How it helps organizations to achieve their strategic goals?

External VS Internal

Recruitment

PresentersHaider Raza Naqvi

Sarmad AliRabia Siddique

Internal RecruitmentPromoting employees from within an

organization To fill upcoming positionsFirm doesn’t have to “reinvent wheel”

with internal employeesEmployee adapts faster a new position

External RecruitmentHR systematically search for new

employee poolInflow of new ideas and skillsNew practices that can be integrated into

organization’s best practicesIt also diversifies teams and creates a

balance

At companies large and smallTalent Hunt never endsTo cut costs and timeCompanies are now looking at what have

been previously over-looked…

Within the company itself

Vitality of External Recruitment is undeniable

Induces new bloodCreates a competitive environment Existing workforce put in more effortsBut, firms are now more inclined

towardsInternal Recruitment

Source: Journal of Labor Economics

Literature ReviewArticle 1: External Recruitment as an

Incentive Device by Kong‐Pin Chen

Article 2: External Recruitment VS Internal Recruitment by William Chan

A hunt for talent never endsCompanies seek employeesWho can give maximum benefits to firm Due to high costs and time consumptionFirms mostly recruit internally

Two choices for employerRecruitment is an economic contestOpening up external recruitment opens up

a competitionChances of internal employees to win

decreaseBecause of incoming new skills and talentCan be avoided by setting the prize of

incentive high

Firms recruit externally for special and superior skill sets

But, Internal Recruitment has its own reasons

1 Human Capital Accumulation2 Risk aversion of choosing a wrong

person

Even if reliability of external candidate is known

Firms prefer to recruit internallyIf the relative significance hiring

externally is not strong enoughFirms also use promotion as an incentive

device along with monetary rewards

How it helps Organization?

It ensures loyalty and commitmentCreates a completive environment Employees strive to win the prizeNew employee rejuvenates organizationOrganization better knows an existing

employee

Critical AnalysisInstable economy has forced to cut

budgets for attracting new employeesHiring externally costs 1.7 times more

than hiring internally40% to 60%eternal hires fails Compared to 25% failiure rate in internal

recruitment

Figures Source: Saratoga Institute

Another concern is to find someone who can fit-in

Because hiring a wrong person can have drastic consequences

It also costs so much and takes a lot of time to make a new person to adopt firm’s culture

ConclusionWe can conclude that…

Crunch economic situations andRequired flexibility of an employee

Organizations are more inclined towards hiring internally

Only when the need to fill in high-demanding position or require some significant talent they look outside the organization