Unit 6: Principles of Management. BTEC Level 3 Business Studies & BTEC Level 3 Enterprise and Entrepreneurship

Internal recruitment is the process of filling vacant job positions with staff who already work for the organisation. This could be in the form of a promotion, changing job role or adding additional roles to somebody’s job description.

Benefits and Drawbacks of Internal Recruitment

Cost effective: By promoting or adapting the roles of staff who already work for the organisation, there is no need to pay for external advertising to attract applicants or other recruitment costs such as agency fees or induction training. 

Faster hiring process: The time between establishing the need for a job position and filling it is reduced as there is no need to wait for applications and no need for new staff inductions. There is also no need for new recruits to work their notice with their previous employer. 

Employee morale boost: Providing opportunities for promotion within the organisation, staff may feel motivated to work harder for them and feel appreciated when considered for or given a promoted role. 

Reduced risk: As the person filling the new position already works for the organisation, it is easy for managers to gain an insight into their track record of performance. The employees are also familiar with the systems and culture of the organisation, increasing the likelihood they will settle in well.

Limited talent pool: Internal recruitment restricts the talent search to staff within the organisation which can limit the skills, experience and perspectives of the workforce. This can hinder the performance of the organisation if its objectives require innovation or a fresh approach.

Conflict amongst staff: When a member of staff is promoted, it may cause resentment from the staff who were not selected for the role. This can have a negative impact on team cohesion, hindering the productivity of the firm.

Skill gaps: Internal candidates may lack the skills and experience that external candidates could bring from their previous employers or training. This may lead to the firm investing in training to provide staff with the skills required to perform their role in a way that contributes to the competitive advantage of the firm.

Resistance to change: Without new regular new staff introducing fresh ideas, existing staff may resist change due to fear or anxiety, especially if change is not part of the organizational culture. This resistance can hinder managerial efforts to implement changes.

Exam Practice - Internal Recruitment at DingDong Limited (Unit 6 June 2022 Exam)

When DingDong diversified into Parcel Delivery, they used internal recruitment to recruit drivers from their existing team of taxi drivers. The drivers felt they could fit the parcel deliveries around their taxi driving work. 

A benefit of internal recruitment is the faster hiring process. DingDong Limited had been struggling in the private hire taxi market with increased competition and the market for parcel delivery was growing quickly at 35% in the past 10 years. These conditions created a crisis that DingDong Limited needed to respond to quickly. By hiring internally, they were able to save time in the hiring and induction process and bring their new service to the market faster increasing their opportunity to gain a competitive advantage. 

A drawback of internal recruitment is the skill gaps that can emerge. Despite the primary roles of taxi drivers and delivery drivers being very similar, the introduction of the delivery service required skills related to warehouse management of over 1500 parcels each day. This led to complaints about missing parcels that could have been avoided if warehouse management skills were brought in with externally recruited staff.