Question

Brainstorm the advantages and disadvantages of both recruiting from within the organization and also external recruitment. What are the risks associated with both? What do you believe would be the most important consideration as to why to hire internally or externally?

Answer 1

Recruiting from within the organization

Advantages:

1. The training cost for the in-house recruitment is eliminated as the employee already knows about the organizational culture and working process. He will also take less time to fit in the new job.

2. The cost of recruitment will be less in case of recruiting in-house as the employee is available and most of the assessment results are ready.

3. The factor of ‘person-organization fit’ already gets ticked here, as the employee is already working in the culture of the firm and has in-depth knowledge of what the company does.

Disadvantages:

1. By recruiting in-house, no fresh talent comes to the organization. This leads to lack of innovation at work which will lead to inefficiency in the longer run.

2. While promoting an employee, there are high chances that his peer will be disappointed for not being promoted and this can lead to personal rivalry.

3. When we recruit in-house, the diversity intake of the firm becomes less.

4. There is a salary cost associated with promoting an employee. Once promoted, it is very difficult to demote him. So the company will have to incur the higher salary costs for him.

Risks associated:

1. While a new person (from outside) will work much harder after getting recruited, an in-house recruit will work less after getting promoted. This will lead to in-efficiency at work.

2. When no fresh talent (from outside) is coming to the organization, the scope of knowledge improvement will be less with no new market insights. This will limit the scope of company’s Knowledge Bank.

3. The in-house recruit might not be able to perform well in the new position.

Most important consideration: The person should be a versatile employee of the organization and should be having more skills than his past portfolio.

Recruiting from the external environment

Advantages

1. Hiring new talent from outside helps in maintaining talent pool and new market insights for the firm.

2. Fresh talent comes with innovation and diversity of work and industry.

3. The company can save on new employee 'costs' as he can be put on probation for some time on less salary.

Disadvantages

1. High recruitment & training costs are incurred while hiring a new employee from outside the organization.

2. The new employee will take more time to fit within the company regulations and culture.

Risks associated: If the employee is not able to perform well on the job, and he leaves the company, then he’ll leave with crucial company information as well.

Most important consideration: The person should fit with the culture of the organization and should be able to perform on the job.