7 Internal Recruitment Advantages vs. External Recruiting

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Internal recruitment is a shrewd approach to filling positions within a company, although one that can often be overlooked. 

This article will explain in detail 7 reasons why internal recruitment will give your company an edge compared to external recruitment, and offer a broader comparison of how the two recruitment methods compare. 

By the end of the article, you should have a solid understanding of how internal recruitment can positively influence your company in comparison to external recruitment. 

So without any further ado, let’s take a look at some of the benefits of internal recruitment.


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The 7 benefits of hiring employees internally

  1. Reduced cost of hiring
  2. Job growth opportunities for employees
  3. Less training
  4. Reduced time spent hiring
  5. Shorten onboarding times
  6. Understanding of company culture
  7. Improved employee retention

1. Reduced cost of hiring

When opting to use an internal recruitment channel/strategy, you immediately reduce expenses in a number of different respects. 

Primarily, you will be saving money on job postings, external advertising, and recruitment agencies. 

The resources you will be able to use instead in order to source internal talent will be pre-existing forums such as job boards, internal announcements, and employee referrals.

Another long-term aspect to consider when recruiting internally as opposed to externally is that chances are, existing employees have the advantage of already fitting into the culture of the company and understanding what is required of them. 

They are also more likely to be more committed than a new external recruit would be straight off the bat.

These characteristics reduce the risk of high employee turnover, which keeps hiring expenses down in the future.

2. Job growth opportunities for employees

Employees are the biggest part of any company’s success, and letting them know they have the opportunity to further their career within the same company is advantageous all around. 

First of all, career development necessitates up-skilling and the occupation of new responsibilities.

A more skilled, competent employee base can only mean good things for the growth of any company. 

Secondly, when employees are aware the company they are working for values and trusts their abilities, loyalty is fostered.

The ability to further their career with the company they currently work for enhances long-term commitment.

3. Less training

Filling vacancies with existing employees substantially reduces the settling-in period to be expected for new external recruitments. 

As has been touched on briefly already, this is because existing employees are already accustomed to company culture and expectations that may befall them.

Beyond already being adapted to the cultural aspects of the workplace, onboarding, and training processes are significantly diminished when hiring existing employees

New recruits often take time to be trained in their roles, which can be costly.

Existing employees likely already have a good idea of the skills required to fulfill a new role within the company – reducing the time and resources spent on these processes.

4. Reduced time spent hiring

The hiring process is significantly streamlined when internal recruitment is used. 

First of all, screening and selection processes are much quicker, as knowledge of candidates’ performance, skills, and qualifications is readily accessible.

This then leads to faster, more informed decision-making.

Background checks are also much less involved, as chances are this information will have already been solicited and will be readily accessible.

External factors out of the company’s control such as market conditions, competition, and candidates’ individual needs can also be avoided by recruiting internally.

5. Shorten onboarding times

This is one of the domains where internal recruitment really outperforms external recruitment. 

There are lots of things that need to be taken into consideration in the onboarding process, such as proficiency with job/industry-related tools and software. 

A preexisting familiarity with things such as these streamlines the onboarding process and allows employees to settle into their roles more quickly.

An understanding of how the company operates is also something that is taught in the onboarding process via things such as inductions. 

However, the more nuanced aspects of a company’s culture such as social networks, relationship dynamics, and hierarchy structures often take considerably longer to adapt to. 

Internal hires will almost always have an established social and professional network within the company, saving the time it may take external hires to find their feet in a new environment.

6. Understanding of company culture

Related to the above advantage, internal hires have a pre-existing understanding of the culture of the company. 

This continuity can reduce any disruption that may occur as a result of a new arrival such as resistance to change from other employees.

Assimilation can be achieved much more easily. 

The other consideration to make in terms of company culture is that internal recruitment can model healthy leadership roles, in the sense that other employees may be inspired by positive examples seen in their peers. 

This also comes back to the importance of employees feeling valued in their workplace.

If examples of rewards for hard work are apparent, motivation will increase and the culture of the company will benefit.

7. Improved employee retention

Essentially an amalgamation of all of the aforementioned reasons, employee retention is fostered by internal recruitment. 

Company culture is assimilated seamlessly, and loyalty is fostered in employees seeking to further their careers. 

The job security offered by new roles within the same organization also improves employee retention.

Internal Recruitment vs. External Recruitment

Internal RecruitmentExternal Recruitment
Reduced hiring time and costsFresh perspectives and diverse talent
Job growth opportunities for employeesSpecialized skills and expertise
Shortening onboarding/training timesExpansion of networks
Tapping into pre-existing knowledge of company cultureReducing the risk of insularity
Improves employee retentionKnowledge transfer
Limited diversity of perspectivesHigh costs
Potential talent gapsTime consuming
Employee competitionIntegration challenges
Organizational inertiaDependency on external factors

Is recruiting internally a good idea?

There are numerous reasons why internal recruitment is a good idea (7, at the very least!). 

Reduced hiring costs (financial and time), opportunities for job growth for employees, fostering loyalty and commitment in the workforce, and employee retention are just a few of these reasons. 

If your organization is looking to recruit some new talent into its ranks, considering its existing employees could be a very good decision. 

Whatever recruitment avenue you choose to go down in the near future, we wish you and your company the best of luck.

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Donny is the founder of SMB Guide. He is a seasoned small business owner and entrepreneur, with over 17+ years of experience growing and building companies. He is a well traveled and multi-faceted individual with several successful six figure business exits.