Internal or External Hire? Where to Look for Your New Employee

When your company has a position to fill, where do you find the ideal candidate - within your existing ranks, or from the outside? There’s no "right" answer to the question; only things to be considered on both sides. The "right" solution will depend upon your company’s needs and goals. Let’s take a look at the pros and cons of each source of an employee so you can decide for yourself.

Hiring from within

Internal hiring involves choosing among your existing employees to fill a position. That can happen a couple ways. Employees can be invited to apply for a new position, in which case they would prove their ability to perform the job just as an external candidate would have to. The difference would be that the pool of candidates would be smaller since they all are employed at your company. Another way to fill a position from within would be by transferring an employee from one department or role to another. The shift might be either lateral or serve as a promotion.

Sourcing your candidate from within your company has a number of advantages:

• Shortens the hiring process - Due to the smaller candidate pool, fewer interviews need to be conducted. These interviews can be more concise since the worker’s employment history, professional accomplishments and work ethic are already known entities on file.
• Reduces costs - The aforementioned abbreviated hiring process means less man hours spent on interviews or resume review. Since the employee with the new position is most likely to be working in the same location, there’s no relocation package necessary.
• Easier and quicker employee adjustment - Working in the same location, the person with the new position enjoys a number of shortcuts to settling in because they’re already familiar with coworkers, corporate structure, company culture. They know the lay of the land and won’t need time to get up to speed on anything except the demands of the new position - which can consequently happen more efficiently.
• Provides career development opportunities within the company - A company that allows for career advancement is attractive to work at. It’s a factor that translates into employee loyalty and a general growth mindset within the company.

On the negative side of things, sourcing your candidate from within means you didn’t actually add an employee; you’ll have to hire someone to fill the position that was vacated by the employee with the new role in the company. That means ultimately hiring from outside, yet it’s for a worker at a lower level where there’s less risk and financial outlay.

Another possible disadvantage of internal hiring is that it could foster a disruptive sense of competition among employees vying for the same job. It’s very important to be clear about the qualifications required for the position and to ensure all decisions are based upon documented records.

External Hiring

Hiring from "out there" opens many doors for a company. An influx of diverse job-seekers can inform human resource personnel of the talent pool that exists, possibly opening their eyes to new hires who could make a big difference in the company based upon their abilities.

As mentioned earlier, to grow a team, people must ultimately come on board from external sources. With them come new and different skills, fresh eyes, diverse perspectives and a wealth of knowledge that can propel a business forward.

External hiring doesn’t come without a few drawbacks, however. It’s costly to bring on a new employee; the costs of job posting, interviewing, orientation, onboarding, training and new equipment must all be taken into consideration. In addition, due to their lack of familiarity with the company as a whole, it can take them considerably longer to settle in and reach productivity goals.

It’s clear that there’s no "right" answer when deciding between internal and external hiring. It comes down to an assessment of your needs. Does your company have working within it personnel who could effectively step into the position? If it does, look no further and tack that job posting on the bulletin board! It would be a shame to overlook the ideal candidate if they’re right under your nose (and already happy in your employ). If it doesn’t, you’ll need to look elsewhere for the right fit who will bring what’s needed (and hopefully more) to your business. It comes down to finding the balance of maximizing your current talent pool while welcoming the new when needed to round out your company’s ability to move forward.

When do you hire internally? When do you broaden your employee search?