There are many benefits associated with recruiting, including faster hiring time and saving costs. Here we’ll discuss some of the reasons why companies pursue internal recruitment, the benefits, and how to build an effective internal recruitment process.
Internal recruitment definition
Internal recruitment falls within the larger recruitment HR process and it refers to the process of filling jobs using existing employees from other departments or teams.
Rather than publicly announcing a job opening and allowing external candidates to apply, internal recruitment usually includes privately announcing job openings and recruiting from within the existing employee pool.
Internal recruitment vs. external recruitment
Put simply, the difference between the two is whether they were recruited and hired for a role from within the company or recruited and hired from outside the company.
In some cases, companies may pursue internal recruitment as a starting point and then move on to external recruitment if the right candidate has not been identified internally.
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Types of internal recruitment and examples
Internal recruitment doesn’t come in a single form. These are the various types of internal recruitment:
- When an employee is promoted to a new position
- Upward career growth
- Usually comes with a title change and pay increase
Example: An entry-level assistant editor is promoted to a more junior-level role like editor. They also take on additional responsibilities.
Part-time to full-time transition
- Usually when a contract or seasonal employee is hired as a full-time permanent employee
Example: A design intern on a six-month contract is asked to join the company as a full-time member of the design team after showcasing their ability and fit for the role and company.
- When an employee takes on a similar position at a new location or within a different department
Example: A barista at a coffee shop is transferred to a different location across town to perform the same job.
- When an employee is compensated to expand their knowledge and skills via training or professional development to fulfill a hiring need
- Can also be leveraged by employees seeking a career change within the company
Example: A project manager obtains a specialized project management certification to pursue or fill a program director position.
- When an employee moves into a different department, function, or industry
- Employee at a company works within a different department and role than they were initially hired for
Example: A technical writer interested in UX writing and design decides to pursue a career in UX writing. A sales representative with experience in product marketing makes a horizontal career move into a product marketing role.
- When an employee moves from one position to another within the same function
- Lateral career move
- May or may not include pay change or title change
Example: A content marketing writer specializing in sales moves into a role focused on customer education writing. The roles are similar in nature but meet different needs.
- Employees refer candidates from within their network
- Some companies incentivize external candidate referrals
Example: An external candidate applies for a role and the internal referral reaches out to the hiring manager with their recommendation. Or, internal candidates become aware of open job positions and share potential external candidates with the hiring manager or recruiter to pursue.
When to consider internal recruitment
If you don’t know whether a job position should be advertised externally or whether you should give internal recruitment a try, consider the needs of the role, the availability and range of existing resources, and business priorities in terms of cost, speed, and skills. To help you decide, consider the advantages of both recruiting strategies.
Internal recruiting vs. external recruitment
|Advantages of internal recruiting||Advantages of external recruitment|
|Saves company money because the job listing doesn’t have to be promoted and advertised externally.||Recruiting externally brings in new people with a fresh take on existing processes or business solutions.|
|Faster hiring cycle since it eliminates a few steps from the traditional recruiting process, such as reviewing references, holding preliminary interviews to gauge the employee’s experience, training, or getting them set up with payroll and IT.||Sometimes this option is best for filling roles that require technical or specialized skills that can’t be sourced internally.|
|Reduces employee turnover because employees are encouraged to seek additional career opportunities within the company rather than leaving.||Whereas the candidate pool is limited when recruiting internally, external recruitment opens the candidate pool to a much wider audience. This increases the chances of finding the best candidate.|
|Saves internal HR resources related to onboarding or employee handoffs since candidates are already registered in the company database.||The range of experience is wider. This can prepare your company for new challenges in the future and provide additional points of view or professional experience.|
|Increases employee motivation and engagement by promoting and encouraging career growth opportunities.||Technical training required for external candidates may be lower because new hires are already coming in with the skills needed for the role. Whereas with an internal recruit, there is a learning curve for the role and they may require additional training or development.|
|Candidates are already familiar with business processes, company culture, and other areas of training that would require additional time teaching.||Less time-consuming than attempting to hire internal candidates. In some cases, this initial recruiting strategy may not lead to a candidate or hire, which would require for the company to pivot to external candidates.|
|Hiring managers don’t have to worry about the candidate being a good fit for the company. If the candidate is already part of the organization, they’re likely already onboard with the company’s mission and aligned with its culture and values.||Hiring an internal candidate fills one job opening but then creates another. By hiring an external candidate, there’s no additional hiring that needs to be done once the position is filled.|
6 key internal recruitment benefits
In addition to the advantages briefly discussed in the previous section, there are many other benefits that can be gained from recruiting internally.
1. You’re already familiar with the candidates and their performance record
As with any hiring choice, finding the right candidate is essential — both in terms of skill and also cultural fit, so this can take time to get right. The advantage of internal recruitment is that you’re already familiar with the candidate.
You’re familiar with their personalities, can rely on their proven track records with your company, and you have easy access to performance metrics. Hiring outside of your company brings an element of unpredictability, but hiring internally is a safe bet where you know who you’re committing to.
