An image of HR members conducting a comparison between internal vs external hiring


Internal vs External Hiring: Weighing the Pros and Cons and How to Balance Both Strategies

September 29, 2023

Kiran Kazim

Kiran Kazim

Content Writer

It’s the age-old conundrum we’ve all faced.

As business leaders, HR professionals, or even startup founders, you stand at the crossroads of hiring every so often. On one hand, there’s the promise of fresh perspectives, new ideas, and a wave of enthusiasm from external candidates. On the other, the loyalty, deep-rooted understanding, and potential of internal talent beckons. Conversations around the water cooler praise the merits of one over the other, yet your own past experiences throw you into a whirlwind of indecision.

So here’s the burning question: Is there a golden ratio between internal and external hiring?

Or perhaps, beneath layers of bias and preference, lies a strategic equilibrium that ensures growth and stability?

Dive in as we dissect the intricacies of both strategies, helping you find the optimal balance for your organization’s unique needs.

Balancing Act: Unpacking Internal vs External Hiring in Modern HR

An image of team members conducting a comparison between internal vs external hiring

Every organization faces the critical decision of how to fill vacant roles, and at the heart of this dilemma lies the internal vs external hiring debate. Understanding the core differences between these two methods is pivotal for businesses aiming to thrive in today’s competitive landscape.

Internal hiring refers to promoting or repositioning existing employees into new roles. This method capitalizes on an employee’s known track record, their familiarity with the company culture, and often results in shorter onboarding times. The advantage of hiring internal candidates lies in leveraging their institutional knowledge and reducing the risks associated with an unknown hire.

On the other hand, external hiring involves bringing in candidates from outside the organization. This approach offers a fresh perspective, new skills, and the potential to introduce innovative solutions that might not exist within the current team. The difference between internal and external hiring often boils down to preserving organizational memory versus injecting new energy.

Choosing the right approach depends on the specific needs of the organization at a given time. Are you looking for stability and continuity, or a shake-up of ideas and processes? Prioritizing one method over the other can have lasting impacts, making it crucial for businesses and HR professionals to understand the advantages and challenges of both internal and external hiring. Only then can a company craft a balanced strategy that harnesses the full potential of its talent pool.

Internal vs External Hiring: A Comparative Snapshot

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At the heart of a thriving organization lies its talent acquisition strategy. Among the most pivotal decisions that HR professionals grapple with is choosing between internal vs external hiring. Diving deeper into their distinct landscapes can offer clarity:

Origin of Candidates

  • Internal Hiring: This pathway leans on the company’s existing talent pool. Promotions or lateral shifts capitalize on familiarity, leveraging existing employee strengths and potential.
  • External Hiring: This approach casts a wider net, exploring the vast sea of talent beyond company walls. This includes tapping into job boards, collaborating with recruitment firms, or even direct headhunting.

Internal vs External Hiring: Onboarding Time

  • Internal: The transition phase is swift. These candidates, already embedded in the company fabric, need minimal time to align with new roles.
  • External: Induction for external hires is more intricate. Beyond skills, they need to assimilate the company’s ethos, workflow dynamics, and cultural nuances.

Internal vs External Hiring: Cost Implications

  • Internal: A more wallet-friendly approach. The journey from an employee’s current role to the next skips many recruitment steps, thereby curbing costs.
  • External: A broader search often comes with a heftier price tag. This encompasses job advertisements, agency commissions, and potentially longer training sessions.

Knowledge Base

  • Internal: These hires carry the company’s legacy in their cognition. Their insights are rooted in their experiences within the firm, allowing for continuity.
  • External: They are the harbingers of change. Infusing the organization with new techniques, trends, and perspectives, they often challenge and enrich the status quo.

Here is a table summarizing the key differences between internal and external hiring:

AspectInternal HiringExternal Hiring
Origin of CandidatesDraws from existing talent pool within the company.Casts a wider net beyond company walls, often through job boards, recruitment firms, or headhunting.
Onboarding TimeSwift transition, minimal alignment required.Requires more intricate onboarding to assimilate company ethos, workflow dynamics, and culture.
Cost ImplicationsWallet-friendly, skips many recruitment steps.Often comes with a heftier price tag due to job advertisements, agency commissions, and potentially longer training.
Knowledge BaseCarries company legacy, insights rooted in firm experiences.Brings new techniques, trends, and perspectives, challenging and enriching the status quo.

