Internal Recruitment In Tech: 4 Key Benefits For IT Companies

This article was updated on 3rd April 2023.

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Do you speak the language of Gen Z? Their lingo consists of ‘slay’, ‘bet’, ‘vibing’, etc. If that seems alien to you, you wouldn’t be surprised to hear that everything they do is different. From the way they speak, and their dressing styles to the way they approach their careers.

Regardless of growth opportunities, appreciation, or rewards, long careers within a company aren’t a priority for Gen Z. Unlike their/our predecessors who would have continued working for a firm, despite all that. Gen Z just doesn’t ‘vibe’ like that!

So how do you ensure that the current workforce is continuously engaged and willing to stay loyal to your company? How do you enable candidates to see themselves growing and advancing the corporate ladder so that they are not tempted to leave?

By creating a culture of internal recruitment in tech, of course. Whether it is filling a role with a current employee, a promotion, or through a lateral transfer, internal mobility is a great opportunity to improve employee engagement, productivity, and retention.

What is internal recruitment in tech?

Internal recruitment in tech refers to filling vacant job positions with existing employees of a company either through promotions or lateral transfers. It involves looking inward to fill positions rather than hiring someone from the outside.

But why has internal recruitment become so crucial in the last few years and why do companies need to consider it seriously?

One reason why is the growing shortage of skilled talent. The market has become fiercely competitive.

Secondly, post-pandemic, employees are looking for far more than compensation to be satisfied with their job. 52% questioned their purpose at their day-to-day job in a recent Gartner survey.

They are looking for personal value at work. Employees want to make an impact. They also want companies to invest in their growth, provide learning and development opportunities, mental well-being resources, and transparency in company operations.

Indeed, our latest 2022-2023 State of the Developer Ecosystem shows that nearly 16% of developers would like a clear path for career growth in terms of upskilling opportunities.

The key to attempting to retain an employee for a longer duration is by marketing a career with longevity and growth. Let’s look at how internal mobility plays a key role in this.

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Also read: Why are Recruiters Switching to Lateral Hiring?

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4 key benefits of internal recruitment over external recruitment

Internal hiring is super beneficial for your TA team! They get to add even more qualified candidates to their existing pool of candidates and could potentially, close open roles quickly.

It’s simple math. Assessing internal employees along with passive and active talent outside the company means more people for your recruiters to pick from. Here are some more important benefits of recruiting internally –

#1 Improves employee morale, productivity, and engagement

When employees know that they can apply for positions and take control of their career advancement, it automatically improves productivity fueled by a desire to perform better on the job. This motivates them and further boosts employee morale.

On the contrary, positions that are predominantly filled externally send a message to employees that no matter how hard they work, their credentials and experience are just not good enough to grow within the company.

It’s easier for internal employees to succeed in a new role as they have pre-established connections and knowledge of how things get done in the company.

They also tend to work harder if they know that the company believes in promoting from within. Internal recruitment also helps build a collaborative and agile company culture, which are key aspects of improving employee engagement.

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Also read: 7 Employee Engagement Strategies For WFH Tech Teams

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#2 Carries low risk of making a bad hire

Companies that prefer recruiting internally understand that the risk with internal hires is lesser compared with ones recruited externally.

They have detailed records of employee performance reviews, compensation, recognition, or awards, along with peer and manager reviews that are reliable predictors of performance. Since they know the no of employees, it helps to avoid employee overload.

Since these jobs are usually filled via self-nomination where candidates express their interest in moving to a new role, the risk of turnover is also considerably lower as employees tend to stay longer.

#3 Costs less than recruiting externally

It is common knowledge that hiring is an expensive activity. The cost per hire is estimated to be around $4000.

This includes external costs such as agency and recruiter fees, job board fees, and internal expenses like recruiter salaries and the money spent on the referral program.

When companies hire from within, they skip all the external costs and most of the internal costs. Internal recruitment in tech is significantly easier on the company’s pockets.

There is also the cost of a bad hire, the likelihood of which is higher with an external recruit.

