Article 04 - Internal vs. External Hiring: Making the Right Recruitment Choice

Hiring the right talent is one of the most crucial decisions for any organization, and one of the major decisions that hiring managers face is whether to promote from within (internal hiring) or seek fresh talent from outside (external hiring). Each approach comes with its own set of advantages and disadvantages, and the right choice depends on various factors like company culture, job requirements, and long-term goals.

An effective hiring process ensures that an organization has a sufficient number of employees and they have the skills and qualifications needed to perform their job roles successfully. It's critical to understand both internal and external hiring procedures when deciding whether to promote current staff members or bring on new experts to fill positions within an organisation.

When an employer fills a vacancy with one of its existing workers (through promotion or horizontal transfer), it forgoes the opportunity to fill the position with a new hire from outside the firm. Understanding those differences helps employers design and manage hiring policies that are appropriate for their organizations (DeVaro, 2020).

In this blog, we’ll explore the key differences, pros and cons of both methods to provide guidance on when to choose each method. This blog is your essential guide to making the right recruitment choice, perfect for HR professionals, hiring managers or anyone interested in attracting top talent.

What is Internal Hiring? 

Internal hiring is the process of promoting or transferring a professional who already works for the company to a new role (Indeed, 2025). It simply means filling the job vacancies with existing employees. 

This could occur when an employee expresses interest in a job opening within the organisation or when management identifies an employee as a strong candidate and think they would be a perfect fit for a new role. Sometimes, HR managers share job advertisements with internal staff members before making them public. This method focuses on recruiting people from various departments, teams, and job roles inside the company.

Moreover, seeing somebody suddenly promoted to a role that hadn’t been advertised is likely to be viewed as favouritism and could cause resentment and bitterness among colleagues. Therefore, every organization should have an internal recruitment strategy in mind when recruiting for new roles (Hogarty, 2022). 

                                                  

Internal recruitment methods

Internal hiring is the quickest and most effective method for addressing unexpected organizational gaps within a company. Here are some common internal recruitment methods that organizations use to fill vacancies with existing employees:

• Promotions - Promotion is the most common way to hire internally. This involves elevating an employee to a higher position within the organization, usually with more responsibilities and a salary increase. It rewards performance, boosts employee morale, and encourages career growth. Entry-level employees who are eager to take on more responsibilities and have proven their skills in their current role can apply and interview for the open senior position.

• Internal transfers - Transfers mean moving an employee from one department, role, or location to another within the same organization. This method offers employees new challenges and can enhance their skills without the need for external hiring.

• Internal Job Postings - This involves advertising available positions within the company, typically through the organization’s internal communication platforms or announcement boards. It provides existing employees the opportunity to apply for new roles or promotions within the organization.

Pros of Internal Hiring

• Boosts Employee Morale & Retention – Promoting existing employees shows that the company values its workforce, leading to increased motivation and loyalty. Employees are more likely to stay when they see opportunities for career developments within the organization. Also, if current employees see external recruits being hired into positions higher than theirs on a regular basis, they will start to feel they have no future in the company.

• Faster Hiring Process – Internal hiring often involves a shorter hiring process than external hiring, as internal candidates are already familiar with company policies, culture, and expectations. Therefore, hiring managers can ignore all of the most time-consuming stages, such as references and background checking.  

• Lower Recruitment Costs – Advertising job openings, screening, and interviewing external candidates can be expensive. Internal hiring cuts these costs significantly since it doesn't require advertising the available position or spending an extensive amount of time to interview candidates.

• Reduces Hiring Risk – Internal candidates have a proven track record, and it makes it easier to predict their performance in a new role, making them a safer choice compared to unknown external candidates. 

• Provide career development opportunities – A strong internal hiring policy encourages employees to develop their skills and seek higher roles. Employees feel valued and motivated when career development opportunities are available within the company. Also, this helps to increase employee satisfaction and retention, as employees may be happier at a place where they can grow. 

Cons of Internal Hiring

• Limited New Perspectives – Organizations may miss out on candidates who are better suited for the position by focusing only on internal hiring, as there is a vast pool of potential candidates outside the company. Internal hires may lack new skills, talents, ideas or experience that an external candidate could bring. “When you restrict your job recruitment process to your own backyard, you might be missing out on an opportunity to add valuable new assets to your organization” (Hogarty, 2022).

• Creates Additional Vacancies – Promoting or transferring someone internally to another role leaves their previous position vacant. It may create an additional hiring challenge, as HR managers will need to find a replacement for the available position.

• Skill Gaps – Internal candidates may need additional training if they lack the necessary experience or skills required for the new role.

What is External Hiring?

