Internal Promotions vs. External Recruitment

Introduction

Employee recruitment is one of the most critical decisions that human resource managers frequently make. They can choose between internal promotion and external recruitment. According to Buckman, Johnson, and Alexander (2018), the decision to recruit internally or externally should be pegged on the corporate environment. Additionally, human resource managers must consider the nature of the job and its significance to the organization.

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Other factors that are essential when recruiting either internally or externally include “the characteristics of the firm or industry and interaction of internal and external hiring policies and other practices” (Buckman et al., 2018, p. 35). In spite of an organization having established recruitment policies, it is imperative to understand that each set of circumstances is unique and might require changing the hiring plan. The hired employee should not interfere with team dynamics or affect organizational performance. Instead, they should add value to a company. The primary goal of recruiting staff is to boost profitability. Hence, human resource managers must use a recruitment process that does not only help to get the right employee but also is cost-effective. This article will evaluate the pros and cons of internal promotion and external recruitment.

Considerations

Human resource managers ought to consider numerous factors before deciding to promote existing employees or hire workers from outside. Buckman et al. (2018) insist that it is imperative to evaluate the present state of an organization. Understanding the current performance gives human resource staff an opportunity to hire internally. If the status quo of business has facilitated growth over an extended time, it is imperative to ensure that recruitment guarantees continuity. It can be realized by promoting the best performing employees. On the other hand, if a company’s goal is to achieve different results, it can opt to recruit from outside. Dessler (2017) advises that recruiting managers should consider the impacts of the hired worker on team dynamics. External recruitment may or may not be the best option for an organization. A foreign recruit can only add value to an organization after learning its culture. Hence, it is vital to determine if a new employee will have adverse impacts on a team of workers who have been working seamlessly together. If an existing team is doing well, there is no need of introducing new staff into the group.

A hiring process should be cost-effective. Therefore, it is essential to consider cost when deciding on the employment strategy to apply (Dessler, 2017). The best procedure must enable a company to save not only money but also time. Even though internal promotion may require the human resource to raise the earnings of the affected staff, external hiring results in an organization drawing up a new salary for the incoming employee. Additionally, a company spends the time to establish a stable working relationship with recruits, which affects the productivity of an organization. The human resource must determine if it is worth a company’s time to go through the transitional period attributed to external recruitment. A recruit must bring improvements into an organization (Dessler, 2017). Else, the employee will be a burden to a company. Human resource managers must evaluate the value that a recruit will bring to the company before hiring from outside. Research shows that a majority of external recruits perform poorly for the first few years in an organization compared to employees who are promoted internally. Even though external hires impact team dynamics, the effects might not necessarily be detrimental. The human resource must establish if the organization requires transformation, which can be achieved through external recruitment.

Internal Promotion

Internal promotion refers to a hiring process where a company fills available job vacancies with in-house workers. The strategy is also known as succession planning. Mostly, internal promotion is used as a strategy to reward the best-performing workers. Nevertheless, it can also be applied in horizontal position shifts. The hiring staff must consider numerous factors before promoting employees. According to Kumar and Singh (2017), creating a job description for the existing vacancy helps human resources to understand the essential abilities, tasks, skills, and knowledge that the job entails. Hence, it becomes easy to determine the right employee to promote. Kumar and Singh (2017) emphasize the need to consider personality when promoting employees. It precedes skills and knowledge. An employee can acquire capabilities, skills, and experience. However, an individual’s personality does not change throughout one’s adult life. Consequently, human resource managers must make sure that an employee has the right traits to enable them to perform in their new positions.

