Internal recruiting: How it works and its benefits

Internal recruiting: How it works and its benefits

Recruiting external candidates for job openings is many managers' first instinct, but you might be missing out on talent already working on staff. Internal recruiting can improve employee satisfaction and simplify your company's hiring process. Read on for our guide to internal recruiting, its benefits and disadvantages, and how to use it to your company's advantage.

What is internal recruiting?

With internal recruiting, an organization fills many jobs with employees working in other positions. Talent shortages in many industries make internal recruiting easier than hiring new candidates. It helps teams fill skills gaps proactively from the company's existing talent pool. Internal recruiting can save your business money, time, and resources compared with external recruitment. There are several types of internal recruitment, as follows:


Promotions are the most widely used type of internal recruiting, and many people hope to achieve a more senior position. For example, you could make the shift supervisor at a retail store the new assistant manager.


Not every instance of internal recruiting is a promotion. Sometimes, people may want to transfer to a similar position in a different department or location. For example, an executive assistant working in HR might move to the sales department. Offering someone another type of position is another option. For instance, you could offer a seasonal, part-time, or temporary employee a full-time job. Letting people transfer when they want can help your organization retain employees when they show promise.

Employee referrals

Employee referrals are an often-overlooked form of internal recruiting. You can encourage existing staff to refer people to positions with referral bonuses and other rewards. That way, people can come to your organization without external recruiting from hiring managers, and you can see a constant stream of candidates. Trusted employees are also likely to refer skilled people who can do the job well. 


Companies often grow, change, and merge, making reorganization a normal part of working life. When demand is high, managers might work alongside employees to increase productivity. People can also start working with a new manufacturer, retailer, or subcontractor.

The benefits of internal recruiting

According to the Society for Human Resource Management, 83% of HR professionals have had trouble recruiting suitable candidates recently. Internal recruiting can help you simplify and speed up the hiring process. Here are some of the benefits of recruiting internally:

  • A proven track record: You have access to more information about a person's skills, work ethic, and personality if you've worked with them before. You can make sure the person you choose is loyal to your company and avoid having to hire someone you don't know much about.
  • Familiarity with the company: Current employees are often familiar with company rules and how things work. They may need to learn some new skills, but you probably won't need to train them as much as an external hire.
  • Lower costs: Internal recruiting doesn't usually require advertising, and training costs are often lower. In addition, you save time and money by interviewing fewer unqualified candidates and reducing background checks and credit checks.
  • Better employee satisfaction and retention: Knowing that promotions are possible can increase morale and employee satisfaction and reduce turnover. It shows people you want to recognize and reward their talents and efforts. Internal recruiting is a great way to encourage staff members to stay instead of applying to other companies to advance their careers.
  • Compatibility with company culture: By hiring someone internally, you can ensure they get along well with the rest of your team members. 
  • Better diversity, equity, and inclusion: Internal recruiting alone can't make your workforce more diverse, but it can give people the opportunities they need to grow their careers. It can also keep people from feeling discriminated against or frustrated by a lack of advancement.

"According to the Society for Human Resource Management, 83% of HR professionals say they have recently had trouble recruiting suitable job candidates. Internal recruiting can help you simplify and speed up the hiring process."

The disadvantages of internal recruiting

Internal recruiting can be useful for many companies, but it can have disadvantages. Internal candidates have fewer new perspectives, while hiring external candidates with fresh ideas can help your company gain insights and grow. Multiple internal candidates often compete for the same position, and those who don't get a promotion after applying may feel jealous or resentful of the person who got the job instead. If you need to fill a highly skilled or specialized job, an internal candidate with the right skills may not exist, and you could need to make an external hire.

You'll usually need someone to replace the employee you promote or transfer. This means external hires are often necessary to keep staffing levels and productivity high. You can also ask for employee referrals to use internal hiring without taking anyone away from their current position.

Using internal recruiting to help your company

With internal recruiting, you can increase the number of internal applicants and improve employee satisfaction. Here are some tips to help you recruit current staff members: 

Establish clear goals and procedures

Establish goals for your internal recruiting efforts. For example, you might decide to set goals for reducing hiring costs or use internal promotions to increase employee satisfaction and retention. Measure your success regularly and make changes when needed. You can also write a policy for internal hiring, promotion, and employee referral. This can create additional clarity for hiring managers and employees and reduce resentment or inconsistencies. Having a standard checklist also allows you to eliminate some steps, such as background checks or phone interviews. You can also ensure that the procedure is the same for every candidate.

Use applicant tracking software

Applicant tracking software can help you distinguish between external candidates, internal candidates, and employee referrals. In addition, many companies create an internal job board that only current staff members can see. It's also a good idea to announce vacancies to your staff before posting the jobs externally. That way, you can encourage internal applicants.

Provide personal, polite responses

Even if a person doesn't get the job, provide a personal, polite response instead of a standard rejection letter. You can reduce resentment by explaining why the employee didn't get the job and what they can do to be more successful next time.

Recognize and reward staff members

An employee recognition system that provides ways besides promotions to reward workers can help make your employees feel more valued. For example, you could offer a bonus to the employee who makes the most sales each month.

Train employees

Investing in training and development can better prepare people for new positions. That way, you can use internal recruiting more often because your staff members will have more of the skills they need for new jobs. 

Use succession planning

Succession planning involves identifying potential candidates for leadership roles that could open in the future. For example, you might ask someone who wants to retire soon to help train their replacement.

Discourage talent hoarding

Some managers avoid recommending people for new positions because they like working with them and don't want to train someone else. This could make some people feel they need to apply to new companies to advance their careers.

Internal recruiting is an excellent way to reduce turnover, make recruiting more affordable, and increase employee satisfaction. You can get help with your business's internal recruiting from CareerBuilder. 

Related reading: Helpful recruiting and training advice:

Providing better salaries and more opportunities for women can help improve employee satisfaction.

Upskilling and training your employees well can make internal hiring more successful. 

Internal recruiting is an important part of building a successful team for your company.

Hiring a former employee with extensive knowledge about your company and its procedures can be beneficial. 

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