What is Internal Recruiting and how does it benefit a company?

In 2020, the journal Organization Science published a study titled ‘Strength from Within: Internal Mobility and the Retention of High Performers’. This study offered great insights into how internal recruiting, if used correctly, can change an organization’s fortunes. 

For years, there have been debates over whether internal hiring is a pro or con. However, some companies have cracked the code on how to use internal recruiting to their advantage.

Before we delve into the pros and cons of internal recruiting, we must first understand its definition and features.

Internal Recruiting

Internal Recruiting is when companies prioritize their employees to fill vacancies before venturing out externally. The reasoning behind this strategy is that companies believe that bringing in employees who are already working in the company can provide better results as they already understand the company’s values and business. Moreover, internal recruiting also saves a lot of time and money.

Another important advantage of internal recruiting is that employees can easily transition into their roles as they are familiar with other employees. Also, such internal recruitment also motivates existing employees to work, knowing that any opportunities or promotions will be presented to them before they move on to external hiring.

Also Read: What are pros and cons of Emotional Intelligence in hiring?

Types of Internal Recruitment 

• Promotion: When an employee is promoted to a higher level in his own company when that position becomes vacant.
• Transfers: When an employee is transferred into another division, branch, or location, it is not a promotion but the same designation.
• Employee Referral: When any employee is referred for the role because of their expertise or past workings.
• Rehiring Former Employees: When the company rehires employees due to their expertise in the role.

Also Read: What are pros and cons of Personality Tests in hiring?

Advantages of Internal Recruitment 

Cost-Effective

What is the cost of a bad hire? A study by SHRM(Society for Human Resource Management) found that hiring an employee who turns out to be a bad hire can cost six to nine months of the candidate’s salary. 

The major reason for a bad hire is that the employee’s values may not align with the company. If the company does not have a good hiring policy, they will continue to hire such candidates, increasing the hiring costs. This is where internal recurring can be a game changer, helping companies save massive amounts of time and money.

Also Read: What is Caring Culture and why it is necessary in the workplace?

Faster Hiring Process

A typical external recruitment process is lengthy and cumbersome. It all starts with the recruiters going through loads of CVs before selecting the most suitable (according to their judgment). Then, they are called for an interview before a candidate is offered a job. However, these situations are not ideal when the company wants employees in quick time. Hiring internally eliminates the need for screening and onboarding. In fact, interviewees only need to focus on the candidate’s technical skills to see if they are fit for the role.

Also Read: Consultative Recruiting: Improve Hiring with a Strategic Approach

Higher Retention & Employee Morale

Any employee in a company demands recognition in the workplace. One of the best ways to do that is to offer them promotion, an increase in pay, and/or incentives. This is why companies prefer offering such roles to internal hires. Doing so not only motivates the employee but also makes them feel valued and engaged. This, in the long run, improves the company’s retention rate and lowers the turnover rate, which reduces the hiring costs.

Also Read: What are the ways to evaluate project coordination skills?

Cultural Fit & Reduced Training Needs

Today, hiring is not limited to only technical skills but also soft skills such as leadership, critical thinking, problem-solving, teamwork, and communication. It is because companies now want employees whose thinking aligns with their values. Moreover, hiring employees that may not be suitable for companies could upset their environment. This can lead to an increase in conflicts and miscommunication 

Also Read: What is External Recruiting and how does it benefit a company?

Increased Productivity & Performance

External hires can also take time to adjust to their roles as they get used to them. This requires time, and during it, the employees cannot perform at their maximum efficiency. However, internal hires solve this problem as internal employees already know company processes, policies, and culture. A study by The Wharton School has also found that internal employees can reach full productivity level far quicker than an external hire.

Also Read: What is an Employee Integrity Test?

Lower Hiring Risks

As mentioned earlier, the cost of a bad hire is worth six to nine months of a candidate’s salary. So, companies always look to reduce such hiring risks. However, with internal hiring, such hiring risks are reduced to a minimum. Furthermore, these employees have a past record at the company, which can be used as a base to evaluate their performance in the new team. Such employees also do not require any additional training.

Also Read: Dunning-Kruger effect: Definition, causes and how to counter it

Disadvantages of Internal Recruiting 

Limited Talent Pool

The main challenge for internal recruiting was, is, and will remain the limited talent tool.At the end of the day, a company has only a limited number of employees from whom it can consider internal hiring. Moreover, employees may not want every vacancy that the company wants to fill. This also reduces the chances of the company finding the best candidate for the role.