Navigating the complex world of hiring can be tricky. It’s essential for companies to get a good grasp on the ins and outs of different hiring methods. This knowledge helps businesses shape their approaches, allowing them to take advantage of both internal and external hiring, leading to better growth and fresh ideas.

Whether you’re focusing on internal talent or scouting externally, the ability to customize pipelines can make a significant difference. With EVA-REC, did you know that you can effortlessly craft dynamic hiring pipelines tailored to your specific needs? Ensuring you have the right talent pools for every scenario. It helps you dive into a more streamlined and efficient hiring experience with custom-built solutions.

The Unspoken Upsides of In-House Recruitment

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The recruitment landscape offers myriad strategies for businesses, and among them, internal hiring stands out for several compelling reasons. Delving into the advantages, we understand why many organizations give preference to their own when looking to fill vacancies.

Nurturing Culture While Safeguarding Organizational Wisdom

One of the paramount advantages of internal hiring is its ability to foster and strengthen company culture. When an employee has already spent time within the company, they are intrinsically aligned with its values, mission, and work ethics. Promoting from within ensures that the deep-rooted traditions and practices of the organization remain intact. 

Moreover, internal hires preserve institutional knowledge. They are familiar with the company’s history, its successes and failures, and the reasons behind important decisions. By promoting internally, businesses safeguard this reservoir of knowledge, ensuring that valuable lessons from the past continue to inform present actions and future strategies.

The Economies of Streamlined Onboarding

The onboarding process for a new employee can be both time-consuming and expensive. From initial orientation to training in company-specific software or practices, newcomers often require a significant period to become fully operational. Internal hires, already accustomed to the organization’s tools, processes, and procedures, bypass much of this learning curve. This not only results in a swifter transition to full productivity but also translates to tangible savings. Businesses can reallocate funds that would have been spent on extensive training to other pressing needs, maximizing resource efficiency.

Fostering Morale and Internal Ascension

The practice of internal hiring sends a powerful message to employees: the company values and rewards dedication and hard work. When team members see that there are clear pathways for advancement within the organization, it fosters a sense of loyalty and motivation. Employees are more likely to invest their best efforts, knowing that their career aspirations can be realized without seeking opportunities elsewhere. This sense of potential for growth nurtures a positive work environment where team members are driven not just by their current roles but by the possibilities that await them in the future.

Banking on Familiar Talent for Assured Success

The hiring process, even with the most meticulous of vetting, always carries inherent risks. How will the new hire adapt to the company culture? Will their work ethic match the expectations? Are their skills truly as advertised?

With internal hiring, many of these uncertainties are eliminated. The candidate’s strengths, weaknesses, capabilities, and work habits are known quantities. Their compatibility with the team, their response to challenges, and their alignment with company values have been observed firsthand. This significantly reduces the chances of a mismatch, ensuring that the chosen candidate is a proven entity, capable of delivering on the responsibilities of their new role.

Simply put, while both internal and external hiring strategies offer their unique merits, the advantages of internal hiring are hard to overlook. From cost savings and reduced risks to boosting employee morale and preserving company culture, promoting from within presents a compelling case for organizations aiming to optimize their recruitment processes.

The Untapped Potential of External Recruitment

In an evolving business landscape marked by rapid technological advancements and shifting market dynamics, companies often find themselves at a crossroads while deciding on their hiring strategies. External hiring, or the practice of bringing in talent from outside the organization, offers a plethora of advantages that can significantly benefit businesses. 

While internal promotions and transfers have their merits, seeking candidates externally can be the catalyst needed to infuse new life and capabilities into an organization.

Invigorating Your Team with External Brilliance

When a company exclusively relies on its internal talent pool, it risks becoming trapped within its own echo chamber, recycling the same ideas and approaches over time. External hiring breaks this cycle, ushering in fresh perspectives.

