Everything You Need to Know About Internal Recruitment

If you want to run a successful organization, you need to recruit and train successful people. However, where do these people come from? They could come from personal networks or a job listing on Indeed, but chances are, if you have an established workforce, the best people are already on your team. That's where internal recruitment comes into play.

Fortunately, internal recruiting is often as easy or more efficient than bringing in workers from outside the company. This article will dive into the world of internal recruitment and why it can work for your business.

 

What is Internal Recruitment?

Internal recruitment is the process of hiring someone from within your company to fill an open position. Often, internal recruiting happens for managerial or supervisory positions, but not always. We'll get into the different routes your new hires may take on the path to success.

Another essential element of internal recruitment is that it should work the same way as external hiring. For example, candidates should still go through the interview and review process before starting a new position. If you have multiple rounds for external hires, it should be the same for internal candidates as well.

 

What are the Benefits of Internal Recruitment?

It's hard to believe that more companies don't try recruiting internally first when filling new positions. Not only are there some incredible advantages, but it also helps alleviate a big problem that many businesses face - a lack of qualified talent. According to a recent PwC pulse survey, 77% of executives say hiring and retaining talent is their most critical growth driver in 2022. However, if they truly understood the skills and ambitions of their workforce, they might be surprised by how many qualified candidates were ready to take on new roles, if only given the opportunity.

Let's break down the various benefits you can expect from internal recruiting.

Save Time and Money

Did you know it costs an average of 1.7 times more to recruit someone externally than from within? According to the Saratoga Institute, external recruitment costs around $15,000, while it's only about $8,600 for internal recruits. These cost savings occur in a few different places, such as:

  • Job Listings - Since you're looking for candidates within your company, you don't need to post on various job sites like Indeed and LinkedIn, which can come with expensive fees. Instead, savvy organizations set up internal opportunity marketplaces (a.k.a. talent marketplaces) to match the demand of new roles with their supply of internal talent.
  • Travel Expenses - High-level talent expects a red carpet treatment when coming in for an interview. You don't have to pay for such expenses when hiring internally since your employees are already local.
  • Labor - Unfortunately, external recruiting can lead to many dead ends and unqualified applicants. The time wasted in vetting and interviewing these people costs money since you need managers and hiring staff to handle the details. On top of that, new hires require lots more time to adapt to the company culture and get trained on all necessary protocols.

Reduce Turnover

It's hard to believe, but up to 60% of new external hires don't work out. Either they're fired, quit, or don't provide the value you expected when bringing them on board. Even if you have an intense vetting and hiring process, almost half (40 percent) of new hires likely won't be working long-term. But, when you recruit internally, that percentage drops to 25%.

The reason for this discrepancy is pretty straightforward. Since your current employees know what to expect, they're far more likely to succeed in a position. They're already familiar with your company culture, benefits packages, workflows, etc. So, if they're interested in filling a new role or getting a promotion, there are far fewer surprises to expect.

This turnover rate is another reason you can't afford to skimp on the hiring process when recruiting internally. Just because someone is good in one position doesn't mean they'll adapt to another, especially a role with more responsibility.

Increase Employee Morale

As the saying goes, a happy employee is a productive employee. Internal recruitment helps with workplace morale in two ways:

  1. High-performing talent can take on new roles and learn new skills, meaning they're far more likely to stay put than apply to a similar position at another company. Also, if the role comes with a pay increase and better benefits, the worker is incentivized even further.
  2. The second morale booster is that other employees see that you're offering new positions and raises to current staff instead of hiring externally. So, even if someone isn't ready for a promotion or role change right now, they might be interested in the future. As a result, they're more willing to stay and put in extra effort, knowing that it can lead to a successful position later.

Build a Stronger Company Culture

All the benefits we've listed can work together to create a happier and healthier workforce. Employees are often willing to go above and beyond when they see that they'll be rewarded or recognized for their efforts. So, the more you recruit internally, the more you show your workforce that you value their time, energy, and expertise.