Pros of Internal Promotion

One of the advantages of promoting existing employees is that it facilitates continuity. Kumar and Singh (2017) assert that insiders have adequate knowledge of the corporate culture. Moreover, they have requisite skills and experience that are unique to an organization. As per Vinayaka and Ramaswamy (2017), existing workers have established a lasting employment relationship with the employers. Hence, they are unlikely to leave a company even in times of crisis. Vinayaka and Ramaswamy (2017) argue that existing workers are devoted to developing their skills as they are assured of job security. Recruiting managers prefer hiring employees that are likely to remain in an organization for long. It is easier to determine if existing workers will stay in an organization than to predict the future of an external recruit. Internal promotion eliminates the doubt that the employee might leave the company in the case of the slightest crisis.

Organizations prefer internal promotion because it serves as an incentive to employees. According to Vinayaka and Ramaswamy (2017), promoting the best performing employees stirs healthy competition amid workers, which boosts not only their productivity but also organizational performance. Kumar and Singh (2017) maintain that when employees realize that they only require doing better than their colleagues to get promoted, they exert an extra effort in their activities. It goes a long way towards improving their output. On the other hand, the understanding that one has to compete with an unknown number of external applicants to get a promotion demoralizes workers. It becomes hard for the internal employees to commit to their assignments.

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Internal promotion is cost-effective. Vinayaka and Ramaswamy (2017) argue that external recruitment is costly since an organization has to advertise the vacancy and spend the time to conduct interviews. On the other hand, hiring from existing employees is efficient because the company does not require conducting intensive interviews. Some job positions affect organizational performance if left vacant. In some cases, operations have to stop until the vacancy is filled. In such instances, companies require using efficient recruitment processes. Internal promotion can be of significant help since it is quicker and helps to get employees with the desired skills.

Cons of Internal Promotion

One of the most significant disadvantages of internal promotion is that it denies a company an opportunity to select the best employee from a pool of experienced applicants. Wang and Seifert (2017) allege that human resource managers are forced to hire from a finite talent pool. The available candidates may not have all the necessary skills. According to Wang and Seifert (2017), human resource managers should ensure that internal candidates possess all the required skills before promoting them. Alternatively, they should organize for on-the-job training to equip the promoted employees with the needed skills.

Internal promotion results in an organization recruiting for multiple positions. Promoting an existing worker leads to the creation of a vacancy in a company. The position cannot remain unfilled, forcing a company to recruit another employee. Wang and Seifert (2017) claim that successive internal promotions would create a chain of multiple recruitments. The only way to ensure that internal promotion does not trigger consecutive hirings is to identify functions that can be dissolved or merged.

External Recruitment

External recruitment refers to the process through which an organization hires employees from a pool of outside candidates. A company may use recruiting agencies or human resource departments to engage potential candidates. Today, low tenure and high turnover make it difficult for most organizations to rely on internal promotion. In some circumstances, an organization may not manage to develop internal talents, forcing it to hire employees with the desired skills from outside.

Pros of External Recruitment

One of the benefits of external recruitment is that it introduces new ideas into an organization. According to Wang and Seifert (2017), external applicants are not entangled in organizational politics. Thus, they are not vulnerable to unproductive manipulation from subordinates or peers. External recruitment offers an organization a chance to choose the best candidate from an infinite pool of talents. An organization must be willing to spend on job advertising to enable it to reach a significant number of potential candidates. Wang and Seifert (2017) argue that external hiring protects a company from initiating a chain of multiple recruitments that are attributed to internal promotion. Such successive recruitments are costly concerning money and time. Internal promotion may encourage complacency among employees. In some organizations, staff may conspire to split part of the gains of a promotion. Conversely, the threat of external recruitment may lead to employees being active as a way to safeguard their jobs.

External recruitment accords an organization a chance to hire employees who can boost its competitiveness. Wang and Seifert (2017) affirm that an organization gets an opportunity to employ individuals from rival companies who have proven track records. In return, an organization learns how its competitors work and alter its operations to boost competitiveness. Hiring fresh talents from outside may motivate existing employees. It may serve as a wake-up call to workers, forcing them to work harder in the hope of getting promoted in the future. Wang and Seifert (2017) argue that external recruitment helps to encourage a culture change. External recruits introduce alternative organizational culture to their new workplaces. Such an action can allow a company to match its customs with strategic goals. External recruitment augments a company’s chances for growth. It enables an organization to hire individuals with the highest potential, thus adding to its prospect for growth. Moreover, employing experienced workers helps to broaden the capacity of existing employees, thus facilitating organizational growth.

