Skill mobility is essential in business. However, it’s just as important to recognise when you lack the necessary in-house skills for a particular role. When this occurs, there are two options available to you: skill development and external recruitment.
Skill development takes significant time and effort to become effective. When you recognise essential skills that are lacking, the quickest solution will often be hiring talented individuals. However, this approach comes with its own unique set of challenges.
In this article, we look at the advantages and disadvantages of external hiring, and strategies for successful external recruitment.
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Delve into its benefits and downfalls.What is External Hiring?
External hiring involves looking outside of your existing workforce for qualified candidates to fill vacant positions. Historically, this has been a widely used approach for growing a company’s talent pool. Even with new trends in upskilling and internal recruitment, existing employees often work in roles that are difficult to fill without creating new skill gaps. This has led companies to rely on external recruitment for high-level positions, and to replace employees who have been promoted.
10 Advantages of External Hiring
1. New Ideas and Fresh Perspectives
When people spend their entire careers within a single company, their exposure to different operational methods is limited. External candidates, on the other hand, often bring diverse experiences and viewpoints. These new ideas and fresh perspectives often help businesses develop new solutions or improve existing processes.
Example: An IT Manager position becomes available in your company. You ask internal candidates to outline their team management approach, and their plans closely mirror your previous manager’s style. When you open the role to external candidates, they provide different strategies, influenced by experiences in IT departments with unique management techniques.
2. Wider Talent Pool
Focusing solely on internal recruitment limits your candidate options, often leading to promotions that prioritise availability over ideal fit. This can result in inefficiencies as employees struggle to adapt to the demands of their new roles.
Embracing external recruitment enables you to tap into a broader talent pool, increasing the likelihood of finding a candidate who meets your specific needs. This ensures they can contribute effectively from the start, reducing potential performance delays.
Example: After reviewing internal candidates for the IT Manager role, you realise your existing IT team still needs to develop their managerial skills. Opening the position externally attracts potential candidates with extensive experience and unique skill sets that you hadn’t initially considered.This offers a faster, and more effective solution.
3. Access to Specialised Skills
When new roles emerge that require niche expertise, businesses may struggle to upskill existing employees quickly enough to meet new challenges. External hires with specialised skills can provide the expertise needed for specific tasks, enabling your business to adapt quickly to changing demands.
Example: Your company is transitioning to a cloud-based infrastructure, but none of your current IT staff has deep experience with cloud systems. By hiring an external IT Manager with a specialised background in cloud computing, your business gains the exact knowledge needed to lead the transition.
4. Fills Skill Gaps
One of the biggest benefits of external recruitment is the opportunity to identify skill gaps and address them throughout your workforce. Instead of focusing solely on upskilling internal employees over time, external hires can quickly fill these gaps, allowing your business to maintain productivity. They also bring the added benefit of sharing their knowledge and helping develop the internal team.
Example: Your IT department is missing expertise in cloud architecture, a skill necessary for the company’s planned infrastructure expansion. Bringing in an experienced IT Manager allows you to fill this critical gap immediately, allowing the project to proceed smoothly.
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Our online skills matrix is exactly the tool you need.5. Competitive Advantage
Hiring externally can give you an edge over your competitors in two ways. It helps you prevent other companies from hiring a skilled candidate who could have been a valuable addition to their team. It also allows you to expand the skills and knowledge available to your business. In the long term, this will help you to future-proof your business and effectively adapt to market changes.
Example: While reviewing external candidates for the IT Manager role, you find one with experience at a competitor. Although bound by a non-disclosure agreement, her unique insights, new ideas, and fresh approach can help differentiate your company in the marketplace.
6. Less Internal Politics
When it comes to internal recruitment, relationships always need to be navigated. Promoting one employee can lead to jealousy among colleagues, or make them feel overlooked. It can also be challenging for an existing employee to take on a management role if it involves leading former peers. External hiring removes these factors from the table (though, as we discuss later, it brings its own challenges to team dynamics.)
Example: When you initially opened the IT Manager role internally, competition among staff led to increased conflict as employees tried to assert themselves as ‘management material.’ Hiring externally, and explaining to existing staff where new skills needed development, reduced this conflict.
7. Improves Diversity
In today’s global workforce, companies that embrace diversity and remote hiring gain a competitive edge. External hires bring diverse skills, perspectives, and ways of thinking, which can enhance operations and foster innovation. By hiring externally, you can build a more inclusive workplace, strengthen your company culture, and position your business as adaptable and forward-thinking.
Example: When you open the IT Manager position externally, you get several applications from international candidates who have worked in unique markets. Hiring one of them will help your business become more adaptable and grow into new sectors while strengthening your global presence.
8. Enhances Training and Knowledge Sharing
Hiring external candidates with new skills and experiences can provide your existing workforce with valuable learning opportunities. These new employees can inspire skill development, share different working methods, and introduce fresh learning styles. As a result, they can play a key role in fostering continuous professional development across the organisation.
Example: After hiring an external IT Manager with expertise in agile project management, your existing IT team begins adopting agile practices, improving collaboration and efficiency. The new manager regularly hosts knowledge-sharing sessions, enabling the team to learn advanced techniques that enhance their professional growth.