Professionals coming from diverse backgrounds bring with them an arsenal of experiences and solutions tested in varied environments. Their outsider’s view, unburdened by the company’s historical decisions or biases, allows them to question existing methodologies and suggest alternate routes. These novel ideas are not merely about doing things differently but often better. For instance, a technique that’s standard in one industry might be revolutionary in another. 

When external hires share such knowledge, they are effectively merging the best of multiple worlds. This fusion of diverse insights catalyzes innovation, ensuring that the organization not only adapts to the evolving business landscape but also pioneers change, setting benchmarks for others to follow.

Welcoming a World of Skills and Stories from Beyond

The professional journey of every individual is as distinct as a fingerprint. Each stint at a different organization, project handled, or challenge faced contributes to their evolving skill set. When companies opt for external hiring, they tap into this global repository of skills and experiences. Instead of being restricted by the competencies of their current team, they have the opportunity to onboard individuals who’ve honed their expertise across various sectors and scenarios. This becomes particularly crucial when a company is expanding into uncharted territories, be it a new geographical market or an innovative product line. 

Rather than starting from scratch or reallocating resources to upskill current employees, businesses can leapfrog this phase by bringing on board external candidates who’ve “been there, done that.” In essence, external hiring isn’t just about filling a vacant position; it’s about strategically acquiring a trove of experiences and skills that can be the catalyst for transformative growth.

Plugging the Gaps with Precision from the Outside In

The dynamic nature of the current business environment implies that no organization is completely insulated from skill deficiencies. As the market evolves, the skill sets required to stay relevant also undergo transformation. 

Whether it’s a sudden demand for expertise in a newly emerged technology or a realization that the company’s leadership pipeline is thinning, these gaps can hamper growth. This is where external hiring emerges as a savior. Instead of waiting for internal talent to catch up, organizations can promptly fill the void with candidates who already possess the requisite expertise. This approach doesn’t just address immediate needs but also preempts future challenges. For instance, integrating someone proficient in emerging digital tools can be a proactive move, ensuring the company is always a step ahead in the technological race. 

By embracing external hiring, businesses aren’t merely plugging gaps; they are strategically enhancing their talent arsenal, ensuring continuous evolution in an ever-changing world.

Sidestepping Internal Tangles with Fresh Faces

The corridors of an organization often echo with more than just the hum of diligent work; sometimes, they resonate with the subtle undertones of internal politics and competition. Advancing an employee from within can inadvertently light the fuse of rivalry, envy, or feelings of being overlooked. These sentiments, if unchecked, can corrode team dynamics and stifle productivity. 

By opting for external hires, companies introduce a neutral element into this mix. These individuals, untouched by previous office dynamics or past allegiances, arrive with a clean slate. Their presence doesn’t threaten existing hierarchies or stir dormant conflicts. Instead, they often serve as a bridge, uniting teams with their fresh insights and unbiased approach. 

For companies, this translates into a double win: not only do they acquire top-tier talent, but they also ensure that the cohesive fabric of their teams remains undisturbed, leading to a more unified and harmonious workplace.

The bottom line is while both internal and external hiring come with their distinct advantages, the benefits of seeking talent outside the organization are manifold. From breathing fresh life into projects with innovative ideas to seamlessly plugging workforce gaps, external hiring remains a potent tool in a company’s recruitment arsenal. By judiciously leveraging this strategy, businesses can not only stay ahead of their competition but also ensure that they are always equipped with the best talent the market has to offer.

While the hiring process serves as a cornerstone for organizational growth, it’s not without its pitfalls. Both internal and external hiring, while offering myriad benefits, come equipped with their unique set of challenges. Recognizing these limitations is as crucial as understanding their strengths, as it equips organizations to craft more holistic, effective recruitment strategies.

Internal Hiring Challenges and Limitations  

While internal hiring often stands as a testament to an organization’s commitment to nurturing and rewarding its employees, it’s not devoid of pitfalls. One primary challenge is the potential stagnation of ideas. When the same set of minds are perpetually rotated into different roles without external stimuli, the reservoir of creativity can run dry. A culture that perpetually looks inward might miss out on groundbreaking external trends, strategies, or technologies, making innovation a rarity rather than a norm.

