Hiring the best candidate for open positions is always a challenge. One issue that many hiring managers face is whether to only hire internally or to open the vacancy up to external candidates. In addition, companies that have some type of internal recruitment process often don’t get the best results from this hiring strategy as it’s not optimized to succeed.

To improve your internal hiring process, you must make it clear to employees what they must do to move up in the company and how they can find vacancies and apply. Knowing how to be proactive and spot in-house staff members that would be ideal candidates is also incredibly important.

In this article, we’ll discuss some internal hiring advantages and disadvantages before offering nine top ways to make your internal recruitment process more effective.

What is Internal Hiring?

Internal hiring is simply hiring for open positions from inside the company. You may choose to only look at in-house applicants or may consider internal and external candidates.

Why Internal Hiring is Important

Before discussing ways to improve your internal hiring process, let’s answer the question: “What is the benefit of internal hiring?” Hiring internally offers many benefits, including the following:

Increased Employee Retention Levels

Employees that see a future with a company, due to consistent internal hiring, are much more likely to stay at the company, therefore increasing retention levels. A primary reason employees leave companies is for more senior positions that they cannot get in their current organization.

Showing that you hire from within, and will happily promote any internal candidate that is qualified, will encourage staff to remain in the company and reduce turnover rates.

A More Streamlined Hiring Process

Hiring from within is quicker and less hassle than hiring externally. You know the employee already, making it easier to assess if they are a good fit. You also don't need to check references with as much scrutiny, if at all.

Reduced Costs

Internal recruitment also costs a lot less than external recruitment. You don’t have to pay any fees to post the position and attract candidates. For example, you save the fees needed to post on job boards and market the vacancy. You also don’t have to pay onboarding costs, such as fees for background checks.

Shorter Onboarding Times

Once you hire an internal candidate, onboarding will take significantly less time than it would with an external hire. To start with, internal hires don’t need to be excessively briefed on company rules, policies, and culture.

They’ll also understand company processes, for example, what tone to take with clients, what internal communication channels to use, and how to log overtime and vacation. So, processes like these will not need re-explaining. In general, internal hires will get up to speed with a new position quicker than an external hire.

Hiring internally can boost employee moral and improve retention levels.

Disadvantages of Internal Hiring

Of course, there are also some drawbacks and disadvantages of internal hiring, which we will now discuss.

Too Few Qualified Candidates In-House

You may find that you simply do not have enough qualified candidates in-house to only look to fill a vacancy internally. This issue is most likely to occur when adding a new position to the company or expanding the number of positions in a department.

Employee development programs can help with this as they ensure there is always an employee ready to take higher-up positions as they become available. If expanding the number of positions, your only choice could be to recruit externally.

Manager Concerns and Resistance

Many managers don’t want their employees to move up or onto a new position, especially if they won’t continue managing them. Managers have concerns about hiring and training new staff to fill the position the promoted employee leaves.

Employee Resentment

Some managers and hiring teams worry about internal resentment if they open up every position to internal candidates.

Everyone is disappointed when they don't get a job they apply for. However, when applicants are external, the hiring team doesn’t have to see them every day (or maybe ever again!) But rejected internal candidates still work at the company. They may end up being resentful to higher-ups, HR, and/or the chosen candidate.

Plus, the internal employee(s) that applied will get to see the successful applicants' behavior and performance each day. If they think they would have been better in the position, based on analyzing the new hire’s actual performance, the resentment will be even stronger.

Less Diversity and Fresh Perspectives

Hiring mainly or solely internally can affect levels of diversity and the amount of fresh and new ideas, insights, and perspectives in the company. While internal hires will know how the company works, they are less likely to generate out-of-the-box ideas when in their new position.

Brand new external hires bring new ways of doing things, based on their experience gained elsewhere. While this can be an issue if they struggle to fit in with your organization’s way of doing things, these new ideas can propel your company forward.

Missing Out on Better External Candidates

Ultimately, if you don’t look at external candidates, you may miss out on the best overall candidate. External candidates bring a fresh perspective, as discussed, as well as unique experience, skills, and qualifications. Completely ignoring the external side of recruitment could do you more harm than good if numerous candidates on the market are more qualified than your in-house staff.

A drawback of internal hiring is that employees may resent the company if they don’t get the position.

9 Tips for Hiring Internally

Want to move more of your recruitment efforts in-house? Then take note of these nine ways to improve your internal hiring process.

1. Create a Separate Job Posting

If you plan to initiate internal recruitment, you must create a unique job posting for in-house candidates that differs from the one you use for external candidates. In this internal job posting, you can offer additional insights into the position that you may not be able to in an external posting.

You can also provide the exact contact information of the hiring manager and remove culture-based content. For example, you don’t need to explain in much detail what the current team and environment are like, what benefits and perks you offer, etc.

2. Make it Easy to Find Open Positions

A critical part of the internal hiring process is making it easy for current employees to become aware of openings in the company. Many internal candidates don’t realize that positions are open until external candidates interview or even get hired. This issue is especially prominent in larger companies.

One way to avoid this internal hiring issue is to create an internal job board. Give all employees access to this board and post your customized internal job postings there.

You can also send an email or other notification every time a position is open. Mark these notifications in a consistent way, for example: “NEW JOB OPENING: position title and department.” This tactic makes these hiring notifications easily recognizable to staff.

