Is it better to build from within or “buy” from the job market?
A crucial factor in hiring someone is how suitable they are for that role. It can be relatively cheap to hire someone in-house compared to the hiring, onboarding and training of a new employee. However, if internal hiring was the way to go, wouldn’t every role be fulfilled internally? The truth is, only about 15 percent of new positions are filled this way.
The decision to hire a new employee or promote from within isn’t always an easy one. Each route has advantages and disadvantages; this guide will help you weigh them so you can make the best decision for your team and determine whether or not you should hire an internal or external candidate.
Advantages of hiring internally
Companies can reap significant benefits from investing in internal candidates. Many businesses prioritize internal applicants for open positions knowing it increases employee retention and performance. Creating a path for upward mobility should be a priority for companies that strive to grow.
The biggest benefit of hiring internally is the candidate’s understanding of the organization. When compared to external hiring, employees hired internally maintain organizational expertise and can quickly get up to speed in their roles. Internal hires are more likely to be familiar with the role they are applying for, while also having an understanding of the organization’s culture and policies. It is also the most economic option; with reduced spending on hiring and onboarding.
Disadvantages of hiring internally
When an internal hire is promoted or moves laterally, their present position must be filled. The hiring manager must AGAIN determine whether to hire an internal or external candidate for the role they left. If you choose to internally fill that position, you will be left with the same set of choices for your previous role. So, ultimately, it can become a decision of whether or not you want to recruit now or later.
While it can also motivate employees to go above and beyond, it can also have the opposite effect. Team members may believe that internal promotion is given when the wrong person is promoted. Recruiting from outside sources, might combat complacency and motivate present employees to pursue professional development possibilities. Promotions should happen exclusively when you have a great team, but if your team is looking for an upgrade, fresh eyes are always the way to go.
Advantages of hiring externally
One of the most significant benefits of external recruiting is the ability to leverage their distinct perspective. Bringing in new individuals, after all, means bringing in fresh ideas. If you’re looking to aggressively grow your business and innovate new areas, a new hire is almost always the way to go.
External hiring may suggest that your company is filling a specific talent shortage. This also has a ripple effect where internal candidates may be motivated to continue their education if they see you prioritizing a certain skill set or knowledge base.
If any of the following is true, you should focus on recruiting new people:
- Corporate turnarounds or strategic adjustments are in the works.
- Specialized abilities that are not easily available inside the company are required.
- The company culture values diverse viewpoints.
- Job training and proper integration into a role are supported by processes.
Disadvantages of hiring externally
Unfamiliarity with your company’s systems might significantly slow down the onboarding process. An external candidate may require more assistance in mastering the complexities of the new job.
External recruiting is an investment. It takes time to prepare training materials in advance. To avoid starting from scratch with each new hire, your organization should arm the staff with robust training materials to ease everyone’s onboarding process. In order to get the most out of your expenses, you’ll need to thoroughly research recruitment options to make sure there’s a strong return on investment. If you fail to hire the best recruitment firm for your organization, it can be costly both financially and time-wise.