Internal Vs External Recruitment

Recruitment Options
In situations where a company has an open position, a company has two options to fill in the vacancy. It is either through internal recruitment or through external recruitment.

Internal Recruitment
Internal recruitment means that the company will fill in the vacancy with resource coming from its current pool of talents. It can be through a promotion or through transfers within the company. Transfer here pertains to a horizontal or lateral movement of an employee from one position to another without changes in the salary.

Advantages of Internal Recruitment
- Selection process is fast and easy since the pool of candidates to choose from is smaller.
- It is cost efficient, saving the company from job advertisement and / or recruiter’s fees.
- Since the candidate is an existing employee you already know the candidate’s capabilities and performance.
- Promotion is a way of engaging employees to stay in the company and motivating them to work hard as they know that they are being recognized and rewarded.
- Lower attrition risk, as you know that the candidate is engaged in the company, adapts to the company culture and can work well with the rest of the team.

Disadvantages of Internal Recruitment
- It hinders new ideas coming from the outside.
- It limits the number of potential candidates to choose from.
- Another vacancy is created when the candidate takes the new role.
- It may cause resentment among employees not chosen.
- It may create an atmosphere where employees feel that they only have a chance to get promoted when a senior employee leaves.

External Recruitment
External recruitment means that the company will fill in the vacancy with resource coming from outside the company. It can be through the company’s recruitment team, job advertisement or headhunters.

Advantages of External Recruitment
- It brings in new ideas and new talent to the company.
- Unlimited number of candidates to choose from.
- The company will be introduced to a more distinct set of skills and experiences.
- It is less likely to cause resentment among employees.

Disadvantages of External Recruitment
- It is more expensive as the company will incur costs on job advertisement and / or recruiter’s fees.
- Selection process is longer since the pool of candidates to choose from is larger.
- It is more challenging for the company to evaluate the candidate as you have no proven experience on the candidates’ capabilities and performance.
- The selection process may not be efficient enough to uncover the best candidate that will fit in the company culture and can work well with the rest of the team.

Whether your company chooses to recruit internally or externally will be based on the framework and current situation of the company. If you have a talent whom you are confident that will be the best fit for the role, internal recruitment makes sense. However, if there is no current talent that stands out then it is best to do external recruitment.

Whichever recruitment option your company chooses, the key is to ensure that you fully understand the advantages and disadvantages of both options to make sure that your choice works best for the company both rationally and economically.