Internal vs. External Recruitment: Examples, Pros & Cons

When it’s time to fill a role in your team, do you promote someone already familiar with your company, or do you bring in fresh talent from outside? This is a common dilemma every manager faces when deciding between internal vs external recruitment. 

Each option comes with unique advantages and challenges. Which strategy will drive better results for your team? Let’s dive into the examples, pros, and cons of internal and external hiring to help you decide.

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Recruiting Internally vs Externally: At A Glance

Factor	Internal Recruitment	External Recruitment
Cost	Saves up to 80% on costs by avoiding job ads, agency fees, and lengthy onboarding.	Higher costs due to advertising, recruitment agency fees, and onboarding efforts.
Speed	2x faster process as candidates are already within the organization.	Slower due to sourcing, screening, and interviewing new candidates.
Access to Talent Pool	Limited to current employees and referrals.	Expands the talent pool with external diverse candidates.
Cultural Fit	Ensures 100% alignment with company values and culture.	Requires additional effort to assess cultural fit.
Retention Impact	Boosts employee morale and reduces turnover by showing growth opportunities.	Risk of turnover increases if external hires feel disconnected.
Effectiveness for Senior Roles	Ideal for mid-level roles or leadership development from within.	Better for specialized or senior-level roles needing external expertise.
Training Needs	Minimal as candidates already understand company processes.	Higher as new hires require onboarding and training.
Risks of a Bad Hire	Lower as internal candidates’ track records are known.	Higher as external hires may not meet expectations.

5 Internal Recruitment Examples

Here are 5 examples that show how internal recruitment works in practice:

1. Promotions

Promotions mean moving an employee to a higher position within the company, with increased responsibilities, authority, and pay. This recognizes an individual’s performance and readiness for greater challenges, making it a motivational tool for career growth. 

Best For: 

• When rewarding top performers for exceptional contributions and retaining talent.
• Situations where leadership roles require someone with existing company knowledge and proven loyalty.

2. Transfers

Transfers are when an employee is shifted to a different role or department at the same organizational level, without a change in pay or status. Unlike promotions, transfers focus on reallocation to address staffing needs or provide employees with new experiences.

Best For: 

• When addressing staffing shortages in specific departments or locations.
• When an employee’s skills align better with a different team or role within the company.

3. Internal Job Postings

Internal job postings involve advertising open positions within the company, giving current employees the opportunity to apply. Unlike direct promotions or transfers, this approach creates a competitive process, where multiple employees express interest and demonstrate their suitability.

Best For: 

• When seeking to identify the most qualified candidate for a role from within the organization.
• Situations where transparency and equal opportunity for career advancement are priorities.

4. Employee Referrals

For employee referrals, current staff recommends potential candidates for open roles using their professional networks. Unlike other internal recruitment methods, referrals can include external candidates but rely on internal employees to vouch for their skills and fit.

Best For: 

• When looking for trusted candidates who align well with the company’s culture and values.
• When you want to reduce time-to-hire and leverage employee networks for sourcing skilled talent.

5. Temporary To Permanent Roles

This approach offers a temporary position with the potential to transition into a permanent role based on performance and fit. Unlike direct hires, this method lets both the employer and employee evaluate the suitability of the arrangement before making a long-term commitment.

Best For: 

• When assessing a candidate’s skills and fit before offering a permanent position.
• Situations where flexibility is needed to adapt to changing business demands or project-based workloads.

???? Food for thought

A referral makes a candidate 18 times more likely to be hired.
(Source)

5 External Recruitment Examples

Now, let’s take a look at 5 examples of external hiring:

I. Job Advertisements

You post open positions on job boards, company websites, or social media to attract external candidates. Unlike internal postings, these ads target a broader audience outside the organization to bring in fresh talent and perspectives.

Best For: 

• When aiming to reach a wide pool of diverse candidates for open roles.
• Situations where fresh perspectives and new skills are needed to complement the existing team.