2. The candidates are already aligned with the company’s culture, mission, and values
It can be frustrating and financially draining to hire what may have been (at the time) the right candidate, only to have them exit soon after due to not being a good company fit.
When you hire one of your own, that problem rarely occurs as internal candidates are much more likely to:
- Fit in with the company culture
- Align with company values and goals
- Work well with coworkers
- Understand existing processes
If a candidate is hired from within the company, it can be assumed that they already possess all the makings of the ideal candidate. The added benefit of this is that there’s less time spent on onboarding them and getting them up to speed on company goals, mission, culture, and value.
3. It’s less resource intensive
When working to fill an open position, it’s good to be considerate and mindful of the strain the hiring process places on your HR department.
When you hire externally, you have to market your company to prospective employees, post job listings, collect and organize applications, and coordinate with hiring managers to follow-up with a potentially large pool of candidates. This process takes an extraordinary amount of time and effort, and the results of this effort can’t be predicted. It can take a week, a month, or even months.
But with internal recruitment, the effort is minimized to crafting a job description, announcing the opening, and reviewing applicants that have already proven to be reliable.
4. It saves money
Hiring an outside employee can get pretty expensive. You have to pay for ads, cover fees for background checks, and sometimes even invest in rigorous training and development.
When you hire someone from within your company, you avoid many of those expenses because:
- You already have a completed background check.
- Employees have already been onboarded, trained for the role, and trained on processes and routines.
- Licenses have already been issued and technology has already been purchased.
- Insurance and benefits are already active.
- Document processing costs are lower.
- HR documents have already been completed and filed.
- Payroll has already processed tax ID and bank account information.
Internal candidates are already part of your company and familiar with the workplace, so you can speed up or even bypass many of the hiring process steps.
5. It boosts employee engagement and morale
One advantage that is sometimes overlooked when recruiting internally is the effect that it has on other employees at your company.
If the wrong external candidate is hired, this can lead to resentment and a decrease in employee morale. However, when you hire workers internally, you send the message that you appreciate your employees’ skills and talents enough to recognize their potential to advance and grow professionally.
This not only motivates employees to push themselves to grow and seek additional roles within the company, it also inspires loyalty which then translates to higher engagement and lower turnover.
6. It improves your company’s reputation
This benefit builds on the previous one. When you hire internally, you demonstrate that you observe, care about and value your employees. When employees feel valued for their skills and talents, they’re happier on the job. And when employees are happier on the job, they talk positively about the business they work for.
You can make this part of your brand image. If you’re known as a company that hires internally and rewards hard work, you will have a much easier time attracting top talent when you do need to hire externally. Make internal recruitment a selling point to external candidates and mention it in your job ads.
Challenges of internal recruitment
Internal recruitment has many benefits, especially when it comes to finding the right cultural fit and saving short-term expenses like hardware, software, and onboarding/training. However, it can also lead to challenges. Below are some examples of internal recruitment challenges.
Limited pool of candidates
Since you’re recruiting from the existing pool of employees, the pool of candidates that may be available or even interested in open roles may be smaller than that of external recruitment. However, with external recruitment, the pool of candidates you’re pulling from is more like an ocean in terms of the number of candidates and range of their skills/abilities.
Additional roles to fill
One thing to consider when hiring internal candidates is who will then be in charge of taking over their old role? Unless there’s a team restructuring which solves the problem by eliminating the need to backfill, hiring an existing employee to patch up one leak will only lead to the creation of another leak.
Possibility of internal company strife
By choosing to pursue an internal candidate rather than external, companies run the risk of potentially upsetting teams or employees. For example, cases like this may include:
- One employee may be favored (and hired) over another. This can lead to additional challenges like jealousy, disappointment, lower engagement, and even turnover.
- Promoting someone who has the technical skills for a position but lacks the management skills. While the internal candidate is familiar with the existing team, their lack in managerial training may lead to unexpected issues like turnover or team mismanagement.
Whereas an external candidate may already have all the skills and technical knowledge required to fill a role, an internal candidate may require some additional training, development, or mentorship to reach that same level of proficiency.
This is not necessarily a bad thing; it is, however, a time-consuming process. For a company seeking to hire someone who can hit the ground running, this additional training may be a detriment to seeking internal candidates.
Possible lack of diversity
If the company is largely homogenous and the company wants to expand its diversity efforts, internal recruitment may keep this from happening.
Lack of innovation
One of the key benefits of hiring external candidates is that they come to the work table with new ideas and fresh perspectives on old business challenges and practices. In some cases, it’s this breath of fresh air that moves a business forward. However, by promoting from within, a company may fall into the trap of failing to see the forest for the trees.
In other words, they’re so involved with a project or task that they no longer see the bigger picture and may miss details or solutions that are clear to someone that’s not as involved. In a broader sense, this lack of new perspective can hinder business agility and innovation.
