Internal Recruitment Guide: Insights into the Process and More

Internal Recruitment Guide

Will you be amazed if we say that the average cost of recruiting an employee is around $4000 (approx 3.2 lac) ? Yes, hiring an employee is a very important decision a company makes, and with a series of steps involved, it is an expensive process.

Every company undergoes the daunting task of sourcing and hiring the right person whenever there is a vacancy. With 75% of companies hiring the wrong person, there is a need to look for a better method of recruitment.

Internal recruitment is the solution. The existing employees have already been selected after careful consideration and background checks. To see a win-win for both the business and the employees, it is essential to select one from the existing bunch. This blog delves deep into the internal recruitment process, and the best practices that should be followed to make it effective.


What is Internal Recruitment?

Internal recruitment is a process wherein a company recruits someone from among the existing employees to fill a vacant position in the organization. This is the most overlooked source often.

Internal recruitment is considered an easy, cost-effective, and beneficial method of hiring for companies. Before we delve deeper into all these, we shall look into the types of internal recruitment.

Types of Internal Recruitment

Here are some common types of internal recruitment:


When an employee is posted to a higher position in the same organization, it is a promotion. Here, the vacancy in the higher post is filled from within the organization.


Whenever there is a vacancy in any other division or branch of the organization, employees from other locations are posted to fill the vacancy. This is called transfer.

Converting Temporary to Permanent Positions

Employees, after completing certain months/years in a position on a temporary basis, may be given a permanent position. This arises when there is a vacancy in the permanent position.


Some organizations hire people through referrals from existing employees. This is considered a reliable and cost-effective way of recruitment.

Why Internal Recruitment?

Human resources are available in plenty in external sources but then, why should a company adopt an internal hiring process? To learn more about this, you should understand the advantages associated with internal recruitment.


Internal recruitment is a time-saving process. Recruiting from outside involves many stages, like posting job details, sourcing candidates, screening and identifying the right one, onboarding, etc.

In internal recruitment, the company is well aware of the caliber of its employees and can easily identify if they are the right fit. This reduces the time taken for recruitment.


There are many stages in the external recruitment process that involve considerable expenditure to the organization. When candidates are sourced from within the organization, such expenditure can be avoided.

Motivates Employees

The internal recruitment process considers the existing workforce over the external source. This boosts the morale of the employees and motivates them to contribute better toward the growth of the organization. They feel valued and can relate better to the goals of the organization.

Reduces the Stress on Employees

The fear of having to change jobs frequently due to becoming irrelevant in the present one haunts employees in many organizations. According to a survey by ADP Research, Institute, 47% of Indians feel insecure and are worried about job security. Internal recruitment can reduce this fear since employees believe that they will be retained in other positions within the organization. This helps them work peacefully.

Quick Onboarding

Your existing employees are well aware of the organization’s policies. So, with internal recruitment, the onboarding process can be completed quickly. The employees need to be educated only about the new position they will be moving to.

A quick onboarding process saves a lot of time and money, which ultimately helps in the improvement of the productivity of the organization.

While there are several benefits attributed to internal recruitment, we cannot ignore its downsides too. Let us take you through some of the disadvantages of this process.



Limits the Entry of New Talent

When existing employees fill vacancies, they may not always possess the necessary skills for the new position. It also limits your access to a fresh talent pool from external sources.

It will lead to a position where you have to rely on internal sources even though they are short of requisite skills, which can impact productivity.

Stagnant Culture

Employees start to become lethargic at work as they are now free from the fear of losing jobs for non-performance. They are not open to new perspectives and lack the motivation to experiment.

This leads to a stagnant culture, which can be avoided if external recruitment is also carried on along with internal recruitment when the need arises.

Conflicts Between Employees

Internal recruitment can create conflict among employees and managers since each one may consider themselves eligible for the internal move. For example, when there is a promotion of one employee, the others in the same team with similar experiences may feel resentful.

This may ultimately lead to employee turnover, which is detrimental to the growth of the organization.

Gaps in the Workforce

When an employee is moved to another position, there arises a vacancy in the present position. Sometimes when suitable candidates are not available to fill this role, the gap remains for a long time.

Gaps can lead to disruptions in the normal working of your business. So to fill this gap, you may have to resort to external recruitment.

When should you Use Internal Recruitment?

Let us look into when you should resort to internal recruitment:

1. Hiring for Key Roles

When a vacancy arises in the organization’s key positions due to retirement or transfers, internal sources are the first resort. Recruiting from the inside leads to a smooth transition to the key leadership position.

It is important that those who fill critical positions need to be aware of the organization’s culture, as this can help maintain business continuity effectively.

