HR Tip of the Week

Internal vs. External Hires: Pros, Cons & Considerations

hiring

When you need to hire an employee, you may choose to look within or outside your company for candidates. Often this decision depends on the expertise you need, your available resources, and the time you have to fill the open position. Below are some factors to consider to help guide your decision.

Internal Candidates:

Here are some of the potential advantages of hiring an internal candidate:

  • Cost and speed. Hiring an internal candidate is typically quicker and less expensive because you don't have to pay to post a job ad or pay a recruiter to source candidates. Scheduling interviews is also easier. However, this doesn't mean you can take shortcuts. It's a best practice to conduct interviews consistently and speak with references, regardless of whether you are hiring internally or externally.
  • Institutional knowledge. Internal candidates know your company, its practices and procedures, and have already formed relationships with clients and coworkers. This can allow them to hit the ground running whereas external candidates may require more time to get up to speed.
  • Performance history. If you have an effective performance review process, you have insight into the internal candidate's past performance, information you wouldn't necessarily have access to for an external candidate. In addition, with internal candidates, you will likely have a better sense of their preferred work style and work environment, and whether they are the right fit for the job. Remember, even jobs within the same company can offer different experiences depending on the position, department, and personnel.
  • Career development. Many employers are increasingly using career development to help recruit, motivate, and retain employees. When employees see an internal candidate hired, they see opportunities to advance, which can increase their engagement and performance.

External Candidates:

Here are some of the potential advantages of hiring an external candidate:

  • Outsider's perspective. External hires may see situations from a different perspective and have outside experience to offer solutions to problems. Internal staff might be too involved to see the solution or may rely too heavily on past practices. In contrast, the right external candidate may approach challenges from a new perspective and have fresh ideas.
  • New skills. While training existing employees might fill certain skill gaps, there are situations where an external candidate can bring new skills to the position that you need and can capitalize on immediately.

Additional Considerations:

  • Weigh the factors. For many employers, the decision to hire internally or externally is made on a case-by-case basis, taking into account the job itself, the company's needs, and what skills are available within the employer's current workforce and labor market. Employers also need to consider that when an internal hire is made, they may need to backfill the employee's previous role.
  • Nondiscrimination. Whether hiring an internal or external candidate, you must comply with applicable federal, state, and local nondiscrimination laws. Avoid assumptions and stereotypes. For example, when an opportunity for promotion is available, never make assumptions about whether an employee would be interested based on their family status or caregiving responsibilities. Similarly, avoid assumptions about age, such as assuming older workers are less able to adapt to change or are less skilled with new technology. As with all employment decisions, focus solely on job-related factors. Identify the skills, knowledge, and experience needed for the job and select candidates based on those criteria.
  • Manage morale. If you decide not to hire an internal candidate, have a direct conversation with him or her explaining why. Let the employee know that career development is important to the company and that you will work with him or her to develop the skills necessary to progress in their career. Following this discussion, check in regularly and offer guidance and support. Be sensitive to that fact that the employee may be disappointed that he or she did not get the job and look for ways to keep him or her motivated and engaged.

Conclusion:

When you have an open position, decide on a recruiting strategy that makes sense for your company. Focus on what will result in finding the right fit for the job, whether it's sourcing candidates within or outside your business.

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