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Internal Vs. External Hiring: Who Should You Hire

When the need to hire a new team member arises - you have two options.

Hire externally or change the role of one of your current team members.

During the recruitment process, the dilemma of choosing between internal and external hiring surfaces each time a vacancy appears.

Balancing the pros and cons of each approach is a task you need to do each time. This requires a profound understanding of your company’s current needs and long-term vision.

While internal hiring nurtures growth within, external hiring infuses fresh perspectives.

In this comprehensive guide, we delve deep into the merits and drawbacks of both strategies, aiding organizations in making informed decisions.

Why Choose Internal Hiring?

Internal hiring refers to promoting or transferring existing employees to fill open positions.

This approach isn’t just about filling a vacant role quickly; it’s about recognizing and rewarding the hard work and dedication of current employees, thereby fostering a positive work environment.

For instance, consider a company like Google, known for its robust internal mobility program, allowing employees to explore different roles within the company, emphasizing the value of home-grown talent and contributing to employee satisfaction and retention.

Pros of Internal Hiring

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1. In-depth Company Knowledge

Internal hires are like home players in a football match. They know the playing field; they understand the company’s values, goals, and work environment. This familiarity means a reduced learning curve and faster adaptation to new roles.

For example, an employee moving from a product development role to a product management role within the same company would already be familiar with the product and the working style of the company, allowing for a smoother transition.

Given their existing relationships and understanding of company dynamics, internal hires can quickly settle into their new roles, making immediate contributions.

2. Efficient Hiring Process

The process of interviewing, background checking, and other hiring formalities are significantly shortened, allowing for the rapid filling of roles. This efficiency is especially crucial in high-paced sectors like IT, where having a role vacant for an extended period can impact project timelines adversely.

With fewer processes and formalities, companies can save substantial resources and expenses usually associated with hiring, channeling them to other critical areas, such as employee development and training.

3. Transparent Performance History

Companies can readily access the performance records of internal candidates, enabling more accurate and reliable evaluations. For example, a manager looking to fill a team leader position can easily review the performance and contributions of potential internal candidates, ensuring the selected individual is the right fit for the role.

4. Retention of Developed Talent

By offering growth opportunities internally, companies can retain valuable employees who have been nurtured and developed within the organization, preventing the loss of skilled talent to competitors.

Cons of Internal Hiring

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However, internal hiring does come with its set of challenges:

1. Backfilling Challenges

When an employee is promoted or transferred, their previous position becomes vacant, necessitating either backfilling or task redistribution. This movement can sometimes create a ripple effect, leading to multiple internal shifts and adjustments.

2. Morale Implications

While internal promotions can boost morale for some, unsuccessful candidates may experience disappointment or dissatisfaction, potentially affecting their performance and commitment. This scenario is common in highly competitive environments, where multiple individuals vie for a single promotional opportunity.

Internal hiring is a strategic choice aligning with the ethos of employee recognition and organizational growth. It offers a slew of benefits, including seamless adaptation, efficient hiring processes, and retention of well-developed talent.

However, it’s essential to be mindful of the potential challenges of hiring, including role vacancies and the impact on employee morale, and to address these proactively to maintain a harmonious and productive work environment.

Now, let's compare this to the Pros and Cons of Hiring Externally.

Why Choose External Hiring for Your Business

External hiring is akin to inviting a fresh breeze of ideas into the organization. It is the practice of recruiting candidates from outside the organization, offering a plethora of opportunities to infuse diverse experiences and innovative insights into the business’s ecosystem.

Consider the example of a tech startup. Hiring a seasoned professional from the UK who worked at a well-established tech giant can introduce new methodologies and insights, enabling the startup to explore untapped potential and innovate.

Pros of External Hiring

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1. Infusion of Fresh Perspectives

External hires come with a rich tapestry of experiences and perspectives, enabling a vibrant culture of innovative thinking and problem-solving. For instance, hiring an external marketing expert from Australia can bring novel promotional strategies, allowing the company to reach broader audiences and explore uncharted markets.

The assimilation of diverse skill sets and experiences can significantly augment organizational capabilities and pave the way for expansion and diversification.

A new hire with expertise in emerging technologies, for instance, can spearhead initiatives to explore new markets, strengthening the company’s footprint.

2. Access to a Broad Talent Pool

External hiring allows companies to tap into an expansive reservoir of talents, elevating the probability of finding the ideal match for the role, whether it’s a creative genius for an advertising role or a coding maestro for a software development position.

Harnessing exceptional talents from a vast pool can lead to the acquisition of individuals possessing unique skills and competencies, offering the company a decisive competitive advantage in the marketplace.

