What is Internal Hiring?
Internal hiring takes place when organizations source and hire existing employees for open roles. Also known as internal recruitment, this process can involve promotions, lateral moves into new roles, and team transfers. You’ll find plenty of advantages of internal hiring, as well as a few disadvantages. Read on for the breakdown and how to get started hiring from within.
Advantages to Hiring from Within
Strong Cultural Fit
Company culture isn’t one-size-fits-all. Your company’s behaviors, beliefs, and attitudes work together to shape your unique culture. Hiring for cultural fit requires ensuring candidates share those behaviors, beliefs, and attitudes. Existing employees, however, have already proven they’re a cultural fit. You know their working style and values align with your organization’s — so you can move right to the next stage of your interview process.
Increased Employee Motivation
60% of workers who were promoted into jobs performed significantly better than employees hired externally into similar positions. Why? Developing and advancing your existing employees is a big morale booster. Employees feel that the organization values their contributions and invests in their career progression — which directly improves morale and, therefore, productivity.
Lower Hiring Cost
Posting on job boards, attending career fairs, using recruiting software, working with a recruiter — these are just some of the costs associated with external hiring. In fact, the average cost of an external hire is 1.7x more than an internal hire. Internal hires have lower recruiting costs across the board, since you’re advertising the role and sourcing candidates within your organization. This still involves time and money, but less than with external hires.
Lower Onboarding Time
Internal hires still need to receive onboarding for their new roles. They need to understand their responsibilities and new team dynamics, for starters. However, this process will take much less time than with an external hire. Because an internal hire brings institutional knowledge to the role, you generally don’t need to onboard them to the company mission, culture, leadership team, or inter-team dynamics.
Improved Turnover Rate
Employees who’ve been given the opportunity to continually develop are twice as likely to say they’ll spend their career with your company. Invest in your employees — in large part via internal hiring and promotions — and they’ll invest in your organization over the long-term.
Disadvantages to Internal Hiring
External hires give you the opportunity to improve your company’s diversity, broadening your collective outlook as a result. By exclusively hiring from within, you could risk creating an echo chamber of employees with similar backgrounds and experiences. Make sure you’re continuing to build a team with a diversity of perspective, background, and work styles. Doing so will keep your organization innovative and inclusive.
A Hiring Domino Effect
Filling an open role with an existing employee means she’s now left her current role open. You’ve filled one role and opened another! This isn’t necessarily a bad thing. But it does mean internal hiring can spur even more hiring.
Conflict in the Workplace
Hiring from within could create conflict and competition within your workplace. Employees may be turned down from open roles. Politics may come into play around who’s hired and where. Employees may feel resentful of peers getting promoted. These are all unhealthy conflicts in the workplace. Luckily, they’re also all avoidable. Create a culture of respect, open communication, and regular listening via surveys. Employees will feel more valued — even if they didn’t get their way.
How to Approach Hiring From Within
So, you’ve decided you’re ready to ramp up your company’s internal hiring process. Where to begin? Here’s a quick checklist to get you started.
- Identify when to turn to internal hiring. For certain teams? High-priority roles? Seniority levels?
- Decide how you’ll source internal candidates. Manager nominations and job postings on internal channels are two common options to start with.
- Communicate open roles and the application process. Employees could apply directly to the job posting, for instance. Or, they could communicate their interest through their current manager.
- Conduct interviews with the applicable company leaders, hiring managers, and team members.
- Make your selection. Respectfully notifying employees who didn’t get the role is crucial here.
Employees not only make great internal hires, but they can also drive high quality referrals to meet your recruiting goals. Check out our eGuide on recruiting through employee engagement here.