Internal or External Hiring: What It Means to You

Whether you’re looking for an internal promotion or a new external job opportunity, the subject of internal versus external hiring could have an impact on your job search. You need to be aware of the possible implications and effects it could produce.

Internal or External Hiring at Various Levels

Companies will often go for an internal person–that is, promote someone who already works for the company–because of several factors, including the following:

  1. The individual is at least something of a known quantity and is presumably well familiar with the workings of the company.
  2. He/she might have internal champions who emphasize the value the individual can bring to the company based on previous contributions.
  3. If the individual has done a good job of networking while employed at the company, he/she might be perceived as a strong asset who merits a greater opportunity.
  4. Promoting from within tends to be a simpler and less costly process than going outside.

This is true at all levels of the organization, but it can become even more important at senior levels, where the costs of external recruitment easily climb into the stratosphere, especially if executive search fees enter the mix. If you’re the external candidate, you might not consider that aspect, but it can definitely play a role in the hiring decision, including whether to pursue internal or external hiring methods.

What the Hiring Method Means to You

First, you need to be aware that whether you’re an existing employee or an outside candidate for a position, you’re going to have competition. That competition might come from others inside your company or from individuals outside the company who are hoping to break in. You can’t assume, for example, that because you already work for the company, you have the inside track all to yourself.

On the other hand, if you’re the one trying to join a new company, you need to be realistic about the possibility that you might even get an initial interview but not necessarily be the hiring choice because someone inside the company has the edge for a variety of reasons. What’s important to understand overall is that your competition can come from two directions–someone inside the company or outside candidates.

Whichever situation is yours, it’s wise to scope things out as thoroughly as you can to get potentially useful hints about what you might be facing. For instance, if you’re going for an internal senior-level promotion, you might need to be aware that other managers are likely to be considered for the position you’re targeting. If so, you should think about doing some due diligence to get an idea of what you’ll be up against.

Internal or External Hiring–Which is “Better”?

An article by Todd Henneman called “The Insiders or the Outsiders” includes some striking information about the hiring trend for CEOs, including the fact that the turnover rate in 2013 was higher than it had been since 2008 and that the tenure of CEOs was down from 11.3 years in 2002 to 8.1 years in 2012. However, it appears that the preponderance of CEO hiring activity has focused on insiders. This seems to be based on the idea that the insiders bring a lot to the table that an external candidate might not have.

To quote from the article: “‘Internal is better in every case unless you have a really deficient internal candidate,’ said John Thompson, vice chairman of the global CEO and board practice, at executive-search firm Heidrick & Struggles….’External candidates should really be head and shoulders above internal candidates to be chosen.’”

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