ADVANTAGES AND DISADVANTAGES OF

INTERNAL RECRUITMENT

SUBMITTED BY

BHAVNA MENON - 16010324222

XERXES BATTIWALLA- 16010324275

SHREYA ANANTH- 16010324261

SECTION - C

Symbiosis Law School, Hyderabad

Symbiosis International University, PUNE

In

JANUARY, 2018

Under the Guidance of

Prageetha Raju

Assistant professor

HUMAN RESOURCE AND TOTAL MANAGEMENT

1
 CERTIFICATE

The Project entitled “Report on internal recruitment, advantages and

disadvantages, and legal issues thereof” is submitted before Symbiosis Law School,
Hyderabad for the course Human Resource and Total Management as part of internal
assessment is based on my original work carried out under the guidance of Prof.
Prageetha Raju. The research work has not been submitted elsewhere for award of any
degree.
The material borrowed from other sources and incorporated in the thesis has been
duly acknowledged. I understand that I myself could be held responsible and
accountable for plagiarism, if any, detected later on.

Signature of the candidates:

Bhavna Menon Xerxes Battiwalla Shreya Ananth

12 January, 2018

2
 ACKNOWLEDGEMENT

We would like to take this opportunity to express our deep sense of gratitude to all
those people without whom this project could have never been completed. We thank
God almighty for blessing us and helping us throughout our endeavors. We thank our
parents for being our inexhaustible source of inspiration.
We would like to extend our gratitude to Prof. Prageetha Raju for the constant
guidance and also for providing us an opportunity to learn.
We would also like to thank all the teaching and non-teaching staff at Symbiosis Law
School, Hyderabad and our friends for the constant encouragement and moral support,
without which We would never have been able to give in our best.

3
 INDEX

INTRODUCTION……………………………………………………………………………...5

OBJECTIVES…………………………………………………………………………………….5

RESEARCH METHODLOGY……………………………………………………..….…….5

MEANING AND RISE OF INTERNAL RECRUITMENT…………………..……….6

INTERNAL RECRUITMENT………………………………………………………….…….7

ADVANTAGES……………………………………………………………………………..….7

DISADVANTAGES……………………………………………………………………..…….9

ANALYSIS……………………………………………………………………………………..10

4
INTRODUCTION:

Before discussing the advantages and disadvantages of internal recruitment, it is very

important to understand the meaning of recruitment. In Human Resource Mnagement,
recruitment is “the process of finding and hiring the best-qualified candidate from within or
outside of an organization for a job opening in a timely and cost-effective manner and this
process includes analyzing the requirements of a job, attracting employees to that job,
screening and selecting applicants, hiring, and integrating the new employee into the
organization”. 1

It is one entire process, with a full life cycle, that starts with the identification of the needs of
the company as for the job, and closures with the introduction the employee with the
organization.

When we discuss the recruitment process, we promptly consider activities, for example, the
analysis of the requirements of a particular job, pulling in candidates to apply for that job,
screening the applicants and selecting among them, contracting the picked candidates to
end up noticeably new employees of the organization, and coordinating them into the
structure.

Clearly, the principle motivation behind why the recruitment process is executed is to
discover the people who are best qualified for the positions inside the company, and who
will help them towards achieving organizational goals.

Recruiting employees can be a to some degree problematic process. With the exorbitant
cost of hiring and training an employee with job and soft skills coordinating the job
description, committing an error in this field can substantially hurt net profit for the whole
year. One noteworthy thought in recruitment is whether to employ externally or promote
from within the organization.

OBJECTIVE:

The main objectives of this project are as follows:

1. To understand the meaning and concept of internal recruitment

2. To understand merits and demerits of internal recruitment
3. To analyze the effects of internal recruitment

RESEARCH METHODOLOGY:

The main source of information used in order to do the research were books and website
and hence secondary source of data was used.

