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Topic:

An insight into the relative strengths and weaknesses of internal and external recruitment

INTRODUCTION:

Employee recruitment is a specialized activity of identifying and soliciting individuals, either from inside or outside of the organization. The sole purpose of the recruitment process is to fill the vacant positions inside the organization and to provide the company with competent human resource that enables the organization to meet its strategic goals. Recruitment is one of the key roles for human resource professionals. Normally the human resource process starts with the recruitment process. Effective employee recruitment is one way companies can remain competitive in a changing and increasingly global marketplace. Today the competition is on its extreme among the companies so in order to compete in tough market conditions the companies need to have competent and capable human resource.

DEFINITION OF RECRUITMENT:

Wikipedia Says:

“Recruitment refers to the process of attracting, screening, and selecting qualified people for a job at an organization or firm.”

According to Society for Human Resource Management (SHRM):

“The practice of soliciting and actively seeking applicants to fill recently vacated or newly created positions using a variety of methods (i.e., internal job postings, advertising in newspapers or electronic job boards/sites, utilizing search firms, or listing position with trade and professional associations, etc).”

There might be several definitions of recruitment but all experts and definition sources agree that it is a process of getting the most competent workforce inside the organization to meet its strategic goals.

RECRUITING FUNDAMENTALS:

Employers generally use some combination of internal and external recruitment tactics. Both approaches have certain basics in common:

A foundation in rigorous job analysis and well-crafted job descriptions.

Compliance with applicable laws, especially equal employment opportunity laws.

The Chartered Institute of Personnel and Development (CIPD) is Europe's largest HR development professional body. According to a study conducted by CIPD in

2004 in UK and Ireland, there are some very helpful findings as far as the internal

and external recruitment is concerned. These findings are also stated below.

TACTICS OF INTERNAL VERSUS EXTERNAL RECRUITMENT:

The criterion whether to use internal recruitment source or external recruitment source varies company to company. Usually organizations with have a strong commitment to their employees often use internal strategies along with external strategies for identifying key talent. Such companies give priority to fill the key positions by offering promotional roles to internal candidates. Employers foster a sense of loyalty, engagement and long-term satisfaction by allowing growth from within.

When internal talent is not available, employers turn to external recruitment to

attract individuals with the necessary skill sets. According to the survey of CIPD in

2004 in UK and Ireland 84% of companies looked internally first then they go for

external options.

INTERNAL HIRING

INTERNAL HIRING

FUNDAMENTALS OF INTERNAL RECRUITING:

Internal

approaches:

recruiting

will

typically

consist

of

one

Job posting procedure

Nomination by manager

Knowledge, skills and abilities database

Succession planning

or

more

of

the

following

Regardless of which approach—or combination of approaches—an employer adopts, it is critical to craft a policy that is fair and equitable to internal applicants, and is implemented consistently and communicated openly throughout. Showing an inequitable policy or procedure will result as backfire of internal recruitment.

The survey conducted by CIPD in 2004 showed that 87% of UK survey participants have a policy of advertising all vacancies internally as compared to 77% in Ireland.

Let’s discuss each of the above mentioned approaches of internal recruitment one by one.

JOB POSTING:

Most companies adopt a job posting approach as a way to encourage internal employees to identify internal promotional opportunities and respond to those for which they have skills and interest.

NOMINATIONS:

Some companies have a more closed approach to internal recruitment and may ask managers to nominate high performing individuals as candidates for internal roles. This tends to be an informal system, yet it may be highly effective, in smaller organizations where individuals are familiar with the work of employees in other departments. However, this approach may appear or in fact involve favoritism, or unlawful discrimination. The consequences of any of these may

offset any benefits that may be gained by promoting from within, so large organizations try to avoid this kind of approach for internal hiring.

KNOWLEDGE, SKILLS AND ABILITIES DATABASE:

Many organizations have human resources information systems (HRIS) or human resource management systems (HRMS) to track and identify various personnel- related issues. These may include a database of employees’ knowledge, skills and abilities (KSAs) as well. While hiring new employee, the companies typically create a KSA profile in the HRIS or HRMS that details their background, experiences and career goals. The profile should be updated periodically, usually in conjunction with a performance review or career development discussion. Using this profile the HR managers can have the idea about the KSAs of particular employee working in the organization and so can offer him/her another job opportunity within the company.

SUCCESSION PLANNING:

Some organizations have developed succession planning strategies to identify not only the potential talent in the organization, but also to establish developmental plans to help prepare individuals for promotional roles. Succession planning is a process to continuously develop the employees and make them ready for future tasks. By pursuing the succession planning process the employees are trained and developed for new high level jobs inside the organization.

Following is the chart that shows the methods used to advertise vacancies internally in UK and Ireland as per the survey report of CIPD in 2004.