Don’t forget to also post job vacancies in any other appropriate places via channels your staff use. This includes in company newsletters, on bulletin boards, on your intranet.

3. Be Proactive

When looking to improve your internal hiring process, you must be proactive in acquiring in-house candidates. Instead of waiting for employees to see openings and apply, reach out to them first.

Every time you have an opening, think about who on your current team could be a good fit. Consult with managers and high-level employees too. Ensure you only consult with employees that aren’t eligible for the position, for example, because it’s too junior for them. This tactic avoids resentment issues occurring.

Search In-House First

Attempt to proactively search in-house before posting externally. Finding the right candidate internally will save you time and money. Even if you have to give a little extra training to a staff member, that strategy will generally consume less time and money than hiring someone externally, even if the external candidate is 100% qualified.

Employee Referrals

Along with consulting with higher-ups, you could also ask the team as a whole for referrals. This strategy can mitigate the issue of managers not referring candidates because they don’t want to lose them. If multiple people in a department suggest their colleague, ask that individual to apply, even if the manager suggests that they aren’t a good fit.

Be proactive in looking for in-house candidates, for example, by getting employee referrals.

4. Don’t Confer Too Much with Managers

As discussed, getting discussing appropriate in-house candidates with managers has pros and cons. While asking managers who may be a good fit for the new role can help you find incredible internal candidates, be cautious when conferring with managers.

Managers may be averse to losing good team members if the new position is not under their management. They may also not like the uncertainty that comes with hiring a new staff member and the need to train them. Keep this in mind and don't rely solely on manager input when looking for top internal applicants.

5. Keep Everything Up to Date

A major issue with job postings, both internal and external, is that they’re not kept up to date. Primarily, they’re not removed when the position is filled.

By leaving job postings up, qualified applicants will apply for a position that is no longer available. This is especially damaging internally as employees will be annoyed and upset at HR and higher-ups as they spent time applying for something that isn’t available.

Be sure to update your internal job boards to show if the position is filled, and to add any new details, such as that applications are closed for now while interviews take place. Doing this with external postings is also crucial, to avoid high-level candidates avoiding sending applications to your company again.

If anything changes with the position, for example, qualifications needed or duties, update the posting straight away.

6. Communication is Key

If you want to improve your internal hiring process, one of the easiest ways to do so is to ensure your communication with potential candidates is strong. Remember, when hiring internally you must maintain good relationships with those that apply as you’ll have to keep working with them even if they don’t get the position.

When filling job openings, many employers don’t get back to applicants they've rejected to let them know they won’t be getting the job and why. Even when candidates have been interviewed once or twice, many employers won’t notify them that they weren't successful.

This lack of communication shouldn’t occur with external candidates but is unacceptable when hiring internally. You must notify all internal candidates of your decision. Also, let them know why they weren’t selected and what they can work on to increase their chances next time.

Communicate with internal applicants at every step of the hiring process.

7. Invest in Employee Development

The best tactic when looking to improve your internal hiring process is to invest in employee development programs. In doing this, you’ll discuss career goals with each employee and initiate personalized plans to help them grow in the company and meet their goals. You’ll also be ensuring that you have a large pool of internal candidates that are ready to move up in the company.

Once a position becomes available that a current employee is working towards as part of their development plan, you can notify them and most likely hire them quickly and easily.

8. Create a Succession Plan

A succession plan shows every current position in the company (and you can add in brand new positions as they become available). It then shows which internal employees are ready to move into which positions should they become vacant.

Your plan must be updated frequently as employee skills and experience grow, employees leave or change positions, and new positions evolve. But, in having this plan ready to go, you can instantly see who is a good fit and who is getting trained to move up into the position.

Succession plans also help to show where you have staff shortages. Knowing where shortages occur allows you to know when you have no other option than to hire externally. Alternatively, this can also make it clear that you must focus on training internal employees to be ready to take certain positions should they become available.

9. Make Your Internal Hiring Policy Clear to All Employees

To improve your internal hiring process and get the best results, your in-house recruitment policy needs to be clear to all employees. Make it clear that you will hire internally when positions become available. Also, encourage employees to discuss career progression and what they need to do to move into the position they want.

As mentioned, also make sure the whole team knows where to look for job vacancy posts and outline how they apply and what the hiring process will look like for internal candidates from start to finish.

Hiring Interns

Hiring interns into full-time positions shouldn’t be overlooked as part of your internal hiring policy. To start with, if you don’t currently hire interns, doing so is highly recommended. Once you have a group of top-quality interns, work on a program to get them ready for an entry-level position once they graduate.

Hiring interns is low risk. Usually, they have short-term contracts. Therefore, hiring interns is the ideal way to assess candidates and teach them how the organization operates before offering them a full-time position.

If the interns perform well, be sure to offer them a full-time job and start working on plans to retain them and move them up in the company over time.

Still unsure of how to choose the best new graduates? Check out these top tips on hiring entry-level candidates.

In Conclusion

Hiring internally can bring many advantages, from reducing HR costs to increasing employee retention levels. When deciding on internal vs. external hiring, there are many factors to keep in mind, such as if you have enough in-house talent to hire effectively and if an external candidate could benefit the company by bringing fresh ideas.

Ultimately, address each hiring situation individually and consider using a mix of external and internal recruitment methods to meet your staffing needs.

9 Ways to Improve your Internal Hiring Process