Guide: External recruitment advantages and disadvantages

By Indeed Editorial Team

Published 19 May 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Finding the right candidate to fill a job vacancy is both critical and challenging for companies. Streamlined hiring practices can help save time, effort and money for a company, allowing it to dedicate valuable HR resources elsewhere. Some companies favour internal recruitment, whilst others opt primarily for external recruitment. In this article, we outline the advantages and disadvantages of external recruitment when companies opt for this approach.

External recruitment advantages and disadvantages

Instead of recruiting internally only, companies can choose to fill vacancies using external recruitment, with advantages and disadvantages to this method. Below are comparative definitions of internal and external recruitment:

Definition of internal recruitment

Internal recruitment means advertising a vacancy within a company, to existing staff members only. This means that individuals outside of the company are not eligible to apply for the role. There are some examples of employers, such as the Civil Service or the NHS, where internal applicants can apply for roles in a different city or department that is still part of the same over-arching organisation.

Related: Internal recruitment: definition, benefits and tips

Definition of external recruitment

External recruitment means opening up a vacancy to a wider pool of candidates rather than selecting someone from the existing staff to fill the role. A job vacancy advertised externally may still end up being filled by an existing staff member. External recruitment can be a useful tool to evaluate how the internal staff compare against candidates from outside the organisation.

What are the advantages of external recruitment?

External recruitment can have several advantages for a company, including:

A wider pool of candidates to choose from

By recruiting externally, the vacancy becomes available to a much wider group of people. Among this group, the company may have a greater chance of finding a highly qualified and very suitable candidate.

Gaining an outside perspective

Hiring and promoting people internally can cause a company to stagnate if the staff become very set in their ways. Inspiring change can be difficult if the same company perspectives are present across a group of staff who have all worked their way up the company. Gaining candidates from other companies can help bring a fresh perspective to the work. It can also be motivating for teams to feel energised by outside ideas or by being challenged on why things happen the way they do at that company.

Supporting diversity

By recruiting externally, a company can take steps to make sure the advertisement reaches as diverse a range of people as possible. This is an important factor in helping encourage applications from all kinds of highly qualified people who may not otherwise be aware of the company. Recruiting people from different backgrounds is an important way to ensure the company promotes inclusion and empowerment for a diverse range of people with different, equally valid perspectives.

Related: The difference between diversity and inclusion

Access to specialised candidates

When a company chooses to recruit only from an internal pool of candidates it can limit their access to highly qualified candidates with specialist knowledge. This is particularly the case for technical industries where suitable applicants would likely have specialised knowledge and training. In fast-paced fields such as science and technology, recruiting externally can provide access to candidates with new qualifications that the existing pool of employees may not have.

Related: 11 effective recruitment strategies for attracting top talent

The opportunity to reward existing employees

External recruitment can be an opportunity to incentivise and reward existing staff, by offering a referral bonus scheme. This is a common strategy used by many companies, through which an existing employee can recommend a friend or previous colleague to apply for a job at the company. If the hiring team selects that candidate, the person who referred them receives a bonus payment. The referral scheme can also help to garner support for external recruitment among staff who may otherwise prefer to see the role filled internally.

Related: How to show recognition for employees (examples and tips)

Reducing competition and tension

If a job advert appears internally and multiple people from the same team apply for it, there may be conflict if one of them secures the role. By hiring an external candidate, the company can reduce the potential for any ill-feeling within teams.

What are the disadvantages of external recruitment?

Whilst there are numerous clear advantages to external recruitment, there are also some disadvantages that a company can take into consideration. None of these issues is insurmountable for a company, as long as they are carefully considered and planned for:

Increased costs

Advertising a role internally is unlikely to cause the company to incur significant costs. The team recruiting for the job can share the vacancy on the organisation's intranet or via emails or other memos. There may be some staff time dedicated to the human resources aspect of hiring, but there are also likely to be fewer candidates than for a role advertised externally, thus less time spent short-listing candidates. This means that external recruitment can be more costly, particularly if a company chooses to use a headhunting or recruitment service.

There are some ways that companies can reduce the cost of recruitment:

  • Using automatic online candidate selection tests that do not require HR/recruiters to review the output, meaning that the candidate either passes or fails.

  • Using peer interviews is a useful development opportunity for existing staff and also minimises the time spent by management or HR on the interview process.

  • Applying screening techniques for online applications can filter out unsuitable candidates before significant time and energy are spent considering their application.

More training and familiarisation

Someone recruited internally is already familiar with the company and can be quick to adjust to a new role without a significant investment in training them. It may take an external candidate longer to get acquainted with the role than it would an internal hire. There are several ways that managers can deal with this process to help make an external candidate successful in the role as quickly as possible. The following approaches could be adopted by companies:

  • Developing a strong 'onboarding' strategy that provides all of the knowledge and information a new member of the team needs to understand the structure of the organisation, the HR processes, how the team works etc.

  • Scheduling regular check-ins and catch-ups with the new member of staff to ensure they have the opportunity to ask questions.

  • Spreading out formal training over several weeks, interspersed with opportunities to spend time with their colleagues and learn on the job.

Impact on employee morale

One of the more challenging aspects of external recruitment for a company can be the effect it has on existing employees who may feel they were a good fit for the vacancy. It is important that employees feel acknowledged and appreciated. It is also important that managers keep staff updated on the decisions a company takes and why it is choosing to hire externally.

It is also recommended to regularly remind employees of the development opportunities available and encourage them to undertake the relevant learning and development activities that would put them in the best possible position to apply for future promotion opportunities.

Related: How to boost employee morale in 6 steps (plus tips)

Impact on team rapport

Some employers choose to make job adverts open to both internal and external candidates. An external candidate hired in preference to an internal one may initially find it challenging to build rapport and relationships with a team, particularly if the internal candidate is well-liked. It is essential that the management chain supports the external candidates fully.

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