Once the recruitment objectives are specified and job analysis results have been considered, one
fundamental decision that an organization must make as part of its recruiting strategy is whether to focus recruiting efforts internally or externally. In some cases, there is no decision to be made. For instance, entry-level jobs must be filled externally, and for other positions, the organization’s policy or union contract may require that internal sources be used first. Most organizations use a mixture of internal and external sources—promoting from within when qualified employees are available and recruiting from external sources when new KSAs are needed or growth is rapid. Whenever there is an inadequate supply of labor and KSAs inside the organization, it must effectively ‘‘get its message across” to external
candidates. It is here that the organization’s choice of a particular method of recruitment can make all the difference in the success of the recruiting efforts. As will be highlighted in our discussion of both internal and external recruiting below, each type of source has its advantages and disadvantages.
Internal Sources of Recruiting
Internal recruiting is the process of looking inside the organization for existing qualified employees who might be promoted to higher-level positions. For jobs other than those at the entry level, current
employees may be a source of applicants. They become candidates for promotions, transfers, and job rotations. Having expressed their interest in a position, internal applicants typically go through the recruitment process in much the same way as external applicants.
Advantages of internal recruiting. Internal recruiting has several advantages. First, the organization should have a good idea of the strengths and weaknesses of its employees. If the organization maintains a skills inventory, it can use this as a starting point for recruiting from within. In ad-
dition, performance evaluations of employees are available. Present and prior managers of the employee being considered can be interviewed to obtain their evaluations of the employee’s potential for
promotion. Since the employer has observed the employee in one position, there is less guess-work involved in assessing his or her suitability for a second position. In general, more accurate data are available concerning current employees, thus reducing the chance of making a wrong decision.
Another major advantage of internal recruiting is motivation. Many employees want—and some expect
—to advance and to move up the organizational ladder to higher-level positions. An opportunity to do just that, then, is likely to be seen as a viable reward and an important source of motivation for many people. Employees also have an incentive for good performance. Skilled and ambitious employees are less likely to quit and more likely to become involved in developmental activities if they believe that promotion is likely (Chan, 1996). Hence an organization that regularly and routinely promotes from within through internal recruiting will usually find that it is more likely to have a committed and motivated workforce.
Not only does the organization know more about its employees, but the employees know more about the organization and how it operates. Thus, another advantage of internal recruiting is that as employees are promoted to higher-level positions, they bring with them an existing familiarity and understanding of the organization, its heritage, its culture, its policies and procedures, its strategies, and its ways of doing business. As a result, their transition to higher-level positions is somewhat easier as compared to
employees recruited externally, and the organization can often rely on the fact that these individuals will continue to promote and enhance the organizational culture in a positive and beneficial manner.
Training and socialization time is reduced when openings are filled internally because a current employee has less to learn about the organization and its idiosyncratic procedures than a newcomer.
Recruiting may also be faster and less expensive if an internal candidate can be found. Also, in times of impending retrenchment, filling as many jobs as possible internally maximizes job security for present employees.
Another advantage relates to the fact that most organizations have a sizable investment in their
workforce. Full use of the abilities of the organization’s employees improves the organization’s return on investment.
Disadvantages of internal recruiting. There are also disadvantages to internal recruiting. One drawback associated with promotion from within is that infighting for promotions can become overly intense and have a negative effect on the morale and performance of people who are not promoted. If the
organization is expanding, there may be an insufficient internal supply of qualified individuals above the entry level. This situation may result in individuals being promoted before they are ready or not being allowed to stay in a position long enough to learn how to do a job well.
If opportunities for advancement are few, promoting an individual who is not clearly the most qualified, nor the group’s choice, may cause resentment. Another drawback of internal recruiting is the so-called ripple effect. For example, when one vacancy is filled internally, a second vacancy is created—the position of the individual who was promoted or transferred to fill the first vacancy. If this slot is also filled internally, then another vacancy occurs. In the end, the organization still has an open position to fill. Thus, relatively few promotions can sometimes result in a large-scale set of transfers and
movements from position to position within the organization.