II. Recruitment Agencies

Recruitment agencies are third-party firms that help companies find and hire qualified candidates by managing the sourcing, screening, and shortlisting process. These agencies leverage their expertise and networks to fill roles quickly and efficiently, especially for specialized or high-demand positions.

Best For: 

• To fill specialized or high-demand roles that require industry expertise.
• When time constraints or limited internal hiring resources necessitate external support.

At Genius, we make finding top talent possible. With a 12-step vetting process, local university connections, and on-ground recruiters, we screen over 250 candidates to find one exceptional fit. 

The result? A+ talent with perfect English, 5+ years of experience, Western work culture alignment, and modern software skills – all ready to work in your timezone. Great talent exists, but only our meticulous process can uncover it.

III. Campus Recruitment

Campus recruitment involves visiting colleges and universities to identify and hire fresh graduates for entry-level positions. It focuses on sourcing young talent directly from academic institutions through career fairs, workshops, or campus interviews.

Best For: 

• When building a pipeline of fresh talent for entry-level or trainee positions.
• To prioritize long-term growth and investment in developing future leaders.

IV. Walk-In Interviews

Walk-in interviews are open recruitment drives where candidates can directly attend interviews without prior applications or appointments. This method lets companies quickly screen and select candidates for immediate or high-volume hiring needs.

Best For: 

• To hire for multiple roles quickly, especially for entry-level or high-turnover positions.
• Situations where there’s an urgent need to fill vacancies without a lengthy recruitment process.

V. Headhunting

Headhunting involves proactively reaching out to highly skilled professionals or industry leaders who are not actively seeking new jobs. Unlike traditional recruitment, this method targets specific individuals with the desired expertise to fill critical or high-level roles.

Best For: 

• When filling senior, executive, or highly specialized positions requiring specific expertise.
• Situations where finding top-tier talent is critical to achieving strategic business goals.

???? Check this out

69% of HR professionals using hiring automation reported a significant time reduction in the hiring process.
(Source)

Similarities Between Internal & External Recruitment

• Aim to fill organizational roles effectively.
• Require a clear job description and criteria.
• Utilize interviews and assessments to evaluate candidates.
• Focus on finding the best fit for the position.
• Demand alignment with company goals and workforce planning.

5 Advantages Of Internal Recruitment: Why Is Hiring Internal Better?

• Save up to 80% on recruitment costs: Avoid expenses like job ads, agency fees, and lengthy onboarding.
• Increase retention by 25%: Employees promoted internally are more likely to stay for 3 or more years.
• Onboard 30% faster: Internal hires adapt quickly because of familiarity with company systems.
• Raise team morale by 20%: Employees feel valued when internal growth opportunities are prioritized.
• Outperform external hires by 15%: Internal recruits deliver stronger results in their first year.

5 Disadvantages Of Internal Recruitment

• Miss out on 60% external talent: Hiring internally limits access to fresh ideas and diverse perspectives available in the external market.
• Risk of role stagnation: Up to 30% of internal promotions struggle to adapt to higher-level responsibilities.
• Potential 15% morale dip: Other existing employees may feel overlooked, reducing team motivation.
• Creates a vacancy chain: Filling 1 role when you hire internally opens 1.5 positions needing backfill.
• Reduces innovation by 20%: Relying solely on internal candidates can hinder new approaches and creative problem-solving.

5 Advantages Of External Recruitment

• Access 60% more diverse talent: External hiring opens doors to a larger pool of skills and perspectives unavailable internally.
• Increase innovation by 20%: New hires bring fresh ideas and approaches that improve creativity within teams.
• Fill 35% of specialized roles effectively: External recruitment is ideal for hiring niche or technical expertise unavailable in-house.
• Achieve a 20% increase in team performance: Bring in experienced external candidates that elevate the overall productivity of teams.
• Expand market insights by 30%: External hires contribute knowledge of competitors, trends, and industry best practices.