How to build an effective internal recruitment strategy
Once you’ve explored the pros and cons of internal vs. external recruitment and decided to keep the hiring process in-house, it’s time to build your strategy. Follow this framework to start developing your own internal recruitment strategy.
1. Determine if internal recruitment is the right choice
This goes without saying, but having a clear understanding of why this choice is the right choice is essential to guiding your strategy. Perhaps there’s a pool of employees showcasing the ability to move up into a more senior position, or showing interest in learning a new skill to make a horizontal career move. Or, could this be the most cost-efficient way to fill a position?
Whatever the reason may be, a clear and data-driven answer to the question of “why” is necessary. Craft your response by assessing the scale of internal resources (such as budget, hiring urgency, existing skills, and willingness to grow).
2. Identify stakeholders and approvers
Start by identifying everyone that needs to be involved. This includes hiring managers, HR, People Ops, and anyone else whose approval is needed. These stakeholders will not only inform hiring decisions like salary or job descriptions, but they will also provide the knowledge needed to identify what makes the perfect candidate.
3. Define the internal transfer or internal recruitment process and policy
As with any hiring process, documentation of the internal recruitment process and policy needs to be completed and circulated with employees seeking internal opportunities. For example, if an employee is seeking a transfer, but the move will impact their benefits, this information will need to be approved by leaders and marked as reviewed or acknowledged by the employee.
This not only creates a layer of transparency between employees and their employer, it also safeguards the company from risk. To streamline the documentation, consider creating a section in the employee handbook with these details.
4. Define the full scope for the role
Once all stakeholders have been identified and brought into the fold, it’s time to define key details like:
- What is the hiring need?
- How quickly does this role need to be filled?
- Has the job opening already been approved? If not, what’s left for review and/or approval?
- What is the role’s reporting structure?
- Would this candidate be leading a team?
- What are the job requirements (i.e. skills, experience, and qualifications or certifications)?
- Which requirements are flexible and which are not?
- What will the interview process look like? Will it require a technical interview or assessment?
- What will the job description look like?
- What is the expected salary range/benefits for this role? How does this differ (if at all) between internal and external candidates?
- Is the role remote, hybrid, or in-office? Is there any flexibility with this?
5. Be realistic about the candidate pool
In a perfect world, there is already an internal candidate who can move into a new role quickly with little to no growing pains. However, there is a chance that the internal recruitment effort fails, and the recruitment strategy becomes external.
Be realistic about the candidate pool and consider that the ideal candidate may not already be in the employee database. Rather than be reactive when (or if) this occurs, create a proactive plan that gets ahead of this possibility and considers all the what-ifs.
6. Get alignment on decision to internally recruit from all stakeholders
Before developing anything else, getting this approval is critical. Without it, you may find yourself ready to promote a job opening that can’t be promoted.
Use the steps listed before to create the business case for opting to recruit internally.
7. Announce and promote the the job opening internally
Get the job listings in front of as many possible candidates as possible. If an internal job board isn’t a possibility, consider sharing open positions in employee newsletters, across messaging channels, or via word-of-mouth.
Best practices for internal recruitment
Finding the most qualified talent to fill a role is no easy matter, but it’s a crucial and needed process to help companies grow and maintain their competitive edge.
If you decide that internal recruitment is the best choice for you (now or later), keep these best practices in mind to ensure your strategy is fair, inclusive, and set up to promote long-term success.
Communicate the job opening clearly and transparently
When writing the job description, make sure it is clear so only qualified employees apply or so there are no surprises after an employee is hired and in their new position.
In this case, overcommunication is the best form of communication.
Ensure fair and objective selection processes
Be careful with bias when choosing among candidates you already know. Don’t let your personal opinions on them lead your decision.
A good way to avoid any bias or favoritism is by creating an objective application process. This can include interviewing candidates with people they’re yet familiar with, seeking references from managers or peers, or conducting an assessment test.
Provide development opportunities and career paths for employees
It’s important to take into consideration how much the person’s career will evolve with this new position, and how much the new department will evolve with this person’s experience. In addition to planning how a promotion or lateral/horizontal move may meet immediate business needs, consider how the business can also meet an employee’s long-term goals.
Celebrate diversity and inclusion
Workplace diversity and inclusion is not only conducive to building a more welcoming workplace, it also creates real business value. Companies that prioritize D&I and allyship perform better than their competitors and cultivate a culture of innovation and out-of-the-box thinking. Not only that, candidates are more likely to connect with your company’s values when they see themselves reflected all the way up to the C-suite.
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Finding the right candidate to fill a role shouldn’t be complicated, no matter if they’re sourced internally or externally. With HR automation software, building a seamless internal recruitment process that recruits and retains top talent has never been easier.
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With Pipefy, give candidates and employees alike the best employee experience with open self-service portals to give employees easy access to the latest job openings before they’re advertised externally, and streamlined way to apply and submit HR requests with structured and standardized forms — easily customizable to meet your team’s needs.
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