Advantages of Internal Hiring 1. H IGH M ORALE : The morale of employees is

Advantages of Internal Hiring

1. HIGH MORALE:

The morale of employees is improved when they know that they may be considered for internal promotions or new opportunities. In today's highly competitive economy, the more incentives you can provide for employees to stay with your organization, the better the results will be from them. Opportunity for advancement is a strong motivator for many employees. The employee who has been promoted for an upper level position will surely give better results.

2. ITS SAFE TO HIRE INTERNALLY:

Management already knows the job history and capability of internal employees, so hiring an internal candidate can often be a safe route to take. You're dealing with a known commodity (existing employee) and there is less likelihood that a bad decision will be made. The existing employees are familiar with the culture and systems inside the organization so they can adjust in the new position easily within the matter of days and start giving the results soon.

Less time is needed for recruitment and then for employee orientation and training. As there is nothing to do with the job posting on various channels and getting CVs and conducting interviews, so the internal hiring process takes lesser time as compared to external hiring process. Internal candidates know the organization, already have contacts within it and are able to hit the ground running in a new position.

4. BETTER HUMAN RESOURCE:

The organization is able to make better use of its human resources. The company that internally hired a candidate has made a major investment in its employees. Developing that investment through training, education and, eventually, promotion into more challenging positions makes sense from a business standpoint. With the trust that the company showed on its employees by internally hiring for a vacant position will give a boost to the confidence of the current employees as company trust on them.

5. COST EFFECTIVE:

Internal hiring is considered as the most cost effective approach to fill a vacant position. Organization does not need to publish the job ads, putting valuable time to screening the CVs and then calling the candidates for interviews, interviewing them and finally making a hiring decision. By hiring the person internally saves the many valuable resources of the company in terms of money, time, and efforts.

Disadvantages of Internal Hiring

Everything in this world has certain advantages and disadvantages, so same for the internal hiring as well. The company that makes a better trade off of the advantages and disadvantages of internal hiring will be able to get most of the process. Following are some of the prominent disadvantages of internal hiring.

1. LIMITED POOL OF CANDIDATES:

The number of potential job candidates is limited in the company. A decision to limit a selection process to internal candidates can help to accelerate the hiring

process, but also limits your pool of qualified candidates. There may be times when this is appropriate but exercise caution in being too quick to look internally only. Sometimes the companies might get more competent individuals outside of the organization. So the companies should also consider the external hiring while running recruitment process.

2. OPPORTUNITY OF FRESH BLOOD IS LOST:

The introduction of new blood is minimized, sometimes resulting in internal hiring. There is a danger in allowing an organization to become too internally focused. An arrival of new ideas and new viewpoints is important for any organization. But when the organization totally emphasizes on hiring the candidates internally, there is a chance to miss the available fresh minds from external environment.

3. DEFINITE NEED FOR EXTERNAL HIRING:

Internal recruitment frequently involves a ripple effect in terms of hiring. As one person leaves a position to take another, a new vacancy is created. This effect continues down to the lowest level jobs, which must then be filled through other means. While this may be appropriate (because it is generally easier to fill entry- level positions than higher-level management positions), it depends upon your organization, your industry and the job market you draw candidates from. So any organization cannot cut the wing of external hiring.

4. BIASNESS:

This is one reason that makes the internal hiring not much suitable for some organizations. Sometimes the managers hire internally any person of their own choice. What happens in this case is other potential employees may feel treated inequitably. This might cause negatively their quality of work as well. On the other side the person who is hired on the base of nepotism or favoritism may not provide the quality work on new position as he was not eligible for the new post.

EXTERNAL HIRING

EXTERNAL HIRING

FUNDAMENTALS OF EXTERNAL RECRUITING:

Many organizations of the world realize that the recruiting function is very similar to the marketing function, in that the organization is promoting both itself and employment opportunities to potential candidates. Adapting marketing principles to employee recruitment is considered an effective way to bring discipline to the process. With the passage of time there are many new ways being introduced to hire employees. Such new ways looks just looks like marketing any product e.g., putting job opportunities in yahoo groups, or on www.linkedin.com or making job blogs.

Companies can be most effective in recruitment when they identify their potential markets, then create specific messages and activities to reach them.

TARGETING PASSIVE OR ACTIVE CANDIDATES:

Before deciding which recruiting method to use, first determine whether the ideal candidates are passive or active job seekers. Those who are unemployed or extremely unhappy in their current employment are generally active job seekers, and those who are happy and successfully working at another place of business are generally passive job seekers. Most employers, because they are looking for candidates who have a positive record of employment and are satisfied in their work, target passive job seekers.

MANAGING EMPLOYER BRAND AND IMAGE:

The organization’s reputation as an employer will affect its ability to attract top candidates. The more renewed the company will be, the more competent candidates will be willing to join the company. When employees are satisfied with the organization, they will tell others about their employer, whether or not there is a referral program or bonus. Word of mouth communications about the organization can either help or hinder formal recruitment strategies. So making the company’s name as a well known employer will surely give an edge while recruiting from outside.

