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Hiring Internally vs. Externally: Weighing Your Options

14 Sep


Filling a job vacancy is no simple task, and deciding whether to hire internally or externally makes the task even more difficult. There are pros and cons to both forms of hiring, but there’s certainly no right or wrong choice.

The best choice is the one that is most impactful to your business. However, after an extended time recruiting and hiring remotely, you have a lot to consider.

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The Pros of Hiring Internally

Making an internal hire can have a profound impact on recruiting, retention, and company culture. According to SHRM, 41% of employees say they will prolong their tenure at a company if they hire internally compared to the companies that do not. Aside from being more efficient than external recruiting, it’s also an attractive selling point for your business—it shows commitment to the advancement of your employees.

In addition to helping with retention, hiring internally can also provide a much-needed boost in employee morale. An internal hire has already gone through the onboarding process and should have a pretty clear understanding of the company’s culture and mission. Whatever training they need to go through should prove to be quicker, and the transition will be seamless.

An internal hire will also show other employees that there are career opportunities within the company.

The Cons of Hiring Internally

While internal hiring may fill a void in one area, it could create a problem elsewhere. Filling an open position with a current employee means their previous now needs to be filled. In some cases, this isn’t so bad, especially if they are more from an entry-level position to one with more superiority. But if this isn’t the case, you may be backing yourself into a corner, and extend your recruiting process.

You also run the risk of increased competition amongst your staff. While the advancement may motivate employees, it may also cause a rift due to jealousy or employees working toward personal goals rather than the overall goals of the company.

To assure that you’ve internally promoted or hired the best possible employee for the job, conduct regular employee evaluations. This will give you a better sense of who has been the most successful leading up to the point of the move.

The Pros of Hiring Externally

Now and again, your business may need a little shake-up. The best part about an external hire is the candidate can bring new, fresh ideas to your operations, the team, and company morale. Further to this point, the candidate may also possess skills that are not currently available on your employee roster.

Another positive to consider with external hires is you aren’t limiting yourself to a smaller talent pool. Since the start of the COVID-19 pandemic, remote hiring has become more prominent and it essentially allows you to hire anyone, anywhere.

To help make sure the onboarding process is as smooth as possible with an external hire, consider using a new hire checklist and/or screening form. This will help you stay on track and properly vet your candidates.

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The Cons of Hiring Externally

According to Toggle Hire, Small business owners spend 40% of their working hours on tasks that don’t generate income, such as hiring. Not only does hiring take up a lot of time, it’s also quite costly. So costly in fact that Glassdoor says the average company in the United States spends about $4,000 to hire a new employee.

By hiring externally, you’re also taking a chance. The recruiter can really only gauge a candidates’ success based on a resume, interviews, and maybe some work samples. But this won’t tell you how successful a hire will be.

Furthermore, it may give current employees the perception that they aren’t adequate to take on new roles and fill open positions.

While deciding to hire an internal or external candidate is ultimately the decision of the hiring manager, it is important to keep in mind that the hiring process is never going to be quick and you may need help. Working with a PEO can help you save time and money when recruiting and onboarding for positions you fill. PEOs like VensureHR can provide an extensive range of services and resources like the Business Owner’s Guide to recruiting and other HR-related items.

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