“External recruitment means filling a job vacancy with an employee from outside the company, rather than promoting or transferring an existing employee from within” (Hogarty, 2022). This approach involves seeking candidates from the external job market to bring in new talent and expertise. This method is usually used when organizations need to hire people with specialised skills to fill higher-level roles or when they want to get new ideas and perspectives from outside the company. 

                                           

External recruitment methods

Here are some common external recruitment methods that organizations use to hire candidates from outside the company:

• Job Advertisements - Job advertisements involve posting open positions on external platforms like online platforms, company websites, or newspapers to attract candidates. According to Hogarty (2022), this is the oldest method of finding candidates, and sticking a "help wanted" sign in the shopfront window and waiting for someone to knock on the door is a thing of the past.

• Recruitment agencies - These are third-party firms that help organizations to find the perfect talents. Since they handle sourcing, screening, and shortlisting candidates, organizations can save time and effort in the hiring process.

• Social media - Social media recruiting means using online platforms like LinkedIn, Facebook, and Twitter to advertise job openings and engage with potential candidates. It helps reach a wider audience and target specific skill sets using social media tools. “However, this method’s strength is also its weakness, as Tweets and Facebook posts can be easily shared far by followers, reaching a huge number of potential applicants in a very short period of time“ (Hogarty, 2022).

• Job Fairs and Career Events - Job fairs and career events are events where employers meet with job seekers in person to discuss open positions. This is a great way for startups and smaller businesses that don't have a well-known brand in their fields to offer open positions to a large number of qualified applicants at once.

Pros of External Hiring

• Brings Fresh Ideas & Innovation – External hiring frequently introduces new skills to the organisation by employing professionals with a wide range of qualifications. They can also solve internal company issues that an internal employee might not notice as easily.

• Enhances Workplace Diversity – Hiring externally helps to improve workplace diversity, which can boost creativity and decision-making. Also, hiring specialists from outside the organization gives them the chance to contribute new ideas and perspectives to the business.

• Avoids Internal Conflicts – External recruitment reduces competition and dissatisfaction among existing employees. 

Cons of External Hiring 

• Higher Costs – External hiring needs significant time and money to recruit, onboard, and train new hires, as it requires extra orientation and training hours in addition to the time and effort required for candidate interviews. 

• Longer Adaptation Period –It takes time for external candidates to become familiar with company procedures, as they are less familiar with company culture and policies. 

• Lower Employee Morale – Existing employees may feel undervalued if external candidates are frequently preferred for promotions.  

• Higher Risk of Mismatch –There is always a risk that an external hire may not fit well with the organization’s culture or expectations. “Starting a new job is tough, since new recruits often struggle with feeling overwhelmed, under qualified, or overlooked by their new employer. In a survey of 1,000 employees carried out by BambooHR, 31% of respondents said they had quit a job within the first six months” (Hogarty, 2022).

Conclusion

Both internal and external hiring play essential roles in building a strong workforce. Internal hiring helps organizations to build strong career development paths and retain top talent, while external hiring brings in fresh talent and specialized skills. Hiring managers should evaluate the organization’s needs, the specific job requirements, and long-term objectives before making a decision. By strategically choosing between internal and external hiring, organizations can ensure they build a strong, motivated, and high-performing workforce that drives long-term success.

References 

Indeed, T. (2025). Pros and Cons of Internal vs. External Hiring (With Definitions). Available at: https://www.indeed.com/career-advice/career-development/pros-and-cons-of-internal-vs-external-hiring [Accessed 26 Mar. 2025].

Hogarty, S. (2022). Internal vs. External recruitment: pros, cons, and Methods. [online] WeWork. Available at: https://www.wework.com/ideas/professional-development/management-leadership/internal-vs-external-recruitment-pros-cons-and-methods.

Fernandez, R.M. and Abraham, M. (2011). Glass Ceilings and Glass Doors? Internal and External Hiring in an Organizational Hierarchy. SSRN Electronic Journal. doi:https://doi.org/10.2139/ssrn.1804896.

Sabina, L.L. and Colwell, C. (2018). Challenges of Principal Succession – Examining the Challenges of Hiring Internal vs. External Candidates. Athens Journal of Education, 5(4), pp.375–396. doi:https://doi.org/10.30958/aje.5-4-3.

Srivastava, S. (2024). Internal vs External Recruitment: Choosing the Right Approach. [online] www.intervue.io. Available at: https://www.intervue.io/blog/types-of-recruitment-internal-vs-external-recruitment.]

DeVaro, J. (2020). Internal hiring or external recruitment? IZA World of Labor, [online] 2(237). Available at: https://wol.iza.org/articles/internal-hiring-or-external-recruitment/long.

PyjamaHR (2024). Internal hiring vs. external hiring: Which strategy is right for your business? Available at: https://www.linkedin.com/pulse/internal-hiring-vs-external-which-strategy-right-your-business-cytpc [Accessed 28 Mar. 2025].