9. Promotes Company Growth
Maintaining the same workforce can limit a company’s potential for growth. As your business expands, additional staff members are needed to handle new responsibilities. Relying solely on internal recruitment and skill mobility can overwhelm existing teams, leading to stress and a higher risk of burnout. To scale effectively, businesses should bring in new talent through external recruitment, allowing new talent to take on key roles and drive company expansion.
Example: As your company expands its digital infrastructure, your IT team becomes stretched thin managing new and existing systems. Hiring an external IT Manager with expertise in scaling operations alleviates pressure on your staff and provides the leadership needed to support further growth.
10. Encourages Impartiality
Working with colleagues for an extended period can make impartial decision-making challenging. While you naturally want your employees to succeed, their success may not always align with the business’s best interests. External recruitment reduces the risk of internal bias, allowing you to focus on hiring the most qualified candidate regardless of personal connections.
Example: John has been a dedicated member of your IT team for 10 years. When the IT Manager role becomes available, he’s the first person to come to mind. However, John lacks experience in cloud computing and has never held a management position. You recognise an external candidate with the necessary skills and leadership experience would be a better fit for the role.
10 Disadvantages of External Hiring
1. Higher Recruitment Costs
External hiring involves several costs, including higher salaries for skilled job candidates, recruitment agency fees, and finder’s fees. Having the role go unfilled for a longer period can also lead to lost productivity or income for the business.
2. Time-Consuming Process
The external recruitment process is lengthy and involves job posting, screening, interviews, and negotiations. If the right candidate isn’t found quickly, you may need to restart the hiring process, further delaying and disrupting business operations.
3. Longer Transition
External hires typically take longer to become productive, as they need to go through onboarding and induction, adjusting to your company’s culture and processes. Internal hires who are already familiar with these aspects could start contributing more quickly.
4. Requires Additional Training
While external candidates may have valuable skills, there may be other areas that they need further training on. Beyond onboarding and induction, you’ll need to invest more time in general training and skill development initiatives to ensure they’re effective in their new role.
5. Increased Risk
While an internal candidate’s fit within your operations is already known, external recruitment comes with several risks. These include cultural misfit, misrepresented qualifications, or underperformance, which increase the chance of failure.
6. Uncertainty Around Performance
How well a new hire will perform in their new position is always uncertain. They may struggle to integrate with the team or fulfil the role’s demands, leading to potential turnover if they don’t meet expectations.
7. Disrupts Team Dynamics
Bringing in an external hire can disrupt established team dynamics, especially if the new hire struggles to integrate into existing workflows or adjust to the new workplace culture. This can cause friction and reduce collaboration and productivity in the short and long term.
8. Demotivates Existing Workforce
When companies turn to external hiring, existing employees may feel that their skills and experience are being overlooked. This can lead to dissatisfaction within their role and reduced employee morale, and can quickly result in increased turnover if not carefully managed.
9. Risk of Career and Skill Stagnation
When companies overly focus on external recruitment, existing employees may feel overlooked, leading to career stagnation. This perception—that their skills aren’t valued and that advancement opportunities are limited—can cause disengagement. Without internal development, employees may also experience skill stagnation as their abilities fall behind industry trends, increasing the likelihood they’ll seek growth opportunities elsewhere.
10. Loss of Organisational Knowledge
When employees leave, they take valuable knowledge of your company’s technologies, systems, and processes with them, potentially disrupting operations. External recruitment can’t fully replace this lost expertise, as new hires lack the deep institutional knowledge of previous employees. While they can fill the role, the nuanced understanding of your operations is often lost, which can hinder efficiency and continuity.
How to Succeed with External Recruitment
- Find the Right Candidates. It’s essential to clearly define the role and the hard and soft skills required to find the right fit. This understanding will help structure your interviews and ensure cultural alignment. Proactively sourcing candidates, rather than waiting for applications, can also increase your chances of success. Partnering with recruitment agencies can be beneficial, as they often have a deeper understanding of external candidates’ abilities and can help you find the ideal match.
- Help the Right Candidates Find You. Attracting the right candidates isn’t just about finding them—it’s also about making your company an attractive place to work. Offering competitive compensation, benefits, and a focus on professional development will draw top talent. Building a strong company culture and ensuring employee satisfaction will enhance your reputation as an employer of choice, making talented individuals want to join your team.
- Streamline Processes with an Onboarding Checklist. Effective onboarding processes enable new employees to become productive more quickly. A well-organised onboarding checklist ensures new hires have access to the tools and resources they need from day one, helping them integrate smoothly and efficiently into their roles.
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Our customisable checklist is the resource you need.- Prioritise Induction Training. Comprehensive induction training helps new hires understand their role,company goals, and culture. This enables them to engage more quickly with their responsibilities and feel connected to the business, accelerating their integration into the team.
- Use the Right Technology. The right technology can streamline your external recruitment efforts, from finding the ideal candidates to onboarding them. Whether it’s HR software or a learning management system, using the right tools enhances efficiency and supports new hires in their development.
- Ensure Transparency with Existing Teams. Clear communication is key when hiring externally. Being transparent about why certain roles are advertised externally helps existing employees understand the process, reducing concerns and fostering a positive attitude towards new hires. It also encourages employees to develop their skills for future opportunities.
- Balance Internal and External Recruitment. Both internal and external recruitment have their benefits and drawbacks. Recognising when it’s best to promote internally or hire externally ensures a strong, adaptable talent pool that can drive your company’s growth.