Even for large organizations, an overreliance on internal recruitment can be harmful. Another drawback involves the inbreeding of ideas. For example, when all managers have been brought up through the ranks, there may be a tendency to maintain the status quo when innovation and a new direction are needed. Thus, when recruiting comes only from internal sources, precautions must be taken to ensure that new ideas and innovations are not stifled by such attitudes as “We’ve never done it before” or “We do all right without it.” Without occasional new talent from the outside, management may become stagnant and out of touch with the competition and the marketplace. Another drawback of internal recruiting is that some organizations’ internal recruiting procedures are extremely cumbersome. They may involve a “bureaucratic nightmare” of forms, waiting times, eligibility lists, and requirements of permission to interview from the candidate’s current superior (Lord, 1989). Finally, meeting affirmative action goals usually can be accomplished only by aggressive external recruiting.
External Sources of Recruiting
Using external recruiting sources involves looking outside the organization for prospective employees.
Organizations have at their disposal a wide range of external sources for recruiting individuals. External recruiting is needed in organizations that are growing rapidly or have a large demand for technical, skilled, or managerial employees. Not surprisingly, external recruiting has advantages and disadvantages that are directly counter to those of internal recruiting.
Advantages of external recruiting. One inherent advantage of recruiting from the outside is that the pool of talent is much larger than that available from internal sources. External recruiting can bring in new ideas, new perspectives and viewpoints, and new ways of doing things. Hence the organization can enhance its vitality, creativity, and potential ability to innovate by routinely bringing in new people from the outside. In addition, it is often cheaper and easier to hire technical, skilled, or managerial people from the outside rather than training and developing them internally. This
is especially true when the organization has an immediate demand for this type of talent.
External recruiting also avoids the confusion that accompanies the ripple effect, helps meet affirmative action goals, and helps cope with the demands of rapid growth without overusing inexperienced
personnel. There may be instances that require a severe shakeup or turnaround. Particularly at the upper management level, an outsider with no prior commitment to present employees or ongoing projects may be the only individual with enough objectivity (and even ruthlessness) to bring about needed changes and enunciate a new vision for the organization (Chung, Labatkin, Rogers, and Owens, 1987).
Disadvantages of external recruiting. One disadvantage of external recruitment is that attracting, contacting, and evaluating potential employees is more difficult. With external recruiting, there is also the risk of hiring a candidate who does not live up to the apparent high potential displayed during the selection process.
Another potential disadvantage is that employees hired from the outside need a longer adjustment or orientation period. This can cause problems because even jobs that do not appear to be unique to the organization require familiarity with the people, procedures, policies, and special characteristics of the organization in which they are performed.
External recruiting also may result in motivational problems within the organization. Existing employees may believe that they have been denied opportunities and that they are more qualified than the outsiders who are brought into the organization at higher levels. Finally, another disadvantage of external
recruiting is the cost, which tends to be a bit more expensive than internal recruiting because of the advertising and other search processes that must be undertaken. Recruiting externally usually takes longer and costs more because the external labor market is much larger and harder to reach than the internal one.
METHODS OF RECRUITING
Once an organization decides it needs additional or replacement employees, it is faced with the decision of how to generate the necessary applicants. As stated earlier, an organization may fill a particular job either with someone already employed by the organization or with someone from outside. Internal recruiting is usually handled by using one set of recruiting methods, and external recruiting typically relies on different methods. In this section we first discuss methods used for internal recruiting and then look at other methods that are more likely to be used for external recruiting.
Methods for Internal Recruiting
Pursuing internal recruiting with the advantages mentioned earlier means focusing on current employees and others with previous contact with an employing organization. Friends of current employees, former employees, and previous applicants may be sources. Promotions, demotions, and transfers also can provide additional people for an organizational unit, if not for the entire organization. The most common methods of internal recruiting are job posting and bidding, supervisory recommendations, employee referrals, internal databases, and promotions and transfers.
