two people looking they are discussing hiring internally and externally

Hiring Internally vs. Externally

June 15, 2023 8:16 am

No matter the size of your business, when your company has a job opening, it needs to be filled. Naturally, you want the most qualified candidate, but you need to ask yourself – do I look outside the company, or is the perfect candidate already in my employ?

In case you didn’t know, internal hiring is when a company transfers or promotes an employee already in the company to an open position elsewhere in the company. This can be because an employee wishes to change departments or feels they are qualified for a position within their own department with more responsibility. Often, hiring managers will let employees know about open positions before they’re made known to the public to give them the chance to apply before external applicants.

Meanwhile, external hiring is when a company looks for a candidate outside of the company for an open position. The company will post advertisements and job descriptions on Indeed, LinkedIn, and other job-hunting websites and conduct interviews based on who applies.

Which is the better option? To know that, you should consider the advantages both options bring to the table and which will suit your company best.

Internal Hiring

A major advantage of internal hiring is that it’s a faster process. You don’t have to wait for someone to see the job among a hundred others on Indeed. You already know the candidate, so fewer interviews and background checks are needed.

On top of that, internal hires already know the company culture, systems, and several of their colleagues. This makes the training and transition process much easier, as you can skip a few steps and streamline the paperwork.

But perhaps the biggest advantage of internal hiring is that it inspires loyalty among your employees. No one wants to be stuck in a job where there’s no chance to advance or are passed over for promotions. 

According to Pew Research Center, in 2021 63% of workers who quit their job cited lack of advancement opportunities as one of the major reasons why they left a company. So internal hiring tells them that they do have a chance to advance in their career while at your company.

External Hiring

There are of course advantages to external hiring, too. For starters, there is a wider pool of applicants to choose from. This gives you a greater chance of finding someone not only with the right qualifications but with other skills you feel could benefit your company. This is especially useful if you wish to implement something new into a department – for example, if you’re planning on implementing a new computer system, you would be better off hiring someone who is already familiar with it and isn’t tied down to the old system.

The other major advantage of an external hire is that they can bring fresh ideas and energy to the table. They might know of better ways to reach clients, new tricks for more efficient workflow, or simply be a breath of fresh air in the office that can revitalize other employees’ passion for a project. Not to mention, having a new employee for a department to train can be a great opportunity for established employees to refresh their own skills. 

Both options have their own advantages, and it’s important to consider what’s best for your company. There are roles and situations where internal hiring is better due to speed and familiarity, while in others, external hires are best due to having fresh skills. Consider the open role carefully, then make your decision. 

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