5 Disadvantages Of External Recruitment

• 30% higher turnover risk: External hires are more likely to leave within the first year compared to internal hires.
• 20% longer time-to-productivity: External recruits take more time to become fully effective in their roles.
• 15% increased onboarding time: External candidates need more time to understand company-specific protocols and expectations.
• Increase recruitment cost by 80%: External hiring requires investment in advertising, screening, and onboarding.
• 25% mismatch caused by cultural fit issues: Hiring externally makes it difficult for new employees to adapt to the company culture. This impacts team collaboration.

???? Did you know?

Executive positions take over 120 days to fill.
(Source)

Internal vs External Recruitment: What Should You Go For? 

To know which recruitment will work best for your company, here’s a checklist you can use:

1. Urgency of the Role

• Do you need to fill the position in 5 days? (Internal)  
• Can you afford 15-20 days for the hiring process? (External)  

2. Budget

• Is cost-saving a priority, with minimal costs of $1,000? (Internal)   
• Can you allocate an average $4,000 budget for recruitment? (External)  

3. Talent Pool

• Do you have 2-3 employees with the skills and experience for the role? (Internal)  
• Do you need a broader talent pool with specialized skills or fresh perspectives? (External) 

4. Company Culture

• Do you prioritize someone aligned with your company values and processes? (Internal)    
• Are you ready to onboard and integrate someone into your culture? (External)  

5. Role Complexity

• Is the role mid-level or leadership, aligning with existing employees’ skills? (Internal)  
• Does the role require niche expertise or a senior specialist with 5-10 years experience? (External) 

6. Employee Morale

• Will promoting internally improve team motivation by showing growth opportunities? (Internal)  
• Will external hiring upset employees overlooked for the role? (External)

7. Training Requirements

• Can the internal candidate contribute immediately with under 10 hours of training? (Internal)  
• Are you prepared to invest 20-40 hours to onboard and train a new external hire? (External) 

8. Risk of a Bad Hire

• Do you prefer the low risk of hiring someone with 1-2 years proven performance? (Internal)  
• Are you willing to accept a 30% higher risk of mismatch to bring in fresh talent from outside? (External) 

Conclusion

When it comes to choosing between internal vs external recruitment, both have unique advantages and challenges. The best choice ultimately depends on your business needs and priorities. Take the time to assess your current team, future goals, and available resources – this will help you make a choice that matches your long-term vision.  

Genius specializes in on-the-ground sourcing from the Philippines and Latin America. With an extensive network and deep understanding of these markets, we connect you with the top 1% of the talent. A one-time fee of 25% of the candidate’s first-year salary will save up to 80% compared to traditional recruitment methods. 

Fill out this form and see how Genius can help you build a stronger, more capable team.

FAQs

Which of the following is true of internal recruitment: “It brings in new ideas, new perspectives, and new ways of doing things.” or “It is a method used by organizations to fill higher-level openings with current employees.”?

The correct statement is: “It is a method used by organizations to fill higher-level openings with current employees.” Internal recruitment focuses on leveraging existing talent within the organization rather than sourcing new ideas or perspectives from outside.

Which are the best external recruitment methods?

The best external recruitment methods include job advertisements for broad reach, recruitment agencies for specialized hiring, and campus recruitment for entry-level talent. The method depends on the role, required skills, and hiring urgency.

How does the internal and external recruitment process work?

Internal recruitment identifies and promotes or transfers current employees to fill roles, using internal postings. External recruitment attracts new candidates through methods like job ads, headhunting, or referrals and includes steps like advertising, screening, interviewing, and onboarding.

What are the different types of recruitment?

Recruitment can be internal or external. Internal recruitment fills roles with existing employees through promotions, transfers, or referrals. External recruitment sources talent from outside via job boards, agencies, or campus hiring. Other types include direct recruitment, targeting candidates personally, and passive recruitment. Contract-based recruitment focuses on temporary or project-specific roles, while recruitment process outsourcing (RPO) lets a third party handle hiring.