2. To Retain Important Talents

In light of high employee turnover in most organizations, it is essential to maintain key talents for the benefit of your business. By promoting them or transferring them to other important positions, you can retain the talent within the organization.

This will help in the long-term growth of the organization. The employees are also happy that opportunities for career growth are available.

3. To Save Costs

If the organization’s policy emphasizes saving costs and there is an existing pool of talented employees, then internal recruitment is the best choice.

4. Current Employees are Interested

When you have posted a job vacancy and existing employees have shown interest in the same, you can consider internal recruitment.

Only satisfied employees who want to continue with the organization express interest. This means that the organization has a loyal bunch of employees who should be retained.

5. Specific Expertise

When the job position demands a specific skill that your existing employee possesses, then it is wise to prefer internal recruitment. Employees from within have a detailed knowledge of the position and can easily fit into the job.

This reduces the hassle involved in identifying the right person with the necessary expertise from outside the organization.

6. Organization Policy

When you have a policy in place that emphasizes prioritizing internal recruitment, then you should consider your existing workforce first. Many organizations practice this policy to encourage and motivate the existing workforce.

Businesses also want to ensure that they move to external recruitment only when they have no other options left.


Steps Involved in Internal Recruitment

The following are the key steps involved in internal recruitment:

1. Identification of Job Vacancy

The process starts with identifying the vacancy and the need to fill the same from the existing employees. It involves a description of the role, eligibility requirements, and skills needed.

2. Posting the Vacancy

Once the vacancy has been identified, the next step would be to post about it on internal notice boards and circulate it among the existing employees. This keeps them aware so that they can apply for the position.

3. Application by Employees

If the employees identify themselves as suitable for the post, they can express their interest and apply in the stipulated process.

4. Screening

Upon receipt of applications, you should start screening them to choose the best fit for the vacancy. Though the recruitment is from the existing talent, it is important to identify if they have the necessary skill for the new position.

5. Selection

Once eligible candidates are screened and identified, the selection process starts. Assessment tests and interviews may be conducted to choose the best one among the lot.

6. Declaration of Selection

Once the interview is over, the selected candidates are notified via email or other modes as is usual. They are also informed about the job requirements and terms and conditions, if any.

7. Feedback to Other Applicants

It is essential to offer constructive feedback to those who were not selected. This will help prevent them from getting demotivated. You should help them analyze the lapses and encourage them to apply in the future.

8. Onboarding

Onboarding the employee into the new role is the final step that marks the end of the internal recruitment process. This process is quick as the employee is aware of the policies and goals of the organization already.

Training and guidance, as required, may be provided so that the employee takes over the new role with ease.

Internal Recruitment Best Practices

A proper system in place will make the process an effective one:

Create Awareness

The job vacancies should be circulated to employees through company newsletters, emails, or the intranet. Existing employees can apply to the position only when they are aware. Your organization should have a proper system in place to create awareness among the existing pool of employees.

Maintain a Database of Talented Pool

Organizations should maintain a database of existing employees’ skills and talents. This will help them identify the right person when there is a need.

A review of the database helps to match employees’ applications when any job vacancy is posted internally.

Talent Development Program

Identifying skilled employees and training them through talent development programs helps hone their skills. This will make them more equipped for the position that will arise in the future.

Job rotation, mentorship programs, workshops, etc., are some forms of training offered to employees.

Encouraging Referrals

Referrals are also a form of internal recruitment. Many companies offer incentives to employees for referring candidates, as this helps in the considerable reduction of cost to the company.

Referrals should be encouraged to bring in a talented pool of people from the existing employees’ network. Existing employees are well aware of company policies and work culture and hence onboarding their referrals becomes an easy task.

Transparency in Selection

Companies should maintain a transparent selection process, especially in internal recruitment, as it may lead to employee resentment otherwise. The process should be objective and free from bias.

You should also communicate the recruitment process to the employees so that they are well aware.

Follow a Proper System

A proper system similar to the one followed for external recruitment should be followed for internal hiring as well. The various steps like identification of vacancy, posting on internal forums, selection, training and onboarding need to be followed for a streamlined hiring system.



Employees are the pillars of an organization. It is imperative to keep them motivated, engaged and happy. Internal recruitment is one way that helps maintain a good relationship with your existing talent pool.

Even though they have some disadvantages, the benefits outweigh them. When employee attrition is a huge problem in many organizations, internal recruitment comes as a solution to tackle it.

Follow the best practices mentioned above, and witness your company build a loyal and talented pool of employees. With one-stop recruitment software from factoHR, you can be rest assured of all your hiring needs. They help you move to a highly streamlined and robust recruitment process so that you retain the best talent.

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