1
Paul Mckinney, https://study.com/academy/lesson/what-is-recruitment-in-hr-lesson-quiz.html

5
MEANING AND RISE OF INTERNAL RECRUITMENT:

An internal recruitment strategy is characterized by promoting employees from inside an

organization to fill up and coming positions. Many firms utilize such methods as job posting
boards, email flashes, intranet presents and fliers on inform existing employees with respect
to positions they may compete for. This recruitment might be through making and
rearranging temporary groups to fill certain assignments or might be permanent changes.
Internal recruitment might be essentially horizontal or it might be for promotions in which
the advanced representative's previous position may not be filled.

At companies extensive and small, the chase for top talent never closes. Of late, in the midst
of endeavors to cut costs and increment the chances of employees being fruitful in their
positions, numerous businesses are discovering talent in a place that may have been
neglected in the past — inside the organization itself.

Previously, external hiring was from numerous points of view the favored standard. As
opposed to hire from inside, companies appeared to incline toward taking talent far from
the competition, along these lines acquiring new perspectives and bit of intelligence, among
different benefits. Real companies had sizable advertising and recruiting budgets, and
expected that a bigger applicant pool would bring about better hires. Flush with money, they
could take risks on hiring passive or active job seekers. Burning through a huge number of
dollars on recruiters appeared to be important to hire top talent, particularly in executive-
level positions.

These days, nonetheless, the frail economy is constraining recruiting budgets to be cut, and
companies are accomplishing more with less resources. Rather than the default approach of
hiring all things considered, companies are discovering (or rediscovering) that inner
recruiting is cost-effective and sensible in more courses than one. 2

The average cost of finding and hiring somebody from outside the organization is 1.7 times
more than an internal contract3. Also, look into demonstrates that in the vicinity of 40% and
60% of external hires aren't effective, contrasted with 25% for internal hires. This is uplifting
news for employees who normally leave firms because of absence of career opportunities,
yet it's awful news for work searchers who may have less jobs to apply for as internal hiring
rises.

Among significant employers who have shown expanded interest in hiring from inside,
frequently by means of leadership development programs, Booz Allen Hamilton's internal
recruiting system called "Inside First" filled 30% of open positions with new hires in 2011, up
10% from 2010. In 2012, the firm has effectively put 5,500 internal staff also. Hill+Knowlton
Strategies, a global PR firm, enlisted 28% internally and 19% externally for their main 97 jobs
2
TIMES OF INDIA, http://business.time.com/2012/08/15/the-power-within-why-internal-recruiting-
hiring-are-on-the-rise/
3
Sartoga Institute Reports

6
in 2011. Enterprise Holdings made approximately 10,000 internal hires in their fiscal year
finishing off with July 2012, up from 8,700 of every 2011. Novelis, the world's biggest maker
of moved aluminum products with 11,600 employees in 11 nations, has set 41% of new hires
through internal hiring. At long last, Energy Future Holdings has expanded its internal hiring
from 56% of every 2010 to 61% out of 2011.

INTERNAL RECRUITMENT:

“Our assets walk out of the door each evening. We have to make sure that they come back
the next morning.”4

Employing the right staff for a job can take a lot of effort as well as cost companies
thousands of pounds in recruitment. Internal recruitment is an easy solution to many
staffing issues adopted by most companies. It is considered an easy solution as makes the
process quicker and reduces external recruitment costs. Moreover, the companies already
have the employees on board, they know the performance capacity of those employees and
also the strengths and weaknesses of these employees are also known to them.

Before a company adopts internal recruitment, it is important that they analyze the
advantages internal recruitment sets before them and how it could benefit the company or
organization in all possible ways. Internal recruitment is done in 2 ways, i.e. transfer and
promotion.

ADVANTAGES OF INTERNAL RECRUITMENT:

1. Lower Recruitment Costs

If the company/ organization is running on a tight budget, then hiring internally can save
them a lot of money because they would not need to employ recruitment agencies or
advertise their recruitment plans. A study conducted by Oxford Economics revealed that
replacing members of staff can cost more than £30,000 per employee which includes the
cost of lost output while replacing an employee, the recruitment costs and the cost of lost
time while getting them up to full productivity. When qualified candidates exist internally,
recruiting candidates internally can decrease the time it takes to fill a position. This is
particularly useful in a tight job market, when the number of external candidates applying
for a given job opening can become astronomical. In such cases, selecting among qualified
internal candidates may be efficient because it offers costs savings, such as those associated
with advertising and from using staffing resources to interview numerous external
candidates.

