Difference between Internal and External Recruitment: Which One’s for You?

Difference between Internal and External Recruitment: Which One’s for You?

Internal and external recruitment is a vital process that must be carried out by companies when there are vacant positions that must be filled immediately. In fulfilling these objectives, companies must consider the type of recruitment that will be carried out because the two types of recruitment above have significant differences.

To answer this question, let’s take a look at the full review of the differences between internal and external recruitment as well as their advantages and disadvantages!

Definition of Internal Recruitment

Internal recruitment is a recruitment process that relies on the supply of labor from within the company, or in other words within the organization. The selected candidates are employees who have worked with the organization, both current and former employees who left work voluntarily with plans to return.

Read also: The Importance of an Effective Recruitment Process to Find the Best Employee

In internal recruitment, employee recruitment is done by moving employees from one department to another or by promoting employees from one level to a higher level. This process also has several advantages and disadvantages that companies can consider as follows:

1. Advantages

Some of the advantages of internal recruitment include the following:

a. Saves Cost and Time

Internal recruitment can help companies save on the costs and time normally required for job advertisements, shortlisting candidates, and interviewing. Companies do not need to advertise or use other external resources to find new candidates.

b. Employees are Familiar Already with the Company’s Culture

Employees recruited internally are already familiar with the company culture. They already know how the work system, business processes, and company values work. This can accelerate adaptation and reduce the risk of cultural mismatch.

c. Increases Employee Engagement

Providing opportunities for existing employees to compete for new positions allows the company to increase the level of employee engagement. This can increase employee motivation and loyalty as well as have a positive impact on productivity.

2. Disadvantages

In addition to the advantages above, internal recruitment has several disadvantages, such as:

a. Triggers Jealousy

The internal recruitment process can trigger social jealousy among unelected employees. They may feel it is unfair to see their colleagues get the promotion or position they want. This can affect the relationships between employees and cause tension in the work environment.

b. Inflicts Vacancy

If all available positions are filled through internal recruitment, this can lead to vacancies in positions left by promoted employees. The company needs to ensure that there is a good and effective replacement plan to prevent prolonged vacancies.

c. Causes Stagnation in the Workplace

If a company only relies on internal recruitment, work culture stagnation can occur. The absence of experience and new perspectives from outside the company can hinder company innovation and development. In the long term, this can limit the company’s growth and adaptation to market changes.

Definition of External Recruitment

External recruitment is the process of recruiting new employees from outside the company. This means that companies are looking for prospective employees from outside the organization to fill available positions.

1. Advantages

Some of the advantages of external recruitment are as follows:

a. Offers a Variety of Workplace

External recruitment can help companies to bring diversity into the work environment. Prospective employees from outside the company usually have different backgrounds, experiences, and perspectives from those in the company. This can increase creativity and innovation as well as bring up fresh ideas within the company.

b. Increases the Company’s Competitiveness

Recruiting prospective employees with new skills and knowledge allows companies to increase their competitiveness. The new employee can bring new thinking, additional skills, and experience from the industry or previous organization. That way, companies can adapt quickly to market and technological changes.

c. Improves Innovation and Creativity

Prospective employee candidates from outside the company often bring innovative and creative ideas that have not been thought of by the company. Hiring externally allows companies to fill vacancies with people with fresh minds and new ideas. As a result, innovation, process improvement, and company growth can be improved.

Read also: Understanding the Purpose of Recruitment of Staff and the Tools for the Process

2. Disadvantages

Apart from these advantages, external recruitment has several disadvantages that companies must pay attention to, such as:

a. High Recruitment Costs

The external recruitment process usually involves higher costs compared to internal recruitment. Companies need to spend on job advertisements, shortlisting candidates, recruiting agents, and other resources to find and attract the right candidates.

b. Time-consuming

External recruitment can take longer than internal recruitment. The process of job announcements, screening of applications, and the process of selecting prospective employees takes quite a long time. If left unchecked, this can slow down the process of filling vacant positions.

c. More Time for Adaptation

Prospective employees recruited externally need more time to adapt to the new company culture, systems, and work processes. They need to learn new work environments, build relationships with co-workers, and understand organizational dynamics. If left too long, it can affect employee productivity and performance in the short term.

Differences between Both Types

The main difference between internal and external recruitment does not lie in their definition alone. There are several other differences that you need to pay attention to in choosing between the two types of recruitment:

1. Adaptation Time

Internal recruitment does not require employees to do onboarding because they only need to adapt to their new position. Meanwhile, external recruitment requires an onboarding and probation process. This is done so that new employees can get used to the company culture.

2. Benchmark Candidate Qualifications

Internal recruitment is carried out on a merit-cum-seniority basis or level of seniority, position, and length of service of employees. Meanwhile, external recruitment is carried out based on merit-cum-qualification or the candidates‘ qualifications as a recruitment criterion.

3. Number and Variety of Candidates

The choice of candidates in internal recruitment is rather limited because they are only looking for talent from within the organization. While external recruitment is the opposite case because it invites candidates from various educational backgrounds and abilities.

4. Source of Employees

In internal recruitment, the source of employees is workers within the company itself who have served for a certain time. While in external recruitment, the source of prospective employees includes anyone from outside the company who has the qualifications requested in the job vacancy.

5. Recruitment Costs

Internal recruitment tends to be more cost-effective because the employee selection process takes place within the company. In fact, this recruitment has a closed method, which means that the company can spend no money at all because the manager provides recommendations for which employees can occupy certain positions.

Meanwhile, in external recruitment, the costs incurred are much higher considering that many steps must be carried out, starting from advertising the vacancies to the selection process which can occur in several stages.

6. Induction Training

In internal recruitment, training like this is no longer needed because employees who have worked for a company for a long time are sure to know the inside and out of the company. However, if the case is a new employee from external recruitment, induction training is mandatory so that the employee can more easily carry out their role in the company.

Which One’s the Best for Your Company?

After understanding the advantages and disadvantages of internal and external recruitment, questions may arise in your mind as to which of the two systems is better. In fact, there is not a single winner between internal and external recruitment. Why is that? Because each system has advantages and disadvantages that can be adapted to the conditions of the company.

For example, if the company’s financial condition is limited, the company should choose internal recruitment which tends to be cheaper. However, it is different when a company requires new talent to enhance the company’s development. Under these conditions, companies should prefer external recruitment that opens wide opportunities for many people. So, whatever your choice, the company must carefully consider the condition of the company.

Therefore, for business owners in the IT industry and IT departments who need competent employee candidates, it’s time for you to rely on the ACE (AdIns Center of Excellence) service from AdIns. The ACE (AdIns Center of Excellence) IT Project Outsourcing service was specifically developed to assist your company in managing IT employees.

Through this ACE service and by knowing the differences between recruitment and selection processes, AdIns is ready to help you to ensure that the IT department is truly competent and suitable for the line of business that your company is in. Contact us via WhatsApp right now and start using this ACE service in your business right now!

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Published date :

10 July 2023