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Internal Recruitment: The Benefits, Costs, and Best Practices

Recruitment for leadership development

Internal recruitment is when a business sources talent from their current team members for a job opening. 

It’s no secret that business evolves. In the last two years, we have seen drastic changes in how organizations finalize transactions, communicate with customers, and even hire for open positions.

Hiring for a new position takes time and money. It’s a long process that shouldn’t be taken lightly. 

Often, companies ask us if they should hire internally or externally. Of course, it always depends on the business and position. But if you’re interested in hiring internally, you don’t want to miss this next part. 

Businesses shouldn’t have to wait years to see results. Learn more about how BSTATE can help your team today!

What Is Internal Recruitment?

Internal recruitment is when a business sources talent from their current team members for a job opening

A few types of internal recruitment include:

  • Temp to hire: Businesses hire workers from temp agencies to fill short-term positions. If a temporary worker is well-liked, organizations offer a full-time job to the temp worker. 
  • Employee referral: Employee referrals are a great way to save time and money on the recruitment process by asking your team if they know anyone who qualifies for the open position. Some businesses even offer referral incentives.
  • Promotion: Promoting an employee is probably the most understood form of internal recruitment. This is when a team member moves up the corporate ladder.
  • Transfer: A transfer is different from a promotion when the new position means moving to a new department instead of moving up the corporate ladder. 

All of these examples of internal recruitment can be bundled. For example, an employee could refer another coworker for the new position, making it a transfer. 

RELATED: Five Meaningful Ways To Support Diversity, Equity And Inclusion In Business

Why Internal Recruitment Is Important

Businesses don’t want to hand a new job over to just anyone. They want someone that possesses the same values, vision, and goals as the company. 

So, why not look at the people already working for you? LinkedIn’s Global Talents Trends 2020 states that trend #3 is internal hiring. Let’s take a look at some advantages to hiring within your company.


  1. Team loyalty

Employees remain loyal to companies that invest in their skills. They don’t feel like they’re wasting their talents. Instead, employees that see opportunities are people that will speak highly of your company. 

  1. Reduced hiring costs

You have to pay for job postings. Sometimes you need to hire recruitment agencies. Other times you have to onboard hiring managers. All of these things add up. But hiring internally will reduce these costs significantly.

  1. Reduced training costs

Training is a must regardless of whether you hire internally or externally. Training takes time away from leadership. But an employee that is familiar with the company, and maybe parts of the available position, will save you dozens of hours.   

  1. Minimize employee turnover

Employees don’t want to stick around with a company that keeps them stagnant in their careers. When employees see that they have a chance at trying new positions, improving their skills, and growing with the company, they stay. 

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Internal recruiting is great, but it’s not always best for every position. Let’s look at the disadvantages of hiring internally.

  1. No new perspective

Internal recruitment means sacrificing a fresh perspective sometimes. Employees tend to fall into the mindset of “the way things go around here” and could resist change.

  1. Replace transferred/promoted employee

If you hire internally, you may be stuck filling another position. Hiring internally does speed up the hiring process, but you may fall into a loop of hiring for new internal positions.

  1. Unhealthy competition

Unhealthy competition is distracting and tears down a team. This can be the case with team members that are close friends or already in a toxic office culture. 

The disadvantages to internal recruitment are worth noting but shouldn’t scare you away from promoting your employees. Consider these points when moving forward with the internal recruitment process.

The Internal Recruitment Process

Step 1: Decide if you will recruit internally

Outside hires are best for some positions. Be realistic about the job and your current list of employees. Does this position require certain training and/or education?

Only you and your team can decide with the help of the points we listed above. 

Step 2: Tell your team about the job

Many organizations don’t tell their employees about a job opening, even if they’re open to internal hiring. Email your employees. Have your leadership team inform your employees about the position in meetings. Post the job description on office cork boards. 

How you tell your team about the open position depends on the size of your business. In any case, make sure you tell your team.

Step 3: Interview

This step goes far beyond your average interview. Ask your team members why they want the job. Ask leadership their opinion about the employees interviewing for the transfer/promotion. 

Think of ways to make the interview process different from other interviews. Ask challenging questions and put your applicants in working scenarios. Have your applicants read a book on leadership to discuss in the next round of interviews, especially if the applicant is moving into a leadership position. 

Don’t have just one interview. Ensure that you hire the right person for the right job. 

Step 4: Communicate with all applicants

The interview process takes some time. Keep your applicants updated on where they stand in the hiring process. 

Most importantly, give feedback. What went well in the interviews? Where do you see this team member going? Are there other internal positions available for this employee? Communicate with all applicants and ensure the process encourages other employees to keep trying.  

RELATED: Employee Performance: Goals & Objectives [Examples for 2022]

Final Thoughts on Internal Recruitment

Why should you recruit internally for a position? Hiring internally or externally requires asking a few questions. Only you can decide what is best for your business. Your team will grow no matter if you hire within or not. 

But hiring internally means giving attention to previously overlooked talent. Internal recruitment means taking a step back, looking at your team, and realizing that you’ve built something great. 

Looking for results to power-up your business? Take a look at who we’ve helped. We can do the same for your business!

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