2. Employees who are already familiar.

It is very well known that people can give great interviews and then turn out to be terrible at
their job. People also lie or embellish their CV and accomplishments. This can be a great
unseen risk for the company/ organization as it slows down the process of attaining the
goals set. By recruiting internally, the company/ organization already knows how productive
a person is and have a good record of their performance, especially if the company/
4
Narayan Murthy, CEO, Infosys

7
organization has an efficient Human Resource Management team to keep track of their staff.
Corporate culture might formally relate to the goals and objectives of the company as
articulated in its vision and mission statement. It informally includes the business attitude,
customs and etiquette. An external candidate that fulfills the experience and skills needed
for a position might not fit into the organizational culture. Internal candidates are already
familiar with the company's culture, policies and procedures. For example, this might
manifest itself in how meetings are conducted, projects are organized or the use of
consensus building in the decision-making process.

3. It can make the company/ organization a more attractive employer

These days it’s not just about employing someone to do a job, it’s about creating an
attractive employer brand so that the company/ organization is able to attract and retain the
best people. Part of that is giving staff the opportunity to progress. Indeed, in a Randstad
survey on employer branding, career progression was one of the top three things workers
look for in many sectors including IT, engineering, banking and leisure to name but a few.

4. Boosts Employee Morale

When a company/ organization decides to promote from within or fill new positions with
internal candidates, there is a positive effect on staff morale. Employees feel that the
company rewards hard work by offering an opportunity to take on new responsibilities or
move to a department in which an employee has an interest. Internal recruiting also can
inspire employees to perform at peak productivity. When the reward is an opportunity to
move into a better position, the staff will work hard to maintain a high level of productivity.
A good Human Resource Management team would be capable of identifying employees
from with the company/ organization who is fit for the new position by analyzing their
performance records in their custody.

5. Incentive for employees to perform better.

Internal recruitment can offer incentive for employees to perform well which may allow the
company/ organization to perform well in the market. It enables the employee to test his
potential in turn serving the purpose of attaining organizational as well as personal goals.
The turnover of valuable employees is reduced through internal placement. Top employees
within the company can be reassigned to an area within the organization where the need is
greater. This increases employee retention and morale by encouraging employees to seek
out career growth and development opportunities within a firm.

There are pros and cons to both hiring external candidates and promoting from within your
existing talent pool. External recruitment often drives innovation, while internal recruitment
is often the less-risky option. It is important that every organization/ company narrows
down their sources of recruitment depending upon the various internal and external factors
that may affect the business and choose a manner or recruitment only after weighing their
impact on the company/ organization in the long run.

8
DISADVANTAGES OF INTERNAL RECRUITMENT:

1. Opening up a part to internal employees can negatively affect morale. On the off
chance that you as of now have somebody at the top of the priority list, other staff
who apply for the part can feel like you're basically paying them lip benefit and not
perceiving their diligent work.

It may appear like a minor issue yet in the event that staff feel disappointed and this
diminishes team morale than your business can truly endure. As indicated by
investigate, companies with low employee engagement experienced 18% lower
productivity and 16% lower profitability – if there is a risk internal recruitment will
diminish your employee engagement it could eventually harm your main concern.

2. Recruiting internally may be speedier and easier and the employee will normally
definitely know your business hones. But on the other hand you're seriously limiting
the talent pool from which to choose from.

By tossing the net more extensive and recruiting from outside you could discover a
candidate who can increase the value of your business and is in reality obviously
better qualified than the individual you're thinking about internally. In addition, it's
occasionally great to have a much needed refresher in your business – somebody
who can get new ideas and new focus. On the off chance that you as of now feel
things internally are not exceptionally productive and morale is low, promoting
internally is probably not going to realize an adjustment in discernment.

3. Internal recruitment consumes a lot of time money and energy in order to train the
employee so promoted. In fact, employees, who do not get promoted feel dejected
which effects the productivity of the company. The position of the person
transferred or promoted may remain vacant.