Another advantage is that promoting workers internally helps strengthen and retain the existing company culture. Not only do employees know what to expect from the job, but they know how to work with each other. It takes time for new people to fit into a tight-knit workplace, so you can avoid most of those headaches.

Finally, internal recruiting allows you to let your top talent rise to the top, meaning that primarily lower-level positions have openings. This way, you don't have to worry as much about finding the best people externally, as you can find entry-level workers and have them move up within the company. Over time, this process ensures a stable foundation of top-tier employees, further strengthening your culture.

Attract External Talent

Although we're talking about internal recruitment, this process can actually help you get better qualified external applicants. In most cases, individuals want to work at a company where they can grow and thrive over the long term. So, by focusing on recruiting internally, you're showing external applicants that they will have plenty of opportunities with your organization.

The Drawback of Internal Recruiting

As you can see, recruiting internally comes with quite a few benefits. However, there is one significant downside - you may still be be short at least one position. For example, if an entry-level worker moves to middle management, you may want to back-fill the entry-level position.

However, this downside can actually be a benefit. As a rule, it's much easier to find entry-level talent and train them to move up within your company. Also, if an applicant doesn't work out, they're not handling as many responsibilities as an executive or manager. So, even though you still have to fill a position externally, internal recruitment can make that process easier.

 

Top Internal Recruitment Strategies

Depending on the size of your company, there are quite a few ways to recruit from your existing workforce. Let's break down these methods and discuss the pros and cons of each.

Promotions

When most people think of internal recruitment, a promotion comes to mind. Typically, a worker moves "up" to a role with expanded responsibilities. In most cases, the employee moves up through their department. For example, they perhaps started as a salesperson and then became a lead sales coordinator or project manager.

The primary advantage of offering promotions to your existing talent pool is that it incentivizes employees to stay with the company long-term. As long as you have a clear path for entry-level workers to advance, the more likely that individuals will take the opportunity whenever it presents itself. Also, a promotion structure can entice external candidates who want to work for a company with which they can grow and evolve.

The downside of promotions is that there are always fewer positions at the higher levels. Also, because managerial and executive jobs create stability, the turnover rate is often much lower. So, you run the risk of a stagnating system where employees at lower ranks don't have a shot at moving up because nothing is available. In that case, they're more likely to move to another company where those positions are open.

Transfers

A transfer typically happens at companies that have more than one office location. In this case, an employee transfers to a similar position at a different office, which may or may not be in another city or state. For example, a salesperson might transfer from an LA office to a Las Vegas office or vice versa.

Transfers might come with a promotion and added responsibilities, but not always. In many cases, the employee might be doing the same job, just in a different location.

Transfer recruiting works well for a couple of reasons. First, you can utilize experienced employees to open a new office branch or to shore up the talent pool at a branch with fewer workers. Second, if one location has more success with external recruitment, you can shuffle people around to take advantage. For example, let's say you have one office in a major city and another in a small town. It's much harder to find top-tier employees in a small town, so you can transfer high-level workers there and recruit within the big city.

The downside of transfers like this is that employees must want to change locations. In some cases, you might have to incentivize them by paying for moving costs, inflating your recruitment expenses. Also, if no one wants to move, you're out of luck. Depending on the situation, you can offer temporary transfers. For example, when opening a new location, you can lean on experienced workers to get that office off the ground, and then they return to their original site once it has sufficient local staff.

Restructuring

As your business grows and expands, your model may shift and change accordingly. Perhaps you're adding new products or services to your lineup or expanding into new markets. These adjustments often require a complete reorganization or restructuring of the business, which is where internal recruitment comes in.

In this case, workers may change positions, or new jobs may be created to fill specific needs. For example, maybe you need to create management positions because you're hiring so many more entry-level workers. In other instances, you might have to merge departments or split them into unique entities, complete with their own hierarchy.

The advantage of restructuring is that it opens up new possibilities for employees that might not otherwise get a chance at a promotion or job change. Also, since your company is growing or shifting, workers might be enthusiastic about learning new skills or benefiting from the company's success.

