Employee turnover is at an all time high in almost every industry in the United States and there are no signs of it slowing down. This is causing multiple crises in recruiting and hiring good employees and owners and HR Directors are experiencing sleepless nights. Recruiting outside of the workplace may lead to poor results. Many HR Directors are looking under their roof for employees to fill different positions. Which recruitment plan is better?
Internal Recruitment: Advantages and Disadvantages
Hiring from within the workplace during a recruitment crisis seems to make good sense. The employees are already a part of the culture, have worked as a team with other employees, and are aware of policies and procedures.
Advantage #1: Decreased Time
Internal recruitment cuts down the time it normally takes to hire someone outside of the workplace. It’s also easier to access internal candidates because they have an established track record and may not require a full interview.
Advantage #2: Reduced Costs
A residual benefit of reducing the time it takes to recruit internally is a decrease in costs associated with posting job openings, subscriptions to resume databases and background checks. Some experts agree that hiring externally can be twice the cost of hiring within the workplace.
Advantage #3: Shortening Onboarding Time
Internal hires may be quicker in adjusting to their new role. They already know the culture, other staff members, policies and procedures as well as the content and context of their new role.
Advantage #4: Increased Employee Engagement
Employers have gotten onboard with ways to improve employee engagement in the workplace, and have discovered that hiring from within is a great way to accomplish it. Internal recruitment sends a strong signal that employees are valued and have opportunities to advance their careers. It’s also good for morale and maintaining a culture of trust and retention.
Unfortunately, internal recruitment isn’t all roses and rainbows. Here are some of the disadvantages to hiring employees from within the workplace.
Disadvantage #1: Gaps in Positions and Departments
Hiring from within can leave holes in other departments and make managers and supervisors of those departments unhappy. They now have the job of finding someone to fill that gap and moving people around and trying to fill empty positions can cause operational disruptions.
Disadvantage #2: Limited Talent Pool
Another downside to internal recruitment is a smaller group of applicants to choose from. The next greatest employee may not already be on the payroll and the organization may miss the opportunity to hire staff with better skills, talents, and knowledge required for the open position.
Disadvantage #3: Stagnant Culture
A serious problem associated with hiring employees already with the company is that they don’t bring anything new or refreshing to the workplace culture. Even employees who leave one position or role and are hired for another may be overly comfortable and complacent. External hires can offer new perspectives and shake up the current culture.
External Recruitment: Advantages and Disadvantages
Sometimes hiring from within the workplace isn’t an option and HR will seek candidates externally. Just as it is with internal recruitment, advantages and disadvantages exist with external recruitment.
Advantage #1: Larger Talent Pool
One of the greatest advantages to seeking candidates externally, is a much larger number and variety of applicants than those already employed within the company. With a larger number of applicants to choose from, the chances of hiring the “right fit” increases.
Advantage #2: Finding the Most Qualified Candidate
Having a greater pool of talent to choose from may also lead to finding the most qualified person for the position or department. Being more qualified can mean having greater experience, certification, licensure and knowledge required for the job.
Advantage #3: Fresh Perspectives
Looking outside of the company may offer the opportunity to find someone who will bring positive attitudes and energy to the workplace. An external candidate may have more passion and drive and lift the entire company to new levels of quality. Some workplaces may actually need their culture to be overhauled and reset.
Advantage #4: Increased Competition
If the hiring process brings in new and exciting talent, the employees already working may raise their game and experience a sense friendly competition. Competition among new hires and existing staff may generate creative ways to improve the company.
Just like internal recruitment, seeking candidates externally has some disadvantages, too. Here are some of the most common associated with external recruitment.
Disadvantage #1: Increased Time and Costs
Hiring external candidates is very time consuming and costly. The steps to hiring an external candidate include the following:
- Evaluating which positions need to be filled
- Creating a recruitment strategy
- Writing or rewriting the job description
- Posting the job
- Deciding on a pay scale
- Going through applications
- Creating a short list of good candidates
- Scheduling and conducting the interview
- Following up with all interviewees
- Extending the offer
- Training and onboarding
As the steps to hiring increase, so do costs. Hiring from outside the workplace is at least twice as expensive as doing so within.
Disadvantage #2: Increased Risk
When HR hires from within, they mostly know what they’re getting. But, when they look on the outside, even if the candidate interviews extremely well, they never truly know exactly who they are getting. Hiring externally carries more risk than hiring from within. The new employee may not fully understand the job, cause interpersonal problems, or quit within days, weeks or months.
Disadvantage #3: Increased Liabilities
When new hires, who HR thought were a great fit for the job, cause problems, look for trouble or are actively seeking to sue the company for one reason or another, legal problems can add up. Sometimes the “devil you know is better than the one you don’t”.
Final Thoughts on Internal vs External Recruitment
Turnover is higher than ever before in most industries. The time and costs involved in searching for talent is going up. The whole recruitment process seems to be very difficult right now, and it doesn’t appear to be getting better anytime soon. So, the question is “Do we hire from within or outside the workplace?” As you can see, there are plenty of advantages and disadvantages to both methods.