When hiring someone for a new role, the dilemma of giving the position to an existing employee versus bringing in someone new has persisted for a long time. The choice between something familiar and possible changes has always kept recruiters and leaders on their toes.
Promoting or reassigning existing talent within the company offers distinct advantages over onboarding a new face. As such, the choice should be made with the role’s needs and the company’s in mind.
Each type of hiring has a significant impact on a company’s costs, culture, and capabilities, which should be carefully measured to create a workforce that encourages growth, welcomes change, and remains true to the company’s core values.
Understanding Internal and External Hiring
When a vacancy opens up in a company, recruiters can choose to fill it with someone already within the company through the Internal Hiring Process. This form of movement can occur through a promotion, transfer, or project change that alters the scope and title of a person’s role but not their company.
Alternatively, recruiters may opt to give the open role to a new face. The External Hiring Process onboards a new employee whose qualities and qualifications best fit the role, even if they may need time to understand the company’s existing culture and workflows.
Each type of hiring process allows the company its own advantages. With internal hiring, transition becomes significantly easier, reducing hiring and onboarding costs while promoting growth. On the other hand, an external hire increases the company’s capabilities while bringing in a fresh perspective.
So, which option should a recruiter go for? According to Suvendu Ghoshal, CEO of White Windows Consulting and Human Resources Consultant for Shivalik Small Finance Bank, there is no straight answer to the question, as the choice depends on the context.
“Internal hiring builds morale, retains institutional knowledge, and signals career growth — but may limit fresh thinking,” explained Suvendu. “External hiring brings new perspectives, skills, and energy — but takes longer to onboard and can disrupt culture.”
This is why Suvendu suggests: “Choose internal when you need continuity and speed; go external when you need transformation or capabilities that don’t exist inside.”
The Case for Both Hirings
To understand which choice to make, one must understand the advantages each hiring type offers.
With internal hiring, there’s a boost in cost savings and cultural positivity that can often work wonders for a company’s workflows. Some of the key advantages of internal hiring include:
- Faster time-to-productivity: With internal hires, the onboarding and assimilation process becomes significantly shorter.
- Higher engagement and retention: Internal growth boosts employee morale, thereby improving engagement and retention.
- Lower hiring and onboarding costs: Due to a smaller transition process while mobilising existing talent, both types of costs are reduced significantly.
- Preservation of institutional knowledge: As the internal hire is already familiar with the company’s operations, institutional knowledge continues to work in the company’s favour.
- Stronger employer brand internally: Internal mobility enhances the company’s image in the minds of not just affected employees but also those around them, signalling available growth opportunities.
On the other hand, external hiring seems to be the perfect fit for growing companies that want to expand not just their skillset but also their perspectives and diversity. Bringing in fresh blood provides advantages such as:
- Access to new skills and emerging capabilities: A new hire may bring skills and capabilities not present in the existing team, enhancing the company’s overall efficiency.
- Injection of fresh thinking: With fresh faces come fresh ideas, allowing creativity to flow freely as new ideas combine with existing experience.
- Filling roles where internal pipelines don’t exist: External hires are almost a necessity in cases when the vacancies are for roles for which no existing employees might have the skills/qualifications.
- Scaling quickly during expansion phases: When a company grows, so does it responsibilities and workloads. In such cases, external hires are not just for bringing in fresh perspectives and skills but can also simply be to reduce the workload on existing employees.
When to Prioritise a Particular Path
With strong reasons to choose either option, the decision between internal and external hiring ultimately depends on what a role demands and the company’s needs. Depending on the circumstances of growth and existing capabilities, a particular kind of hiring offers more sense than others.
A good recruitment plan involves being open to both kinds of hiring. It involves evaluating the circumstances and available talent to make a choice that provides the greatest benefit.
When Internal Hiring is the Path to Choose
During the hiring process, choosing an internal candidate can provide various advantages. In fact, this form of recruitment can be ideal for:
- Roles with strong internal skill adjacency
- Leadership and succession-critical positions
- Stable business environments
- Organisations investing in reskilling and mobility
- Situations where speed and cultural fit matter most
When External Hiring Makes More Sense
Adding a new employee to a company offers recruiters, leadership, and team members new opportunities and a fresh perspective. They are especially well-suited for:
- New or niche skill requirements
- Rapid business transformation or digital shifts
- Market expansion into new geographies or industries
- When internal talent is overstretched or unavailable
As per Deepti Mehta, Chief Human Resources Officer for Interface Microsystems, “Onboarding a new hire is more beneficial when the business needs skills that do not exist internally or requires an objective perspective to challenge legacy approaches.
Deepti adds that external hiring is “especially impactful during periods of transformation or expansion, where fresh ideas and proven external experience can accelerate progress.”
Risks of Over-Indexing on One Approach
Merging the two forms of hiring in a company’s recruitment process is not just about reaping both sets of advantages. It is also important to avoid the drawbacks that can come from relying solely on one form of talent movement.
When a company relies solely on internal talent mobility, it opens itself to stagnation, skill gaps, and talent hoarding. The lack of new minds creates a vicious cycle of repetitive ideas that can significantly hamper the company’s growth.
On the other hand, when a company only wants to hire new people for open roles, it can create significant disengagement among employees, especially those who might have felt they were suitable for a particular role. A loss of morale can lead to increased attrition.
Moreover, a constant influx of new employees can significantly alter a company’s established culture. New employees might find it hard to fit into a company’s culture, especially when it keeps changing with every new addition.
The imbalance created within the company due to a reliance on one form of hiring can severely harm the health of the workforce in the long term. A pattern in hiring becomes obvious to existing employees over time and can negatively shape their perception of the company and how it values its employees.
Designing a Blended Hiring Strategy
The ideal strategy for creating a recruitment plan is to combine internal and external hiring paths into a single plan. With small steps and conscious choices, a company can easily know when to prioritise internal talent and when to bring in a fresh face.
“HR should prioritise building a talent ecosystem where internal mobility nurtures career growth, boosting employee commitment and motivation, while external hires infuse fresh ideas, skills, and innovation,” says Deepti.
Deepti elaborates that “The right blend, tailored to your organisation’s context and dynamic market, can future-proof against skill shortages, disengagement, and competition.
Some simple steps to create a blended recruitment plan include:
- Creating clear criteria for internal vs external decisions
- Using skills data to guide hiring priorities
- Aligning talent acquisition, learning & development, and workforce planning
- Making internal opportunities visible and fair
A little bit of transparency, an open mind, a drive towards growth, and a desire to boost existing talent can help create recruitment paths that cater to the company’s needs while improving overall capability.
In the End…
The best organisations hire with intent, not habit. The focus of any recruitment process should not be on where a person comes from, but rather on what they bring to the table. A fair process can often break expectations and provide welcome advantages.
A good recruitment process allows an existing employee to show previously undemonstrated talent while also giving external candidates a chance to highlight just why they will add to the company. By making capability-led decisions that do not rely on established patterns, companies can significantly boost their capability, culture, and performance.
Remember, the right choice between internal and external hiring should depend on the context, not a preference.