The downside of restructuring is that you might not have qualified applicants. For example, if you're creating new managerial positions, your talent pool might not be sufficient to fill those jobs. If not, you might be hurting for high-quality applicants, which can infringe on your hiring process.

Role Changing or Lateral Promotions

While promotions typically occur within the same department, sometimes workers want a complete role change. For example, perhaps an employee wants to move from marketing to manufacturing or sales to HR. In this case, their duties and responsibilities are much different from their current job.

One thing to understand about role changing is that it often still involves extra training and onboarding. Since the worker has a different position right now, they might not be fully qualified to take on a new role. If that happens, you might actually find better external candidates with more experience.

Another term for this type of recruitment is talent mobility. By allowing employees to switch roles and departments, you can often prevent them from heading to other companies just because they want to try something new and expand their skillsets. That said, you need a comprehensive talent mobility plan to ensure you're not inadvertently hurting your workforce in the process.

 

Tips and Tricks for Recruiting Internally

Now that you know more about internal recruitment, you're likely ready to get started. However, since this process can be somewhat complex (depending on your business organization), you might experience some setbacks along the way. To mitigate these potential issues, here is some advice on how to recruit internally:

  • Notify All Workers of Open Positions - Some companies use a dedicated internal job board or opportunity marketplace to notify workers of available positions. Other businesses might send a memo or mention the openings during meetings. No matter what channel you choose, it's crucial to tell everyone about what's open, including pay scale, benefits, and more. These opportunities should not come down to "who you know." Equity and fairness are critical in the modern workplace, so you have to incorporate them into your hiring strategy. Plus, sometimes the best candidate may come from the place you least expect.
  • Keep Track of Employee Interests and Skills - Internal recruitment is a two-way street. On your end, you're looking for top-tier talent. On the employee's end, they may be looking for a higher salary or better benefits. In some cases, the worker might be interested in the job itself. So, the more you know about your employees, the easier it is to narrow your recruitment search. Luckily, technology can help you better understand your complex workforce.  Automated people profiles can capture and organize employees' work history, interests, skills, capacity and even previous project or client data that you can use to find out who is the perfect fit for an open role.
  • Outline Your Recruitment Path - You should already have a process for hiring external candidates, so you should develop one for internal recruitment as well. However, this path will differ slightly because each candidate should already be familiar with your business and job description. That said, you should avoid "good faith" hires just because someone seems qualified or interested in the position. In many cases, the employee may not work out for several reasons, so you can't skimp on vetting and interviewing. By outlining these steps ahead of time, you can follow them accordingly and remove the potential for mistakes or favoritism.
  • Celebrate Your Internal Recruits - One way to get employees more excited about taking on new positions is to highlight the benefits that come with them. Once you recruit someone internally, announce the change and celebrate the individual. This way, other employees will take notice and apply when new opportunities arise.
  • Ask for Recommendations - If you're unsure whether an existing employee will work in a specific position, you can ask those closest to them, including supervisors. Alternatively, you can ask your managers who they think would be ideal for the role and start your hiring process there. Sometimes, you may discover a diamond in the rough.
  • Avoid Bias, Encourage Equity - Unfortunately, internal recruitment makes it easy for hiring managers to play favorites and simply promote someone because of their relationship, not talent. Here is where having a clear set of guidelines and rules comes in handy. For example, you could state that only employees with at least one or two years at the company are eligible for promotions or transfers. Just make sure to enforce any rules you create equally. As we mentioned, listing openings on a company-wide opportunity marketplace ensures that everyone has equal and transparent access to them.

The Bottom Line

If you've been toying with the idea of internal recruiting, this article should have pushed you in the right direction. As you can see, this process yields many tangible benefits with very few downsides. As long as you create a clear and understandable path for internal recruits to follow, it's relatively easy to get top talent into your hiring pipeline. From there, you can build a stronger bottom line and ensure long-term success for both employees and the company as a whole.

 

Want to learn how to build an agile & empowered workplace?

Explore Structural