A hiring process can be a daunting time for businesses. For whatever reason an employee vacated their position, it now lays unclaimed, and while the company efforts to fill it, money is lost. There are two options for filling an open position: hiring from within, and hiring externally. There are many factors to take into consideration before committing to one option or the other. Many of the benefits associated with hiring from within a company are tied to employee morale.


Employee Morale


Hiring internally is quicker because the candidate is already an employee with the company, and are therefore already familiar with operations and business methods. The training process will be quicker, and the transition will generally be smoother than bringing on a new employee. Hiring from within sends a message to other employees that there are real career opportunities with the company. Often, this boosts company-wide productivity, as it creates added incentive for increased productivity.




Companies like to hire from within because the candidate for the position is a known commodity; someone whom the company is already familiar with. They know the person’s strengths and weaknesses, and the candidate has already established relationships with employees in the company. The costs associated with hiring a new employee are also lower, meaning advertisements and time spent working with an unfilled position won’t accumulate, because of the speed of a quick hire.


New Outlook


Conversely, hiring a candidate externally introduces a fresh perspective to the fold. Bringing experience from outside the company can be a breath of fresh air, particularly in a struggling business. Hiring an external candidate means access to a larger, more diverse talent pool. Often times, the company only has one or two qualified candidates for an open position, hamstringing them into choosing between two under qualified candidates. Hiring externally gives a company a chance for a fresh start


While hiring a known commodity may appeal to many, it comes with its potential disadvantages as well.


‘Thinking Within the Box’ Syndrome


Hiring an existing employee for a position with more responsibilities can lead to a narrowing of ideas; more of the same. A struggling business that hires from within is less likely to receive the proverbial “shot-in-the-arm” of innovative concepts and ideas that comes with hiring someone outside of the company.




Even though there will be less training and need for orientation for an internal candidate, they will have to adjust to new expectations and responsibilities, just like an external candidate would. Internal politics also play a hand, as some fellow employees may not agree with the promotion, creating tension in the office, and hurting overall output.


Relying on the Unknown


When hiring an external candidate, all a company has to judge them is a resume, the interview, and perhaps some examples of work, depending on the type of position. This puts the hiring company at a disadvantage, known commodity also applying for the position.


Organizing a search for external candidate means spending money on advertising for the position, and means that the position is open for a longer period of time, draining the company of additional funds, and diminishing productivity. A person hired from the outside will take time to not only train, but to become familiar with other employees, and their respective strengths and weaknesses.


Unhappy Workers


Announcing to a group of employees that the position has been filled externally can hurt morale just as much as the news of a hiring from within can help it. Knowing that all of their hard work will lead nowhere except a paycheck hurts effectiveness, costing the company money in the long-term, as right now.


Weighing the pros and the cons for hiring internally, or externally, comes down to what the company is looking for. Is it looking for a fresh perspective for the position, or is it looking for stability, and a smooth transition? It’s an easy question to ask, but not nearly as easy to answer.


About the Guest Author:

Hilary Smith

Hilary L. Smith is a small business entrepreneur who enjoys topics involving mass communications, technology development and international relations.