Employees are the most critical assets for a company because they are the ones who determine the success or failure of a company. Hence, it is important for companies to ensure that the right employees are hired for the right jobs.

Recruitment refers to the process that is used to recognize the human resource requirements of the organization and take the steps that are needed to counter the issues that may be experienced because of the lack of human resources. There are mainly two forms of recruitment, i.e. internal recruitment and external recruitment. In the process of internal recruitment, job vacancies may be filled by employees who are already working in the organization, whereas external recruitment refers to the process in which external sources are used for recruitment.

In this article, we will discuss the two processes in detail and the differences between the two.

Definitions and explanations

Internal recruitment

Internal recruitment is the process in which job vacancies and positions in an organization are filled by those employees who are already working in the organization. The right candidate for a job is chosen from those who are already employed within the organization, i.e. its current employees.

There are certain methods that are used to fulfill the human resource requirements of the organization, a few of which are discussed below:

  • Promotion: It refers to giving employees a more advanced position in the organization as compared to their current posts. In a few organizations, employees are promoted after a specific time, and in others, they are only promoted if they perform well.
  • Employee referral: Employees are supervised by managers who monitor their performance and maintain a record for every employee. When a company needs to recruit new employees for its vacant posts, these records are checked and the managers refer those employees for the job who are performing well and are most appropriate for these jobs.
  • Transfer: In an extensive organization that has many branches, it is possible to fulfill the human resource requirements of one branch with those employed in other branches.

Internal recruitment is an easy and rapid method of hiring employees. It also has other advantages. For example, it increases the motivation of employees and offers them an opportunity to prove their capabilities and competencies. It encourages employees to develop their skills and work harder so that they get promoted in the organization. In addition, internal recruitment does not require induction training because employees are already aware of the rules and regulations of the organization and about the job requirements. Internal recruitment is also cost effective because unlike external recruitment, it does not require performing different procedures like making job announcements, carrying out interviews, etc.

However, internal recruitment also has some disadvantages. It prevents the inclusion of new talent into the organization. It encourages favoritism in the organization, which is an unfair practice as certain employees or groups of employees are preferred over others. In addition, the number of employees that are available for the organization are limited and may not be appropriate or skilled enough to occupy the vacant position.

External recruitment

In the process of external recruitment, employees from outside the organization are chosen for a job. New candidates who have the skills and abilities needed for a job are offered employment in an organization, which brings in new ideas within the organization.

There are different methods that are used by an organization to recruit candidates from external sources. A few of them are described below:

  1. Advertisement: Vacancies are announced by companies through electronic and print sources, for example newspapers, television, internet and radio.
  2. Walk-in interviews: Those people who approach an organization while looking for jobs are referred to as walk-ins.
  3. Campus recruitment: There are many companies in the present times who directly recruit candidates from universities and colleges. These educational institutions conduct job fairs on an annual basis to allow organizations to recruit their students.
  4. Employment agencies: These agencies work as an intermediary between potential employees and recruiting firms. They have a record of different job openings as well as prospective candidates and create a suitable match between then.

External recruitment is beneficial as it offers a pool of suitable employees, from which the ones that have the best qualifications can be selected. The selection of employees from outside the organization ensures that novel ideas, abilities and skills are brought into the organization. Because of the rapid developments in technology, the inclusion of new ideas and skills enables organizations to adapt more easily to these developments.  However, external recruitment demotivates and demoralizes existing employees. In addition, external recruitment is very time consuming and costly as the organization has to make significant investments in advertisements, training and recruitment of the employees.  It also creates adaptability issues because external employees take some time to understand and adjust to the new settings.

Difference between internal recruitment and external recruitment

Some major points of difference between internal recruitment and external recruitment are listed below:

1. Meaning

Internal recruitment is the process through which employees from within an organization are hired for a vacant position, whereas in external recruitment, job openings are filled by candidates from outside the organization.

2. Kind of process

Internal recruitment is a cost-effective process and one that does not take up too much time and effort. On the other hand, external recruitment is a costly, lengthy and extensive process.

3. Training required

Induction training is not required for employees recruited from within the organization, whereas it is required for those recruited from other sources.

4. New ideas and skills

Internal recruitment does not bring about fresh ideas and competencies to the organization, while external recruitment draws fresh talent, skills and ideas into the organization.

5. Basis

Internal recruitment is based on merit as well as seniority. However, external recruitment mostly focuses on merit and qualification.

6. Employee pool available

A limited pool of employees is available when carrying out internal recruitment, i.e. there is limited scope of new talent. However, when external recruitment is carried out, candidates from outside the organization can be approached, which offers a greater number of candidates to choose from.

7. Motivation of employees

Existing employees are motivated when their organization performs internal recruitment, which leads to improved performance and job satisfaction. However, when the organization opts for external recruitment, the morale of the current employees may decrease, leading to dissatisfaction with the job.

Internal recruitment vs external recruitment – tabular comparison

A comparison of internal recruitment and external recruitment in tabular form is presented below:

Internal recruitment vs External recruitment
Filling job vacancies with employees who are already part of the organization Filling job vacancies with candidates who are not part of the organization
Kind of process
Cost-effective, quick and not very extensive Costly, time-consuming and very extensive
Training required
Not required Required
New ideas and skills
Not promoted Promoted
Merit plus seniority Merit plus qualification
Employee pool available
Limited Extensive
Motivation of employees
High Low

Conclusion – internal recruitment vs external recruitment

The success or failure of any organization depends on its employees. Hence, it is very important to recruit the best employees for a given job. The ideal method that should be used by an organization for recruiting new employees depends on the situation. If the employee base of an organization is good, then it can select an employee for its job opening from within the organization. However, if it does not find an appropriate employee for the job, then it can employ external sources for filling the vacant post.