5 Benefits of Hiring Internally 

Find your new job!

Look for your perfect career match with the Jobillico job search!

Search Now!

When it’s time to fill a new leadership role in your organization, remember the 5 benefits of hiring internally. 

Hiring for new or recently opened positions can be complicated and often stressful. Therefore, it’s no surprise that 40% of HR professionals reported sourcing candidates as the most challenging phase of the recruitment process.  

HR teams invest time and money searching for fitting candidates, interviewing, and vetting them to hire the ideal one for the open position.  

But hiring the candidate isn’t always the end phase of the hiring process, as sometimes the chosen candidate doesn’t seem to be a good fit for the company. Then, the overall hiring process starts again from the beginning. 

Thus, when searching for a solution for situations like these, more and more HR teams opt for an internal hiring process. After looking at 5 benefits of hiring internally, it will be clear that HR managers should always consider existing employees when looking for the right person for an available job. 

What is Internal Hiring? 

To put it simply, internal hiring or internal recruitment is hiring someone within the organization. That means filling an open or new position from the existing workforce. 

This internal hiring process can involve transfers, promotions, employee referrals, transitions from freelance to full-time jobs, and more.  

Furthermore, external hiring processes frequently rely on offering employee benefits packages to attract talent, and often internal recruitment procedures follow this example. The top 5 employee benefits to attract internal hires are health benefits, wellness programs, retirement, tuition reimbursement, and workplace flexibility.  

But why are employee benefits important for internal hires?  

They show that when employers invest in employees’ health and their future in the company, employees are much more likely to remain engaged and loyal team members. Hence, it contributes to a higher retention rate within the organization. 

Moreover, to make the most of the internal hiring, HR teams should: 

• Create an internal hiring process policy 
• Write an internal job ad listing the job duties and requirements, describing the department, and emphasizing the benefits 
• Inform employees of the open positions via email, internal newsletters or job boards, intranet, or by talking with managers 
• Use an applicant tracking system to follow the eligible candidates through the hiring process 
• Cultivate an open and transparent internal hiring process and provide all applicants with helpful insights to help them in future internal hiring processes.  

Advantages of Internal Hiring 

There are many advantages of hiring internally, as internal recruitment can benefit both employees and companies. The 5 benefits of hiring internally include: 

1. Employee familiarity 

By knowing the candidate for the position, HR professionals diminish the risk of a bad hire and save time and money at the same time. According to a CareerBuilder survey, 75% of employers said they had hired the wrong person for a job position. This error ended up costing them an average of $17,000.  

By hiring internally, HR teams, managers, and companies, in general, are aware of candidates’ capabilities, performance, and problem-solving skills, and they’ve already proven to be a cultural fit. Even if there will be some additional time for an internal hire to upskill their abilities and be trained in the new role, their familiarity with the organization as a whole will make the process simpler. 

2. Saving time 

Internal hiring shortens both the period for recruitment and onboarding as well. Familiar candidates may have shorter interview processes and promptly start the new role without a long onboarding process.  

However, a shorter onboarding period doesn’t translate as no onboarding. Instead, newly promoted employees will still take time to grow familiar with their new responsibilities, duties, and team dynamics. Nevertheless, this will take less time than with an external hire.  

3. Lower hiring costs 

According to a Saratoga Institute report, the average cost of finding and hiring someone externally costs 1.7 times more than an internal hire. Companies can save money on various costs, from job ads and hiring agencies’ fees to expenses for background checks and onboarding processes.  

4. Higher retention rates  

As Gallup’s research shows, employees who have been hired internally and therefore have been given an opportunity to develop are twice likely to spend their career with their company instead of looking for new career opportunities.  

This way of investing in existing employees is crucial for their morale and engagement, ultimately resulting in positive benefits for the business as employees remain committed to furthering the success of the organization.  

5. Greater employee motivation and satisfaction 

When companies are committed to investing in their employees, they care for learning, development, and growth opportunities within the organization. Career progress opportunities contribute to greater motivation, employee satisfaction, and productivity. 

This is supported by hard facts, as research conducted by HCI and Oracle reports, 60% of employees who were promoted performed way better than employees hired externally into similar positions.  

Disadvantages of Internal Hiring 

Despite the obvious benefits of hiring internally, it would be dishonest to say there are no potential drawbacks as well. Some of the most common cons of internal hiring are: 

• New empty role(s) to fill. Even though that is not always the case, promoting an employee to a new position translates into a new vacant position. In this case, companies are filling two job openings instead of one. Thus, hiring managers are back to square one and once again facing the decision of hiring an external or internal candidate. 
• Facing potential conflict in the workplace. The opportunity for a promotion may spark unnecessary conflict and competition in the workplace. Turned-down employees may feel unmotivated and feel resentful toward their promoted colleagues. To avoid these risks, companies must establish a clear and transparent internal hiring process and continuously work on fostering a culture of open communication, respect, and employee appreciation.  
• Potential lack of diversity and fresh perspective. Even organizations with a great company culture where the employees are familiar with the organization’s processes and goals may benefit from external recruitment’s fresh perspective and new ideas that will ultimately lead to innovation and new insights. 

Conclusion 

Internal hiring can be a great recruitment strategy for companies. It allows companies to retain top talent and get the best out of their employees while at the same time providing them opportunities to develop and advance in their careers. After looking at 5 benefits of hiring internally, it’s clear that the next time your organization needs to fill a new job role, the best candidate could be right in front of you.