4. There is a high possibility of partiality in case of internal recruitment. Frequent

transfer of employees may reduce the productivity of the employees and the spirit

5. of competition among the employees may be hampered.

ANALYSIS:

9
As a knowledge intensive company, Infosys recognizes the value of human assets in
maintaining its competitive position. It realizes that these assets can easily walk away, as
competitors in India and abroad covet its IT talent.

Walmart's human resource management addresses recruitment needs using distinctive

recruitment sources and methods suited to various positions in the organization. The
company also uses retail industry-specific criteria in its selection process. To enhance
employee retention, Walmart's human resource management strategy includes a
consistently advancing compensation program, together with employee-relations
management and career development. The firm's HR managers also use different
approaches to enhance morale and motivation in the workforce. Through this mix of
approaches and strategies to address business needs in recruitment, selection and
maintenance, Walmart's human resource management viably maintains sufficient human
resources to support the firm current retail operations and arranged future global
expansion.

According to reports, out of 200 companies and firms polled in 2011, internal recruitment
accounted for 41% of their hiring.

Sodexo's Human Resources and Operations leaders cooperated to change the internal
outlook of the organization. The company, in this manner, needed to put forth the case and
demonstrate the benefits of cross-divisional, cross-functional hiring internally. In the wake of
doing research and contemplating performance ratings across business lines, they
discovered that there was no distinction between employees who were promoted inside
their division and the individuals who moved across business lines. Through this research
and review of extra studies, they exhibited the observational points of interest of hiring an
internal candidate – paying little mind to the division where the employee worked.

Internal hires had company knowledge and a set up network, knew processes and fit well
with the way of life and values of the organization. Besides, an internal contract had various
transferable skills that were appropriate to different business territories. The internal
mobility program likewise added to employee engagement and retention, as high
possibilities could search out new open doors inside the company and grow further. The
benefits of the program were clarified. Today, the organization has seen that an internal hire
takes a fraction of the season of an external hire to perform at maximum capacity. In
addition, the company has kept up strong employee engagement with 76% of their
employees saying they would not hesitate to suggest Sodexo as an employer and general
engagement achieving levels just shy of best in class. Lastly, around half of general hiring is
done internally, which positively brings down employment marketing costs. Unmistakably,
the benefits of Sodexo USA's internal mobility program are outstanding.

Sodexo USA actualized its internal mobility program because it saw the benefits of internal
hires as of now being all around adjusted to the organization. The company started off by
teaching hiring managers and demonstrated not just that internal candidates had company
knowledge that enabled them to progress rapidly in their part with a lower learning curve

10
than external hires, fit in socially and understood processes, yet additionally that they had
various transferable skills that could be used in new business divisions. The talent acquisition
team held up a year prior to making it a formalized process in 2007 and used best
management to set the case for the rest of the company, which drove the path to its
selection by the entire company. Today, the talent mobility program has turned out to be
one of the numerous success stories at Sodexo.

For internal recruitment, the process can make vocation structure for employees and help to
motivate and retain talent. You most likely find out about the applicants and embracing this
approach implies that you can formally perceive the endeavors of the individuals who have
been prepared for a role or are as of now doing all or part of a role. What's more, obviously,
internal recruitment is genuinely quick and significantly more cost-effective than going
outside the business.

The principle disadvantage of internal recruitment is that the pool in which you are looking
for talent is restricted, prompting a toleration of candidates who are adequate however not
incredible

Unacceptable applicants will frequently apply for the position (and will presumably must be
interviewed). You need to consider to how you will manage the feedback and keep
employees motivated on the off chance that they have been unsuccessful. It might be that
unsuccessful internal applicants are displeased and make life troublesome for the fruitful
competitor.

It's shrewd to trawl the market for new talent. There might be discrimination issues on the
off chance that you don't. In the perfect world the number of inhabitants in the workplace
ought to proportionately reflect the nearby populace as far as gender, age; ethnicity and so
on and this ought to apply from shop floor to meeting room. On the off chance that you
have a workforce that isn't especially assorted and tend to recruit from inside you will
sustain the lack of diversity.

11