Job posting and bidding. Job posting and bidding is an internal method of recruitment in which notices of available jobs are posted in central locations throughout the organization and employees are given a specified length of time to apply for the available jobs. In the past, job posting involved little more than the use of bulletin boards and company publications for advertising job openings. Today, however, job posting has become one of the more innovative recruiting techniques being used by organizations. Many organizations now see job posting as an integrated component of an effective career management
system.
A job posting system gives each employee an opportunity to move to a better job within the
organization. Without some sort of job posting and bidding, it is difficult to find out what jobs are open elsewhere in the organization. The organization can notify employees of all job vacancies by posting notices, circulating publications, or in some other way inviting employees to apply for jobs. The most common method employers use to notify employees of openings is to post notices on bulletin boards in locations such as employee lounges, cafeterias, and near elevators.
Computer software is now available to handle posting and bidding on PCs and intranets (Lotus
Development Corporation, 1998, p. 9). Computer software allows the employees to match an available job with their skills and experience. It then highlights where gaps exist so that employees know what is necessary if they wish to be competitive for a given job. More recently, some larger organizations have developed job posting systems via electronic mail.
In a unionized organization, job posting and bidding can be quite formal; the procedure often is spelled out in the labor agreement. Because they are concerned about the subjective judgments of managers, unions normally insist that seniority be one of the primary determinants used in selecting people to fill available jobs.
Normally the job notice specifies the job title, rate of pay, and necessary qualifications. The usual
procedure is for all applicants to be sent to the HRM department for an initial review. The next step is an interview by the prospective manager. Then a decision is made based on qualifications,
performance, length of service, and other pertinent criteria. Some organizations that rely heavily on internal recruiting go so far as to require that jobs be posted internally before any external recruiting may be undertaken.
Job posting and bidding systems can be ineffective if handled improperly. Once a job is posted internally the organization must allow a reasonable period of time for existing employees to check notices of
available jobs before it considers external applicants. When employees’ bids are turned down, they should have discussions with their supervisors or someone in the HRM area regarding KSAs they need in order to improve their opportunities in the future.
In conclusion, job posting systems have the advantage of reinforcing the notion that the organization promotes from within. This belief not only motivates employees to maintain and improve their performance but also tends to reduce turnover.
Supervisory recommendations. Another method of internal recruiting is through supervisory
recommendations. In this case, when a new position needs to be filled, a supervisor simply nominates or recommends internal candidates in response to his or her manager’s requests for potential internal
candidates. These supervisors look at the individuals for whom they are responsible, and if any of them are particularly well suited for the new job opening, then the supervisors recommend that individual to the higher-level manager.
This method is very popular among supervisors. They like it because it gives them total discretion in selecting the individual who will report to them. Moreover, the supervisor is generally in a good position to know the capabilities of potential candidates, especially ones who already work for them and are seeking promotion.
However, a supervisor’s recommendation is usually very subjective, and is thus susceptible to bias and possible discrimination. Moreover, some qualified employees may be overlooked. That is, supervisors may bypass good candidates in order to get their “favorites’’ promoted, or they may simply be unaware of the capabilities possessed by some individuals.
The courts have frowned on this method of internal recruitment. In a landmark decision, Rowe v.
General Motors (1984), the Supreme Court found GM guilty of discrimination because under a system where supervisory recommendations were needed for promotions, supervisors failed to recommend qualified black candidates as frequently as they recommended white candidates. As a result, at the time of the suit there were almost no black supervisors at most GM facilities. The courts prefer the use of a system in which all potentially qualified internal candidates are notified of promotional opportunities and are given a fair chance to apply (Baxter v. Savannah Sugar Refining Corp., 1984). In the end, it is important that supervisors give equal consideration to all potential candidates.
Employee referrals. Before going outside to recruit, many organizations
ask present employees to encourage friends or relatives to apply. This is a reliable source of people to fill vacancies. Employees can acquaint potential applicants with the advantages of a job with the
organization, furnish letters of introduction, and encourage them to apply. These are external applicants recruited using an internal information source.
