by: Negin Vatanian

 

One of my own challenges of interviews and job searching is determining whether the company prefers hiring internal or external candidates. I have had external interviews where I was told their final decision was to hire an internal candidate, as well as internal interviews where the management’s decision was to hire an external candidate. I know it is not about me because I have had both, internal promotion and hired by a new company; so I have had experience with both situations. Therefore I’ve decided to do some research and thinking to find out the reasons and motives behind hiring external versus internal candidates, and the positives and negatives to each one.

Filling a new position is to meet a need of an organization, which can be through internal resources that already exist or from outside. The person who fills this position regardless of being an internal or an external hire is to bring value into the organization to hopefully meet this need. Internal and external candidates offer completely different values and it is important to know which values are being brought by each category.

Internal Hiring

Internal hiring is based on promoting the existing employees from within the organization and by shuffling them to a new position. This can be horizontally and from one department to another one, or through promotion by offering a higher position to a current employee who is familiar with the job and has the potential to perform the new tasks and is able to perform new and more responsibilities.

The internal candidate knows the business model, organization goals and inside culture, and has the skills that are required by the company for doing that particular job as well as the ability to do the job based on her/his previous performance and interpersonal skills. They already know the internal processes and producers as well as customers, clients, and their coworkers. The candidate has already demonstrated his or her potential, and has established a relationship with their colleagues, as well as the leaders and management. This established relationship and knowledge about the organization, culture and other employees help the newly promoted employee to settle in his/her new role. As a result, internal hires are able to assimilate faster into their new position and role. Internal hiring requires a better title and increase in payment, which also increases employee satisfaction and moral. Internal hirings are more useful for long-term commitments and planning as it sends a message to other employees that the organization values their career planning and development.

Hiring an internal candidate is a safe move by the company as the newly promoted employee is already recognized and accepted by the management and his/her colleagues. However, he/she might need some training and mentoring to get ready for his/her new role and responsibilities. Also, hiring internal candidates prevents new minds and new ideas from entering the company. Knowing the personnel, internal environment, and culture could obstruct the newly promoted employee from making tough decisions and implementing required changes if the culture of the organization is against and resistant to implementing changes, or the implemented changes would effect on the current employees.

External Hiring

External recruitment is a systematic search through employees that are outside the organization’s pool of candidates. External hiring is usually based on reviewing impressive resumes and candidates’ past positions and job titles. Thus, external hires usually have higher education and more extensive work experience than the internal candidates. The external candidates bring a new wave of energy and a fresh vision, in addition to a different experience and approach to the organization. They also bring skills and knowledge that were not available internally. The external hires are probably eager to make changes to their new work place and implement their new ideas, information, and practices. Hiring external candidates also increases diversity within the organization, and also could shake things up and bring a new level of innovation and creativity to the organization and among the current employees.

However, hiring an external candidate is always a gamble and risky. Although the external candidates have impressive resumes and references, it is not clear whether they would fit into their new position and the company’s culture, and whether they have the required skills and abilities to perform the job. Also hiring an external candidate could damage internal candidates’ moral and loyalty by giving a message to the current employees that the organization does not invest in their development and career goals. Furthermore, hiring external candidates is associated with higher costs as external hires tend to be paid more than internal hires. In addition, external hires need longer adjustment time and orientation period as they need some time to get settled into their new position and become familiar with the internal culture, business model, get to know their new coworkers, build relationships with them, and learn the required skills and knowledge that is required to do the job. Also, the current employees spend time training the new employee to bring him/her up to speed. Accepting a new external candidate by the current staff is another risk and there is always a possibility that the new employee would not fit into the company culture and would not get along with the staff, which can create friction and dissatisfaction for other employees. As the new employee has to spend time to become familiar with the new policies, system, and work environment; her/his performance could fail and he/she would suffer an immediate decline in his/her performance. This is also because their previous strengths and success were dependent on their resources, network, and colleagues, and by moving into a new role and to a new organization, they do not have their team and support system they used to have and obviously building such infrastructure requires some time and effort from all sides.

Factors Affecting a Company’s Decision

Bringing in a new and fresh face to a company might be tempting, however it is always hard to integrate new people into a system that is already established. In general, external and internal candidates bring completely different values to the organization and it is critical to know the different values of each category. Here are some general factors affecting the decision on whether go with internal candidate or external:

  • Ability to mentor and train newly promoted employee
  • Ability to train external candidate
  • Organization culture and its acceptability to possible changes
  • Higher cost of bringing external candidate on board
  • Organizational vision and its long term and short term goals
  • The need and place for new expertise

The hiring becomes more challenging if internal and external candidates compete against each other, which can cause friction and dissatisfaction among the current employees and even create a hostile environment. However, these are not the only factors that the organization should consider. The key is to learn what the required job for the employee is and then decide which one is more suitable for that specific position and is capable of performing the required tasks and bringing the right values to the organization.

Final Note

The important note is that hiring an employee, either external or internal, is not the finish line. The role of management and organization does not end by hiring a new employee or promoting a current one. It is just the starting point and both need the company support to success. Internal hires need some push to go beyond what is already acceptable by the organization culture and staff and the external one need some guidance on what needs to be done to avoid conflict with the staff.

 

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