Secondly, the practice can inadvertently instill a sense of complacency. If employees believe that longevity is the primary metric for advancement, the motivation to consistently upskill or outperform might wane. The notion of ‘waiting one’s turn’ could eclipse the drive for excellence.

Lastly, the dynamics of workplace relationships come into play. When one internal member is promoted over another, it can sow seeds of discord, leading to a charged atmosphere. Decisions, rather than being seen through the lens of meritocracy, might be perceived as favoritism, undermining trust and cohesion within teams.

External Hiring Challenges And Limitations

External hiring, while a beacon for diversity and innovation, isn’t without its maze of challenges. A pivotal concern is aligning a candidate’s individual values with the organization’s culture. No matter how stellar a resume is, if an external hire doesn’t resonate with the company’s core values, their tenure might be marked by friction and misalignment, hampering team synergy and output.

The induction journey for such candidates is often an intricate dance. Acclimatizing to a new environment, understanding nuanced processes, and building rapport with colleagues demands time, patience, and resources. This prolonged adaptation period can sometimes delay project kick-offs or strategic implementations.

The unknowns associated with external hires further compound these complexities. The absence of a shared history means organizations are sometimes navigating in the dark, banking on references and short interview interactions to gauge a candidate’s potential and reliability. 

Finally, the financial aspect can’t be ignored. The recruitment process for external candidates, encompassing job postings, multiple interview rounds, exhaustive background checks, and potential relocation or signing bonuses, often commands a heftier budget, making it a weightier business decision.

Balancing the Scales: Mastering the Art of Dual Hiring Strategies

An image of an organization conducting tests on internal vs external hiring

When it comes to talent acquisition, it’s seldom a question of choosing one method over the other, but rather, integrating both to harness their collective strengths. Striking the right balance between internal vs external hiring is similar to blending tradition with innovation. But how does an organization decide when to tilt the scales in favor of one?

  • Evaluate Organizational Needs: Before initiating the hiring journey, clearly define the role’s requirements. For specialized skills or expertise not present internally, external hiring becomes pivotal. Conversely, for roles requiring deep institutional knowledge, look inward.
  • Cost-Benefit Analysis: Weigh the financial implications of both methods. While external hiring might bring in fresh perspectives, it may be more expensive. On the other hand, internal promotions can boost morale but may lack novelty.
  • Consider Timeframes: If a role needs to be filled urgently, internal candidates, with their familiarity with company processes, might be a quicker fit. External hiring, although potentially lengthier, might be ideal for long-term strategic roles.
  • Gauge Current Morale: If the organization has recently witnessed high turnover or low morale, internal promotions can serve as a morale booster, signaling growth opportunities.
  • Stay Open to Flexibility: Instead of rigidly adhering to one strategy, adopt a fluid approach, adapting to changing organizational goals, market conditions, and talent landscapes.

Keeping it short, the choice between internal and external hiring should be informed, not by habit or convenience, but by strategic alignment with organizational objectives and current needs.

Internal vs External Hiring: Wrapping Up By Weighing Merits Against Pitfalls

Recruitment isn’t just a choice between internal vs. external hiring; both methods have their strengths and challenges. While internal hiring values loyalty and can be cost-effective, it might lead to stagnation if overused. External hiring, though bringing fresh perspectives, can also bring challenges in assimilation and costs.

The key isn’t to pick one over the other but to blend both based on an organization’s needs and long-term goals. 

Are you still struggling with creating customizable workflows?

EVA-REC is an award-winning hiring tool designed to simplify your hiring process. Seamlessly recruit top talent at scale and ensure you secure the perfect fit for every position. Ready to see it in action? Request a free demo today!

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Kiran Kazim

Kiran Kazim

Writing about the next big thing in HR by day; sipping on coffee by night. Turning hiring insights into must-reads.

Turn top talent to employees fast

Hire, assess, onboard and manage top talent for every job. See how Elevatus streamlines everything; from acquire to new hire.

Request a demo