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6 Advantages of Internal Recruiting Any HR Team Should Know

Nestor: 6 Advantages of Internal Recruiting Any HR Team Should Know

In the modern world of work, finding and attracting top talent is more competitive than ever. And this has given birth to more innovative and flexible approaches, like internal recruiting — a strategic practice that has become increasingly pivotal in shaping the success and sustainability of organizations and their workforces.

Whether it’s due to a tight talent market or cost-effectiveness taking center stage, we expect to see an increasing number of C-level executives and HR strategists start focusing on internal candidates for new vacancies.

But what are the advantages of internal recruiting? And is it worth implementing in your company? Let’s dive right in and find out!

What is internal recruiting?

Internal recruiting (or internal recruitment) is a hiring approach that aims to fill job vacancies by first looking at existing employees, their skills, and suitability before considering external candidates.

This process starts with transparently promoting job openings within the organization, encouraging your people to apply, and then comparing their abilities and qualifications against the demands and expectations of the available roles.

Some of the most common forms of internal recruiting are:

  • Promotions or vertical moves
  • Lateral or cross-departmental moves
  • Transfers, either to another department or to a different location
  • Making temporary agreements permanent (e.g., interns, contractors, freelancers, gig workers)
  • Employee or internal referrals (hiring based on the recommendation of a current trustworthy worker)

You will also see internal recruiting referred to as internal hiring.

Why is internal recruiting a necessity?

There are multiple reasons why an approach like internal recruiting has become so popular. These are the most important ones in our view:

  • Tight talent market: We’re still witnessing low unemployment rates, which means many employers are currently struggling to find qualified or desirable candidates for their job openings.
  • Increasing skill gaps: Around 375 million people are estimated to need new skills in the next two years alone, according to Guild, thus revealing the severity of skill shortages and their evolution in the near future.
  • Challenges to hiring newer generations: Hiring Gen Zers is more difficult because their professional expectations (e.g., quick and regular promotions) and needs associated with work-life balance (very flexible arrangements) are very different. They also seek employers who provide comprehensive L&D programs and attractive career paths.
  • Economic uncertainty: The current economic and geopolitical landscape, combined with previous experience (the hiring boom during the pandemic followed by mass lay-offs) has made companies less eager to allocate resources to external recruitment — prioritizing efficiency and making the most out of existing resources, including people.
 
77% of businesses globally reported difficulty in finding the skilled talent they needed in 2023.
ManpowerGroup
 

Advantages of internal recruiting

1. Retain top talent and high-potential employees (HiPos)

According to LinkedIn data, “Workers who have moved internally have a 64% chance of remaining with an organization after three years and are 3.5x more likely to be engaged compared to those who stay in their current jobs.” — thus proving some of the worthwhile advantages of internal recruiting.

Proof of internal promotions and hiring will also act as motivation for other high-potential employees in your organization, making them much more likely to perform at their best and aim for opportunities that will advance their careers.

2. Bridge skill gaps and talent shortages

Identifying workers with adjacent skills relevant to new roles and providing upskilling opportunities can be one of the fastest and most cost-effective ways of dealing with internal skill or talent shortages.

This will become even more important in 2024, with the adoption of AI being one of the top HR trends of the year and with “62% of workers saying they don’t have the skills to effectively and safely use generative AI”, according to findings from Coursera.

Internal recruiting can also act as an opportunity to better allocate talent and find the best positions for people who feel their skills and expertise aren’t utilized to their full potential.

3. Facilitate and encourage employee development

By its nature, internal recruiting also encourages employee development by motivating individuals to invest in their professional growth and pursue appealing internal opportunities.

Knowing that internal moves are a viable and encouraged option, your employees are incentivized to enhance their current skill set, acquire new abilities, and broaden their experience within the company.

Thanks to this approach, you will create a dynamic environment where people actively engage in ongoing learning to increase their chances of securing attractive positions within your organization instead of seeking them outside.

4. Identify leadership potential and hidden gems

#4 on our list with advantages of internal recruiting is its potential to support the succession planning process and help identify potential leaders.

By making managerial or higher-lever positions first available to internal candidates, you encourage employees who are eager to take on more significant responsibilities and who are already familiar with the company culture and its mission.

This is also a great opportunity to listen to feedback (360) from their colleagues and ensure that the person who gets the role is good for the team, good for the company, and has the soft skills required to lead everyone toward higher levels of success.

5. Streamline hiring and mitigate associated risks

The hiring process benefits from the internal recruiting approach in several ways:

  • Internal candidates are often considered a safer bet since they are already well aware of the company culture, values, and policies.
  • The recruitment timelines are also shorter since internal candidates require less time for the initial steps, as well as for the orientation and onboarding.
  • The good communication and collaboration between internal candidates and other co-workers, as well as their familiarity with existing teams and dynamics, further contribute to the efficiency of the hiring process.
  • Existing employees who are considered for the new roles already have a proven history of performance and professionalism, showcasing their desire to keep on learning, growing, and excelling at their tasks.

6. Boost the company’s status and attractiveness as an employer

Of course, embracing internal recruiting doesn’t only boost the morale of your existing workforce. It also sets the foundation for attracting top talent in the future, by showcasing your commitment to employee development and career growth.

When employees are offered internal promotions and opportunities, it signals that the organization values its workforce and is willing to invest in their professional advancement — making them more likely to share these exciting facts with their networks or on social media platforms, like LinkedIn.

This practice also highlights a supportive work culture, where employees are not only hired but also encouraged to build long-term careers internally — further strengthening your company’s reputation for investing in its people.

 
External hires cost 18% more than internal hires, and are 21% more likely to leave during the first year.
Forbes
 

Frequently Asked Questions (FAQs) about internal recruiting

What is the internal method of recruiting?

The internal method of recruiting is the practice of looking at existing employees to fill in current vacancies or jobs that are about to become available.

What is an internal recruiter?

An internal recruiter is a member of the HR team whose task is to identify current people on the payroll with the potential to fill internal vacancies and assess their suitability together with the hiring manager or the relevant team lead.

What is external and internal recruiting?

External recruiting is the process of filling job vacancies by looking at external talent pools of candidates. This can apply to full-time positions as well as temporary roles or contractors.

Internal recruiting is similar to the external approach, but the focus is on filling the same job vacancies with candidates from the internal talent pool (current employees).

Final thoughts about the advantages of internal recruiting

As you can see, internal recruiting has many benefits for modern organizations, and it isn’t the kind of approach you want to overlook.

While it might take some getting used to, especially for HR teams, it represents more of a change in mindset and approach rather than in the way or steps of hiring people.

To take your internal recruiting practice to the next level, you would greatly benefit from an internal talent marketplace — a centralized database where all the available positions and growth opportunities (L&D programs, temporary projects, mentorship) are displayed transparently for employees and managers alike.

At Nestor, our talent marketplace module is based on a skills-first approach — just like our entire People Intelligence Platform, and it can transform the whole internal mobility strategy of your company. Ready to find out more?

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