Informal communications among managers can lead to the discovery that the best candidate for a job is already working in a different part of the organization. In some cases, referrals are made through
“support networks” established by certain groups of employees; in recent years women’s groups have had a noticeable influence in this area. Employee referrals do appear to have universal application.
Lower-level and managerial-level positions can, and often are, filled by the recommendation of a current employee. In higher-level positions, however, it is more likely that the referral will be a professional acquaintance rather than a friend with whom the recommender has close social contact.
Many organizations pay bonuses or “finders fees” in the form of monetary incentives for a successful referral. Other organizations pay employees incentives for referring individuals with specialized skills that are difficult to recruit through normal means. High-tech organizations use this device the most and probably pay the largest bonuses. For example, an organization might pay between $1,000 to $5,000 depending on its need for extraordinary computer talent.
There are, of course, some potentially negative features of employee referral. For one thing, recommenders may confuse friendship with job performance, thus the current employee may
recommend a friend for a position without giving an unbiased consideration to the friend’s job-related competence. Employee referrals may also lead to nepotism; that is, hiring individuals who are related to people already employed by the organization. Although such actions may not necessarily align with the objectives of hiring the most qualified applicant, interest in the organization and loyalty to it may be long-term advantages.
Organizations must be careful, however, not to accidentally violate EEO laws while they are using employee referrals. For example, in EEOC v. Detroit Edison (1975), the U.S. Court of Appeals, Sixth Circuit, found a history of racial discrimination that was related to recruitment. The court stated: “The practice of relying on referrals by a predominantly white workforce rather than seeking new employees in the marketplace for jobs was found to be discriminating.” The case suggests that employee referrals should be used cautiously, especially if the workforce is already racially or culturally imbalanced. This can violate equal employment regulations if protected-class individuals are underrepresented in the organizational workforce. The case also suggests that it might not be wise to rely exclusively on word-of- mouth referrals but rather to use them as supplements
to other kinds of recruiting activities or that some external recruiting might be necessary to avoid legal problems in this area.
Internal database (skill or talent inventories). Almost every organization has a pool of internal talent that it can tap when recruiting to fill open positions. Like savings accounts, internal talent pools contain easily accessed resources that can be “withdrawn’’ as needed. Many organizations have developed computerized internal talent or skill banks, or applicant tracking systems, to keep track of their internal talent and furnish a listing of the KSAs available. Information on every employee’s skills, educational background, work history, and other important factors is stored in a database, which can then be used to identify employees with the attributes needed for a particular job. Organizations that must deal with a large number of applicants and job openings have found it beneficial to use computer software as part of a human resources information system (HRIS).
Software of this type allows organizations to enter resumes and then sort the resumes by occupational fields, skills, areas of interests, and previous work history. In the past few years, resume-tracking software programs such as Restrac and Resumix have been developed to store and search resumes electronically. Resumes are either submitted by e-mail or scanned in from paper copies. An artificial intelligence program picks out and catalogs key words from the documents (Talbot, 1996).
One advantage of a computerized talent or skill database is that the system ensures that suitable internal candidates won’t be overlooked before recruiting begins outside the organization. Another advantage of these computerized databases is that they allow recruiters to identify potential candidates more quickly than they could by manually sorting numerous stacks and files of resumes.
Promotions and transfers. Many organizations choose to fill vacancies through promotions and transfers from within whenever possible. A promotion generally involves moving into a position that is
recognized as having higher status—and often, higher pay. To plan for employee promotions, some organizations use replacement planning charts in addition to maintaining a talent or skills inventory.
Replacement planning charts list the current and potential occupants of positions in the organization.
The charts also list each person’s promotion potential and developmental needs.
A transfer involves moving into a position that’s of similar status, often with no increase in pay. Many organizations have replaced the traditional system of jobs that are organized into clear status hierarchies with job families. With job families, taking a new position with the organization often involves a lateral job transfer rather than a promotion. After several transfers, employees develop a broader perspective and can better understand how the entire organization functions as a system.
Some organizations schedule two or three years of planned job transfers to help employees develop a broad array of competencies. When they are