Cons of External Recruitment

Studies show that external recruits do not only receive high salaries but also perform poorly in the first two years after employment. An analysis from the United States investment banking sector revealed that external recruits earned 18% more than their internally promoted colleagues despite them being in the same job group (Buckman et al., 2018). Buckman et al. (2018) allege that external hires are unlikely to stay in an organization for a long time. They are at a higher risk of being sacked than internally promoted workers. Buckman et al. (2018) claim, “External hires are 61% more likely to be fired from their new jobs than those who have been promoted from within the firm” (p. 41). External recruits tend to be more experienced and learned than internal hires. Nevertheless, it is imperative to appreciate that one cannot be productive on the first day. They require establishing a healthy working relationship and understanding the routines and structures of an organization.

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External recruitment contributes to a temporary reduction of organizational productivity. The hired employees require time to adjust to the new environment and learn the culture of the organization. The company cannot continue to perform efficiently throughout the learning period. One may argue that the best candidate learns and adjusts to the new environment quickly. However, it is imperative to understand that an organization cannot escape a brief lull attributed to hiring new staff.

External recruitment may result in changes in team dynamics, causing conflicts between employees. According to Kumar and Singh (2017), the information that a candidate provides is not sufficient to enable human resource managers or recruiting agencies to ascertain if an applicant will fit in an organization. Even though an external recruit might introduce novel ideas into an organization, not all employees may be willing to embrace them. Such a scenario may stir conflict between workers and affect their productivity. External recruitment may demoralize employees. Many workers commit themselves to organizational activities hoping that the leadership will appreciate their effort through promotion. Bringing senior employees from outside reduces the chances of internal workers getting promoted. It might affect employee productivity as some workers may not see the essence of working hard.

External recruitment may lead to a company hiring the wrong candidates, particularly for low-level positions. Kumar and Singh (2017) argue that external hiring involves advertising, which reaches many potential applicants. Therefore, an advertisement is likely to attract many applicants who might not possess the required skills. The cases of numerous unsuitable candidates applying for low-level positions are common. External recruitment may expose an organization to legal risks. Hiring skilled employees might require a company to enter into some exclusive contracts with the applicants. Violation of any clause of the agreement may result in an organization facing a lawsuit.

Conclusion

A company may decide to use an internal promotion or external recruitment depending on the prevailing circumstances and organizational structure. If a company has an employee who can fit in a new position, there would be no need for external recruitment. The leadership can promote the worker to make sure that a company stays operational. On the other hand, if the business cannot get a suitable candidate from the existing workers, it is imperative to use external recruitment. The most important thing is to ensure that the human resource understands the strengths and weaknesses of whichever recruitment approach that an organization opts to use. It would help to ensure that the hiring process profits the organization both financially and operationally.

References

Buckman, D., Johnson, A., & Alexander, D. (2018). Internal vs. external promotion: Advancement of teachers to administrators. Journal of Educational Administration, 56(1), 33-49.

Dessler, G. (2017). Human resource management (15th ed.). New Jersey, NJ: Prentice Hall.

Kumar, P., & Singh, S. (2017). Recruitment process: A case study in banking sector. Journal of Bank Management & Financial Strategies, 1(2), 25-32.

Vinayaka, M., & Ramaswamy, S. (2017). Recruitment process and practices undertaken in IT sector: A comparative analysis of selected Indian and MNC companies. Imperial Journal of Interdisciplinary Research, 3(2), 14-36.

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Wang, W., & Seifert, R. (2017). Employee referrals: A study of ‘close ties’ and career benefits in China. European Management Journal, 35(4), 514-522.

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