Internal Hiring – Meaning, Methods, Advantages and Disadvantages

Internal hiring refer to recruiting employees from within the organization. In deciding requirement of employees, initial consideration should be given to a company’s current employees, which is concerned with internal hiring. They include those who are already available on the pay roll of the company. This is important source of recruitment as it provides opportunities for better development and utilization of existing human resources in the organization

Internal Hiring - Internal Sources of Recruitment

There are two aspects of hiring under internal sources. They are as follows:

  1. Promotions – It refers to promoting or upgrading an employee who is already existed in the pay roll and contributed for organizational performance. It is done by shifting an employee to a higher position with high responsibilities, facilities, status and pay. Usually, many companies fill higher job vacancies by promoting employees who are considered fit for such positions. This is due to fact that it has a great psychological impact over other employees for their motivation towards better performance.
  2. Transfers – It is an alternative technique to promotion. Under it, employees are internally recruited through transfer from one work place to another. It means, transfer refers to the process of interchanging the job duties and responsibilities of employees from one place to another or from one department to another. It involves shifting of people from one job to another without any promotion in their position or grade. It is a good source of generating qualified employees from over-staffed departments.

Methods of Internal Hiring

There are two methods of hiring qualified candidates under internal recruitment. They are as follows:

  1. Job Posting – Job posting is an open invitation to all employees in an organization to apply for the vacant position. It provides an equal opportunity to all employees currently working in the organization. Today it has become a very common practice in many organizations across the world. Under this, vacancy announcement is made through bulletin boards or in lists available to all employees. Interested employees, then apply for the post being advertised. In this way, it has become one of the cost saving techniques of recruitment.
  2. Employee Referrals – Employee referral is recruiting new people based on the reference of current employee. Under this method, a candidate is appointed on the recommendation of some currently working employees. Usually this is nomination by supervisors. It is effective generally particularly to find critically skilled candidate for an organization. It has been a major source of new hires at many levels including professionals. It can be a good method of internal recruitment when employees recommend a successful candidate. However, it may be influenced by the tendency of developing good prospects for their families and friends in the organization.

Advantages of Internal Sources of Hiring

Internal sources of hiring has following advantages:

  • Moral – Internal method of recruitment ensures that employees would be preferred over the outsiders; hence, it yields high morale in them.
  • Labor Relations – Internal sources of recruitment brings an efficient labor relations between employees and management as they are transferred and promoted to desired places.
  • Better Selection – Internal recruitment policy provides an opportunity for the better selection of qualified and experienced personnel who can perform the job well.
  • Economy – Internal recruitment method is economical, as the organization need not spend much money for recruitment of employees from outside the organization.
  • Better Performance – The transferred or promoted employees can perform better work performance, as they are known with requirement of skill, knowledge and ability.
  • Employee Development – Under internal recruitment, every employee gets an opportunity for transfer and development, which motivates him/her for higher level of performance. Ultimately, it helps in employee development.
  • Less Time – Internal recruitment takes less time in comparison to the external source and methods of recruitment. Different aspects of an employee are already known, it does not consume much time to appoint him/her in the organization.

Disadvantages Of Internal Sources of Hiring

Internal hiring sources and methods have some disadvantages as follows:

  • Limited Choice – Internal sources of recruitment provides limited choice of talent available in the organization as it avoids the arrival of fresh candidates. Internal recruitment does not tap any candidate from outside the organization; hence, the choice upon members of organization is limited.
  • Implementation Of Traditional System – Internal sources of recruitment requires the implementation of traditional form, system, process and procedures. And this limits the scope of fresh talent in the organization.
  • No Opportunity – In internal sources of recruitment, the internal employees are protected from competition by not providing any opportunity to fresh talents. This also develops a tendency among the employees to take promotions without any extra knowledge or talent.
  • Favourism – There will be tendency of referring friends and family members in the organization. Then, the organization will be overstaffed with talent-less crowd.
  • Limited Internal Sources – The source of supply of manpower is limited in internal recruitment method. When an employee is promoted, his/her previous position will be vacant and another personnel is to be recruited to fill that vacant position.
  • Costly – Taking into consideration that when an employee is promoted, his/her position will be vacant. In this regard, another employee is to be recruited to fill that position, which may be costly affair.

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