Internal versus external sources of recruitment

Building the best talent pools by tapping into multiple sources of recruitment

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By Nicole Schreiber-Shearer, Future of Work Specialist at Gloat

After more than 18 months of record-breaking quit rates, companies are eager to recruit candidates with the expertise needed to excel in high-priority roles. Yet, in response to ongoing economic uncertainty, 57% of organizations are planning layoffs this year.

Dealing with turnover surges and headcount reductions simultaneously might sound contradictory—but it’s quickly becoming part of HR’s new reality. As leaders strive to bridge widening skill gaps on tightened budgets, there’s one component of the talent management process that’s coming into focus: recruitment.

While recruiting the right candidates for a specific role has always been challenging, today’s talent landscape adds a new layer of complexity. Since no company can afford to spend extra on skills their workforce already has, it’s up to leaders to harness new talent acquisition tools and frameworks to help them make more strategic decisions about internal and external recruitment.

What is external recruitment?

Generally, when people think about recruiting talent for new opportunities, external recruitment tends to come to mind. It describes any search or hiring process involving candidates from outside of the organization with the intent to fill a specific role. Bringing new talent into the organization has traditionally been the dominant form of recruitment, and many leaders view it as a valuable practice because new hires come with fresh perspectives.

What are some types of external recruitment?

Some of the practices that support this talent acquisition strategy include:

  • Advertisements: Advertisements are created to make a job opportunity sound attractive to potential candidates, often by emphasizing the type of work this person would get to do and showcasing a company’s employer brand. Advertisements are often posted on job boards and social media to maximize visibility.
  • Educational institutions: Schools and universities are often good sources of recruitment as graduating students begin entering the workforce. Some organizations participate in job fairs or other networking events to connect with prospective job seekers directly.
  • Employment agencies: Employment agencies provide a database of skilled candidates that organizations can tap into to use for their recruitment efforts at a cost. Some employment agencies will specialize in a specific industry or function, giving hiring managers direct access to a specific talent pool that aligns with their priorities.

What is internal recruitment?

Internal recruitment occurs when existing employees are presented with opportunities to take on new roles within the same organization. It describes the process of finding internal talent to reallocate or redeploy to another function or area of the enterprise to meet shifting business needs. Many organizations are increasingly embracing internal recruitment to respond to emerging priorities while keeping overhead costs low.

What are some types of internal recruitment?

Some types of internal recruitment include: 

  • Promotions: Promotions shift an existing employee into a higher or more senior position within the organization and provide that worker with more responsibilities at an increased pay rate. Promotions can help motivate other employees to maintain their performance and productivity so that they too can become eligible for a more advanced role.
  • Transfers: Transfers happen when an existing employee is moved from one department to another within the same organization. Some transfers may occur in response to a shift in business priorities, or when an employee expresses interest in taking their career in another direction.
  • Internal advertisements: Much like external advertisements, internal advertisements provide information on an open role or opportunity within an organization. These postings are open invitations for employees to apply for the vacancy and they’re often published on internal company platforms, such as an intranet or internal job board.

The key differences between internal and external recruitment

The main difference between internal and external sources of recruitment comes down to where candidates are coming from. For internal recruitment, employees from within an organization are identified as best-fit candidates for another role.

Since internal candidates are already working for the company, processes like interviewing and onboarding are often streamlined, because employees understand how various organizational systems work. As a result, internal recruitment is more efficient, and it often comes with a lower associated cost because companies don’t need to spend on recruitment marketing or talent sourcing. It’s also likely to lead to better retention since research from Cornell University found that the highest-performing internal hires are particularly likely to stay with their organization, while the highest-performing external hires are more likely to leave.

In contrast, external recruitment describes any hiring process in which applicants are coming from an outside organization. Since these candidates are new to the company, it often takes longer to vet them and for them to get familiar with the systems and technologies that their new organization uses. Bringing new talent into an organization can also come with high price tags, with the average cost per external hire estimated to be $4,683 or $28,329 for an executive position. While companies have traditionally relied primarily on external recruitment to fill vacancies, talent leaders are shifting their focus to internal mobility to harness the skills they need on expedited timelines.

What are the pros and cons of different sources of recruitment?

While internal mobility can boost engagement and reduce hiring costs, that doesn’t mean it’s time to entirely phase out external recruitment. Both internal and external sources of recruitment have their own pros and cons, so it’s up to HR leaders to decide when each strategy should be implemented.

When it comes to internal recruitment, some of the most noteworthy benefits are the savings in time and money that companies can reap by streamlining their hiring processes. Given that two out of three employees indicate that they would leave their jobs if internal mobility wasn’t offered, this type of recruiting strategy can also help maintain workforce engagement and retention rates. However, there’s also a risk that managers will begin feeling possessive over their direct reports and discourage them from pursuing new opportunities within the organization. For internal recruitment to succeed, all team members must embrace a talent-sharing mindset, which can be a significant shift for leaders to make.

While external sources of recruitment don’t require a similar mindset shift, the process is often more expensive and time-consuming than internal recruiting. Deloitte estimates that it takes two years for an external hire to gain the same level of insight into an organization that an internal hire has. Despite this, external sources of recruitment are still valuable, particularly because of the ideas that new hires bring to the table. When employees join a new organization, they bring best practices from previous roles and fresh perspectives with them. If a company urgently needs employees with a specific skill set and their workforce is entirely unfamiliar with it, external hiring can also be a more efficient way to access that expertise.

Taking recruitment strategies to the next level with a workforce agility platform

Ultimately, there’s no one-size-fits-all strategy for sourcing candidates. At every organization, there will be times when it makes the most sense to hire externally, moments when talent can be “borrowed” from other teams, and occasions when internal candidates can be upskilled or reskilled to fill high-priority roles.

The new challenge for talent acquisition teams is making strategic decisions about when to upskill existing employees, when to hire externally, and when to reallocate team members—which is where a workforce agility platform comes into play. By pairing a talent marketplace with workforce intelligence, these platforms create a continuous loop of insights to action that takes recruitment strategies to new heights.

Workforce agility platforms can help talent acquisition teams capitalize on internal mobility by ensuring their organizations can tap into all of the skills within their workforce. They can even compare profiles for external applicants side-by-side with internal talent, empowering leaders to feel confident that they’re promoting an equitable hiring process that doesn’t overlook any employees with in-demand skills.

To learn more about what it takes to build highly qualified talent pools, check out our guide on transforming talent strategies with ethical AI.