Difference Between Internal and External Recruitment

Internal and external recruitment are two ways to recruit employees in an organization. Internal recruitment is the process of hiring people from within the organization. The management is already aware of their skills, and they have been working with them.


Business Quiz

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Individual Ownership is called as?

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When at least 51% shares are in the hands of government, it is called as __________.

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In case of death or insolvency of a partner the firm is?

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Who takes no active part in Business?

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Which country's currency is called the Baht?

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If a general manager asks the sales manager to recruit some salesman on his behalf, it is an instance of ___________.

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The return of shares to the company is known as ___________.

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Productivity means how much was done compared to what it took to do it.

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External recruitment is the method of recruiting employees from external sources. This can be done through advertisements, agencies, etc.

External recruitment is a more costly process. It is also a more time-consuming process than internal recruitment. Both of these types of recruitment have their own merits and demerits.

Key Takeaways

  1. Internal recruitment sources candidates from within an organization; external recruitment looks outside
  2. Internal recruitment can improve employee morale and retention; external recruitment provides a broader candidate pool
  3. Internal recruitment is usually faster and less expensive; external recruitment can bring fresh perspectives and skills.

Internal vs. External Recruitment

The difference between internal and external recruitment is that internal recruitment uses present employees. In contrast, external recruitment creates a pool of candidates from external sources. These employees do not have relationships with the organization.

Internal vs External recruitment

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Comparison Table

Parameter of ComparisonInternal recruitmentExternal recruitment
MeaningThis type of recruitment focuses on employing people already in the organization.This type of recruitment focuses on employing people outside the organization.
TimeIt is not as time-consuming as external recruitment.It is a time-consuming process.
CostIt is an economical process.It is more costly than internal recruitment.
Number of candidatesThis type of recruitment provides a limited choice between candidates.This type of recruitment provides an unlimited choice between the candidates.
BasisIt is based on merit or seniority.It is based on merit or qualification.
SourcesPromotion, transfers, references, etc., are sources of internal recruitment.Employment agencies, casual callers, advertisements, etc. are external recruitment sources.


What is Internal Recruitment?

Internal recruitment is a type of recruitment where the employees are recruited from within the organization. This is an economical method of recruitment and can also be done quickly.

There are various ways to recruit employees internally. For example, transfers, promotions, former employee re-employment, internal advertisements, etc.

A transfer is a horizontal method of internal recruitment, whereas promotion is a vertical method of internal recruitment. A transfer is shifting an employee from a department to another where there might be a requirement.

There are many advantages of internal recruitment. It fosters trust and loyalty and helps the organization maintain secrecy. There are negligible costs incurred on training and orientation in this type of recruitment, and the employees are also reliable. 

The drawbacks of this are that it only provides a limited pool of candidates. It can cause the employees to be lethargic and decrease organizational innovation.

internal recruitment

What is External Recruitment?

The external method of recruitment is one where the pool of candidates is created from outside the organization. These candidates do not have any relations with the organization presently.

It is a costly method as there are advertisement costs and the new employees need training and orientation. This type of recruitment is also time-consuming as the recruiter has to go through the profiles of all the candidates and then create a pool of the potential ones.

This is followed by a long process of training and orientation.

There are various sources of external recruitment. For example, advertisements, campus recruitments, waiting lists, employment exchanges, job portals, recommendations and references, job fairs and seminars, job consultancies and agencies, etc.

The external method of recruitment brings in fresh talent in the organization and, thus, bring along innovation and opportunity to improve. It also gives the management a large pool of candidates to narrow their potential candidates. In simple words, it provides management with a lot of choices.

external recruitment

Main Differences Between Internal and External Recruitment

  1. Internal recruitment can be based on seniority, whereas external recruitment gives qualification a priority.
  2. Sources of internal recruitment are transfers, promotions, internal advertisements, etc. External recruitment sources include job portals, campus placements, and employment exchanges.

  1. https://core.ac.uk/download/pdf/37882826.pdf
  2. https://www.journals.uchicago.edu/doi/abs/10.1086/667814
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