internally your employee can get straight down to business with fewer teething problems and hiccups.

Since the other team members already know the employee too, they’ll be less disruption for them as well.

It’s a positive signal to other team members

By offering someone the opportunity for growth, others will notice. See that they could also develop can serve as a strong motivator.

It also sends a great message that potential is recognised and rewarded which helps to build a positive culture.

It adds to your brand value

Everyone loves a story about the rise of a worker from the shop floor to the exec table, and while your internal recruit may not reach the dizzying heights of CEO, customers and applicants to other roles will enjoy hearing such a positive story. Your brand will benefit from offering great opportunities for your staff to develop and will be seen to be more human and people focused.

The problems with internal recruitment

While internal recruitment has its advantages, these do come balanced with some downsides that you’ll also need to think about.
You might benefit from a fresh perspective

The other side of knowing the ropes and the rules is that current employees may not see opportunities or spot flaws in processes in the same way that a new pair of eyes might.

You risk it backfiring

If there was more than one current staff member gunning for the new role, those who are unsuccessful may decide to leave.

It might make life hard on the promoted employee

In an ideal world (and ideal work culture) fellow employees will congratulate their colleague on their new role and collaboratively work with them going forward.

Sadly, this isn’t always the case and there’s a chance that other staff may not view the promotion favourably. In the extreme they may even make life purposefully difficult for the hiring manager or even for the promoted person.

You limit the pool of potential applicants

The wider you cast the net the more diverse potential talent you’ll find.

The cost of recruitment

In the short term, it may seem that internally recruiting could save you money. But it’s best to take a bigger picture approach and consider how recruiting the wrong person internally could mean bigger financial losses down the line.

Additionally, consider the training costs that you may have to provide for your internal recruit, whereas if you look elsewhere you can specify the exact training, skills or experience you need and save on training costs.

It’s worth noting that recruiting for senior level roles or using an agency can incur significantly higher costs for you. And additionally, it’s likely you’ll need to replace the former role of the person who has moved up.

There’s no right or wrong answer when it comes to the best way to recruit for your business, but the best advice is not to be tempted to cut corners. Getting things wrong can be an expensive headache.

Don’t forget

Finally, when planning your recruitment, don’t forget the following two legal obligations:

  • If the role you’re advertising is a permanent role then by law you must tell any fixed term or temporary workers about the position.
  • If you have any staff on maternity leave they need to be kept informed of any vacancies and should be given the opportunity to apply.

Streamline employee onboarding with HR software

If you do decide to recruit externally, our HR software can help streamline the onboarding process. You’ll be able to generate contracts in minutes and store all the information you need about the new employee on the system, in compliance with GDPR regulations.

Want to see how our software can help save you hours of time on HR admin? Get in touch today for a demo. Or try our software out for yourself with our free trial.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Terms of Website Use. If you require professional advice, please get in touch.

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