Cons of External Hiring

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However, external hiring is not without its hurdles:

1. Extended Onboarding Process

Individuals stepping into a new organizational structure may necessitate extended periods to acclimate and comprehend the company’s protocols and dynamics, impacting project timelines.

The journey of onboarding a remote employeeinto a new culture can be intricate and prolonged, potentially affecting the overall harmonization and productivity during the initial phases.

2. Elevated Hiring Costs

To allure high-caliber candidates, companies often need to offer competitive salary packages, which could be relatively higher compared to promoting an existing employee.

The encompassing expenses of external hiring, including advertising, meticulous interviewing, and onboarding, can escalate, necessitating a substantial investment.

External hiring is a strategic approach to fostering diversity, innovation, and expansive growth within an organization. While it brings forth an abundance of fresh perspectives and access to a broader talent pool, companies must navigate through the longer onboarding times and higher associated costs diligently.

Balancing these aspects ensures that businesses not only acquire top-notch talent but also enrich their organizational fabric with diverse, innovative, and harmonious collaborations.

When considering the hiring pathways, it’s imperative for companies to meticulously evaluate the distinct advantages and challenges of external hiring in alignment with their strategic goals, organizational culture, and operational dynamics to harness the optimal synergies and drive sustainable growth.

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Striking the Right Balance: Integrated Hiring Strategies

In the quest for organizational success, adopting a balanced and nuanced approach to hiring is pivotal. An integrated hiring strategy embraces the strengths of both internal and external hiring methodologies, tailoring recruitment processes to the unique and contextual needs of each vacancy. Below, we delve deeper into the strategic components of an integrated approach, and we explore how leveraging advanced platforms like Parallel can elevate your hiring experiences.

Strategic Analysis

A. Role Requirements Assessment

Understanding the exact skills and experiences pivotal for a role is paramount. Conducting a meticulous evaluation helps in determining whether the needed competencies are already available within the organization or need to be sourced externally.

For example, a managerial role may require a deep understanding of the organizational ethos, favoring internal candidates, whereas a specialized technical role might necessitate external expertise.

B. Long-term Vision Alignment

Each hiring decision should not only meet immediate needs but also seamlessly align with the company’s long-term visions and developmental trajectory.

It’s crucial to consider whether an internal promotion or an external infusion would best serve the company’s strategic objectives and growth aspirations, ensuring sustained progress and harmonious evolution.

Developing a Comprehensive Recruitment Policy

A. Flexible Approach

Removing rigidity in favor of a flexible hiring approach allows companies to adaptively leverage talents from both internal and external domains, aligning with the ever-evolving needs and dynamics.

This flexibility can enable companies to effectively respond to various international challenges, like sudden market shifts or unexpected vacancies, ensuring uninterrupted operational flow.

B. Employee Development

A robust employee development program is the cornerstone of preparing internal candidates for prospective roles and responsibilities.

By investing in continual learning and developmental initiatives, companies can cultivate a pool of well-rounded and versatile candidates, ready to step into diverse roles as the need arises. It is the fastest way to expand your business on a global scale.

Embracing Technological Solutions

A. Enhanced Recruitment Platforms

Utilizing technologically advanced platforms like Parallel's global employment platform can revolutionize your hiring processes, offering streamlined, compliant, and efficient solutions.

Parallel can assist in navigating the complexities of global hiring, ensuring that every step of the recruitment journey is coherent, compliant, and optimized for success.

B. Data-Driven Decisions

The adoption of analytical tools and data-driven methodologies enables companies to scrutinize candidate suitability empirically, mitigating the inherent risks associated with hiring decisions.

By harnessing the power of data, companies can make informed decisions, accurately assessing the alignment between candidates’ profiles and organizational needs, thus ensuring a synergistic fit.

Final Thoughts On Internal vs. External Hiring

Striking the optimal balance in hiring strategies is crucial for fostering an environment ripe with innovation, diversity, and sustained growth.

In the business world, hiring the right people is key. Whether you're looking inside your company or out, every choice counts.

That’s where Parallel comes in, guiding you to make the right hiring decisions, whether internal or external.

Parallel – Your Hiring Sidekick

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Need full-time, part-time, contract workers, or freelancers? Parallel is your go-to.

We make hiring straightforward, whether you’re bringing on people from inside or outside your company.

As your Employer of Record (EOR), Parallel takes on the heavy lifting. We handle the details like payroll, benefits, and staying within the law, freeing you up to focus on growing your business and building your team.

Simple, Secure, Smart Hiring with Parallel

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