In addition, the company may not find the preferred candidate for the vacant role. Certain roles may require new skills or fresh perspectives, which means that external recruiting would be the only option, as internal recruiting would find unsuitable candidates.

Also Read: What is the Pareto Principle and why is it important ?

Creates Internal Gaps

So, if an employee gets an internal promotion to a new team, the company has saved time and money that would have been required to hire externally. But what about the employee’s previous role, which now lies vacant? If they manage to fill that with internal hiring, then that employee’s previous role now lies vacant. This leads to a situation where it becomes a chain reaction that can cause a shortage of employees on some teams.

Also Read: What are the critical DEIB Questions for Talent Acquisition Teams

Stagnation & Lack of Innovation

PwC Innovation surveyed executives, and 61 percent of them linked innovation to higher revenue growth of the company. However, continuous promotion of internal hiring can lead to a situation where there is a lack of innovation due to the lack of new ideas that would have been brought by external recruiting. Internal hiring can also lead to Groupthink, where every employee starts to agree on every issue to avoid chaos and conflicts.

Also Read: Effective strategy for improving slow hiring at workplace

Employee Resentment

When a company starts to prioritize internal hiring, there are bound to be feelings of resentment among employees. Moreover, this can also lead to bias, as the recruiter could promote employees with whom they might be on good terms. This bias, in the long run, can have disastrous effects on the company’s culture while also affecting morale, communication, and teamwork.

Also Read: Recruitment agency vs RPO: What is better for hiring?

Skill Gaps

There are some times when companies need an employee for a specialized role that might not be available in the company. Another scenario could be when the company is hiring for a newly created role. Some roles may require additional training or certifications that no other employee in the company may have.

Also Read: 5 Best Ai interview copilot Software You Must Know About In 2025

Limits Diversity

Several studies over the years have proved the benefits of Diversity, Equity, and Inclusion (DEI) in the workplace. This is because employees coming from diverse backgrounds bring with them new perspectives, experience, and ideas. This creates an environment where people from various backgrounds work together, providing fresh ideas that greatly bolster the innovation in the company.

Also Read: Best Interview as a service platforms in 2025

Less Competitive Edge

Companies that depend largely on internal hires in the long run can make their workforce inefficient, which can lead to a less competitive edge. This creates a situation where they will miss out on the top talent in the job market that will now be going to their competitors. Without such employees, companies can fail to adapt to new trends in the industry, which can lead to a downturn in growth and profits.

At the end of the day, internal recruitment can only be used for a minimal number of vacancies and the majority of the hirings have to come from the job market. Therefore, external recruitment is the key for a company to grow.

Also Read: What is Salary History and why do companies ask for it?

This is why companies are now starting to invest a lot of time and money in their recruitment process. The aim is to ensure that the companies hire the best talent out there. 

This is where we present to you BarRaiser, a state-of-the-art AI-based interview assistant that will take the quality of your hiring to the next level. With BarRaiser, recruiters can create a detailed interview plan for candidates. The interviewer can give specific instructions to our AI bot to create an interview, such as:

• The questions for the interview 
• The number of rounds for the interview 
• The duration of the interview and its specific sub-parts 
• The number of parts that the interview must be divided into and their durations 
• Must have questions 
• The number of experience required for the job posting 
• Must have skills
• Additional Skills 

Using these instructions, our tool will create a structured interview format to ensure an unbiased candidate selection process.

After this, our AI Interview Copilot assists the interviewer, giving them specific instructions. For example, if the interview exceeds the time limit, the AI bot will alert the recruiter to speed up the process. In addition, we are also committed to making our process as unbiased as possible. This is why our AI transcribes and records every interview and immediately raises an alert if the recruiter uses language that might be considered discriminatory to the candidate. 

Also Read: What is Bureaucratic inertia and how to solve it?

After the interview, the AI asks for a detailed review of the candidate from the interviewer. We believe that our tool is an assistant and not the decision maker, so it formulates answers only after receiving instructions from the interviewer. While this is happening, the AI is also creating another report that measures the recruiter’s effectiveness and their performance. This report acts as a check and balance to ensure accountability for every stakeholder involved in the recruitment process.

Using BarRaiser, we guarantee quality hiring that will bolster diversity and inclusion. BarRaiser is the best AI interview platform that features structured interviews and tools to ensure quality hiring while eliminating recruitment bias. With BarRaiser’s support, you’ll be well-equipped to build a strong team of sales associates who will drive sales and deliver exceptional customer service.