DEVELOPING RECRUITMENT PARTNERS:

Many HR professionals juggle the staffing function with many other duties:

employee relations, compensation, benefits, and training and development. In order to best meet their staffing needs, effective HR professionals seek out the assistance of those who can best support these needs. For this purpose the companies can outsource their recruitment functions or can contact with other companies of the industry that is lay off their employees.

TACTICS FOR EXTERNAL RECRUITING:

Following can be the tactics for external recruiting.

Third-Party Recruiters – Outsourcing the recruitment activities or hiring consultant for recruitment.

High Schools, Technical Schools, Colleges and Universities – Going to schools, colleges and universities to get the fresh pool of candidates. Job fair conducted by the educational institutions is a best example of external hiring.

Public Relations – Various seminars, training programs, and social parties give a chance to managers to communicate with others and enhance their public relations that, in future, may help in external hiring.

Media – Using internet, TV, radio, billboards, posters and newspapers to pursue the external recruitment process is a very renowned way.

Employee Referrals – It is one of the most commonly used external hiring sources. The existing employees are asked to refer any person they think can be candidate for any vacant position. According to the CIPD survey in 2004 70% of commercial companies and 66% of manufacturing companies use this mean of external hiring.

Own Website – Companies also use their own websites for job posting. This is also one of the efficient means getting applications for external environment. According to the CIPD survey, 72% of companies use their own websites to publish their job vacancies.

Advantages of External Hiring

1. LARGE POOL OF POTENTIAL CANDIDATES:

One of the superb advantages of external hiring is to have a large number of applications for a particular job. The recruiter can have a huge selection of candidates who applied for a particular job. So the recruiter has more choice to pick the one best competent candidate. Also the external candidates are from various backgrounds so there is a diverse pool of applicants available for selection.

2. Opportunity to Inject the Fresh Knowledge in Organization:

Through this kind of hiring process, the organization has a chance to bring the persons from external environment that has fresh and some extra knowledge about the things. Internal candidates are not very much familiar with the current knowledge and latest concepts of the industry while the external candidates are supposed to equipped with the latest knowledge of the industry.

3. LESS CHANCES OF BIASNESS:

At the time of hiring internally the recruiter may be, alleged for showing the biasness. But this objection can also be eliminated by pursuing external hiring process. The job applications which are gotten externally will be checked as per the hiring standards and then the selected candidates will be called for various selection methods (written tests, interview, and group discussions). One, who fulfills the requirements, will be selected.

4. INCREASE DIVERSITY:

Increase in diversity is one of the well-known advantages of external hiring. When an organization hires externally it gets a chance to induct new persons from various different backgrounds. This will enhance the diversity inside the organization. Through other policies and procedures the company can take advantage of such diversity inside the organization. Diversity in the organization means broad and diverse ideas, more effective implementation of policies and

enhanced efficiency of the company. According to CIPD survey the majority of organizations surveyed have a diversity policy (94%).

5. MORE REFINED RECRUITMENT PROCESS:

With the external hiring, the recruiter will have a chance to perform all the basic activates involved in hiring process (posting job ads, screening the resumes, interviewing the candidates and others). So if there is any deficiency found in the process then it can be identified and rectified to make the hiring process more effective.

Disadvantages of External Hiring

Following are the potential disadvantages of external hiring:

1. MORE TIME CONSUMING:

One of the biggest disadvantages ever of external recruitment is its huge time consumption. Companies want to get new employees hired as soon as possible. But the process which includes posting job ads, conducting tests/interviews, and reference checks, takes much time that some companies cannot afford.

2. HIGH COST:

As compared to internal hiring, external hiring costs a lot to the companies. Some studies indicate then external hiring costs 90% more than the internal hiring because in internal hiring there is not job posting externally or any other connection to the external environment. The cost of external hiring is high both in terms of money and time. So companies where turnover is high, it is recommended to use internal hiring process primarily.

3. CURRENT EMPLOYEES MAY NOT FEEL WELL:

Sometimes there are better options available inside the organization but still the recruiter goes for external hiring. So the potential insider employees may feel to be treated inequality as morally they had the right to be offered this job first. This

may cause their output as well. So the companies first must see inside the company if they can find good potential employees for the vacant position.

4. OUTSIDER MAY NEED MORE TIME:

It is obvious that new employees from outside the organization will take much time to adjust in the new environment as compared to an internal one. They will require more time to be trained, understanding company’s policies and procedures, and to be familiar with the norms of the organization. Unless and until they are fully known with the company, it is hard to expect 100% performance from them.

CONCLUSION:

There are many other advantages and disadvantages associated with both sources of hiring new employees. It is the ability of HR manager to choose the best source of hiring for his/her organization. For this purpose Human Resource Planning is conducted in order to ensure that only best available human resource is hired and inducted in the organization. This is because ultimately these are the people who will lead the company to the success or failure. If an organization has competent workforce then obviously it is going to accomplish its goals and objectives but with less efficient or incompetent workforce, the dream of achieving the set objectives will remain a dream.