Question

Discuss 3 advantages and disadvantages of hiring from within vs. hiring externally. Provide an example where it would be better to promote internally, and one example where is it better to hire externally?

Answer 1

Advantages of hiring from within the organization

1.Cost efficient: The hiring costs including costs involved in advertising, conducting job fairs and external hiring agency costs can be eliminated through internal hiring. Salary also can be paid less for employees hired internally without much increment. Moreover the existing employees do not required to be trained on company policies and hence new hire training cost also can be avoided.

2. Motivates the employees: When the company hires from within, the employees get motivated as they feel that their hard work would get rewarded by the company and encourage them to work with more commitment.

3. Efficiency can be guaranteed through assessment: The employees within the organization can be easily assessed and make sure that the selected candidate can perform the job well. Thus efficiency can be guaranteed and the employee can work efficiently without wasting time on adjusting to the new environment as the work environment is already familiar.

Disadvantages of hiring from within the organization

1.Lack of new ideas: Internal hiring do not bring new ideas and perspectives to the organization.

2. Less number of candidates to choose from: Company needs to choose from the available pool of employees which is very less compared to hiring externally.

3. Chances of conflict and resentment among the employees who were not considered for promotion: The employees who are not promoted may feel that they were ignored while promoting and there can be conflict among the employees.

Advantages of hiring externally

1.Brings new ideas and fresh perspectives to the work environment: External hiring brings new talents filled with new ideas and fresh perspectives. New skills get added to the organization and the current employees also may get benefitted.

2. Large pool of candidates for selection: External hiring can select from a large pool of candidates and methods like advertisements and job fairs helps to attract maximum number of candidates.

3. Avoids the chances of resentment among the existing employees: As the hiring is done externally, the internal employees do not feel like overlooked as the position is filled with an external candidate whose capabilities are not known to them.

Disadvantages of hiring externally

1.Expensive: The costs are high compared to internal hiring due to costs related to advertisements and external hiring procedures adopted. The hired resource also needs to be paid more.

2. De-motivates the existing employees: External hiring can be de-motivating for existing employees as they feel they were considered unfit for the role by the management.

3. Difficult to assess the new employee: It is very difficult to assess the new employee capabilities and hence the efficiency cannot be guaranteed. The new employee may take more time to adjust to the work environment and this also affects the efficiency.

It would be better to hire internally for the higher management jobs which require the selected candidates to work closely with the company policies and procedures. The existing employees can understand the work culture and company policies better than anyone and it is not guaranteed that new employees can fit into the work culture.

The jobs that require special skills can use external hiring because it would take time to train the employees and develop the required skill set. External hiring would help to select the best candidate with the desired skills.