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What Is Internal Hiring?

Instead of looking externally for talent, internal recruiting is focused on finding talent in a company’s existing workforce. 

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Visier HR Glossary

 What is internal hiring?

Internal hiring is filling open positions with existing employees. Internal recruiting may be related to promotions, transfers, moving from a temporary to a permanent position or employee referrals. Instead of looking externally for talent, internal recruiting is focused on finding talent in a company’s existing workforce. 

Benefits of internal hiring

Companies benefit from internal hiring because they already know the candidate and their performance; they know their strengths and weaknesses. Internal candidates are also already familiar with the company culture and have established relationships with colleagues. Hiring internally also can help boost engagement and satisfaction—not just for the person hired to fill an open position, but for others who observe the company’s commitment to offering opportunities to current employees.

Challenges of internal hiring (and why it’s still valuable)

There are some potential downfalls to hiring internally though:

  • First, existing employees may not have the competencies required to fill the position.

  • Second, existing employees can sometimes have baggage that may challenge their ability to successfully fill a role. 

  • Finally, hiring internally has a tendency, over time, to minimize the level of diversity in the organization and to encourage insular thinking. 

External candidates can bring new ideas, fresh energy, and new perspectives to an organization.

Still, despite the potential disadvantages, there’s data to back up the value of internal hiring. Research from the University of Pennsylvania, for instance, indicates that external hires tend to receive lower performance evaluation ratings during their first two years in the position when compared to internal candidates who were promoted into these roles. 

It’s important for companies to value long-term talent growth of existing employees as a supplement to hiring externally. 

Types of internal hiring

There are different types of internal hiring. For instance:

  • Hiring from within to fill a position that has been vacated.

  • Hiring from within to fill a newly created position.

  • Promoting a current employee to a higher-level position.

  • Transferring an existing employee from one position to another, either within the same or in a different department or division.

  • Moving an employee from a temporary to a permanent position.

Managing the internal hiring process

It’s important for companies to have a policy representing their internal hiring philosophy and approach. The policy should indicate when the company will consider internal candidates and when they may not. It should also outline the process. 

For instance, the company may first advertise the position internally before looking outside to fill the role. Or the company may always err on the side of hiring internal staff who are qualified for the position even if external candidates may be more highly qualified. Or the company may not consider employees to fill senior-level roles, preferring to look outside for talent. 

These considerations will vary by company based on their culture and talent acquisition strategy. Ensuring that employees understand how and when they might be considered for internal openings, and how those openings will be announced and filled can be an important way to manage expectations, and minimize dissatisfaction and a sense that there are no growth opportunities for them. Opportunities for growth are important for today’s employees. When they feel there are no opportunities, they may be more likely to seek employment elsewhere.

How to build an internal recruiting strategy  

Internal recruiting offers many benefits as we’ve seen. To really reap those benefits it’s important to build an internal recruiting strategy. What benefits are you hoping to see from internal recruitment? How will internal recruitment align with and support your overall staffing plans? How will internal recruitment support your diversity, equity and inclusion efforts? Thinking these questions through helps ensure that you’re not missing out on important opportunities for your company or your employees. 

Your internal recruiting strategy may be closely aligned with your succession planning efforts. By identifying which employees may soon exit your company—for retirement, for instance—and which positions internally may be at risk, you also identify potential opportunities for the movement of employees within your organization. 

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