This is because, unlike an internal hire, there isn’t first-hand information on the employee’s work ethic, critical thinking, leadership abilities, etc., making it difficult to predict the employee’s performance.

#4 Provides quicker results and reduces time-to-hire

Internally hired employees tend to assimilate and deliver results faster.

They are either nominated by the hiring manager or might know someone from the team, which helps them get comfortable with the team faster.

For projects that have imminent deadlines, hiring someone internally results in quicker turnaround times as they are already aware of the processes, systems, and company expectations. Companies also spend less time on-boarding them which saves a lot of time and associated costs.

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Also read: Optimize Your Hiring Process With Recruitment Analytics

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But what’s the catch with internal recruitment in tech?

If internal hiring is cheaper, faster, and less risky, why aren’t companies able to successfully utilize it more often? There are many internal factors responsible for this.

This can lead to compliance issues

Companies fear that if they continue to select candidates from an internal pool, there is a higher chance of disgruntlement, complaints, and lawsuits filed by employees who are not selected.

Thus, companies rely on self-nomination where employees proactively apply for jobs or positions of interest. While this might sound like a safe alternative, it is also not the best one because in this case very little is done to educate those who might not be actively looking for movement but might be an excellent fit for open positions.

Create resentment among employees

Secondly, the very thing that internal recruitment in tech is supposed to boost can sometimes get adversely impacted – employee morale.

Employees not picked for positions or promotions might feel disheartened and end up looking externally for growth opportunities.

Thirdly, restrictive policies that were once meant to enhance productivity and reduce turnover may become restrictive and claustrophobic to high-caliber employees.

For instance, some companies make it mandatory for employees to have a tenure of one year in their current positions before applying for other roles within the same company.

Sometimes, the employee needs to get additional sign-offs from their managers. Loyal employees who would rather avoid uncomfortable discussions with their bosses are quite unlikely to apply for an internal role. Instead, they would rather take up an external opportunity.

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Also read: 10 Key Employee Retention Strategies In Tech

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Leave a gap in your existing workforce

Lastly, and probably the biggest factor is pressure from current managers to restrict mobility.

Every manager has those stellar employees on their team who have been around for a long time. They know the processes in and out and are excellent at their jobs.

They are hesitant to nominate them for a different position. Mainly because they are worried about the void that will be created once they leave. It could take ages to fill that role. Managers are not discussing employees’ career advancement plans for fear of losing them.

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Also read: How You Can Identify And Close Skill Gaps In Software Development

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How to build an effective process to recruit internally?

A lot of the above-mentioned issues arise because companies are being short-sighted in their approach. They focus solely on filling positions rather than investing in candidates.

Let’s change that, shall we?

Speak to your managers – As seen above, managers may not be the best promoters of internal mobility. Educate your managers and conduct training sessions to explain why internal recruitment is beneficial to the company. Also, focus on pointing out how it is directly correlated to employee productivity.

Nomination by the manager – Consider doing away with the clause that a manager has to nominate high-performing team members as candidates for internal roles. This could lead to unconscious bias and favoritism causing further resentment among employees. Your most promising internal candidates may not be able to apply.

Make internal transfers easy – Create a flexible internal transfer policy where the company itself can grant a transfer to a candidate who may be the best bet for an open internal position. Encourage your TA teams to keep the paperwork minimal during an internal transfer.

Create a succession plan – Succession plans refer to internal pipelines maintained by the HR team. They keep a track of skills, training, and performance reviews of existing employees. This helps in pinpointing which employees are ready to fill jobs when they become vacant. HR has the responsibility of building and updating these plans taking into account current and future business needs.

For internal hiring to give positive results, there needs to be a culture that promotes employee development. Encourage internal promotions, open communication with employees about their individual development plans, and a system to close gaps that arise when employees move to different roles.

Internal recruitment vs. External recruitment – Key differences

Internal recruitment: This refers to the process of filling job vacancies within a company with current employees who are seeking new positions or promotions. In tech companies, this might involve shifting a developer to a project management role or promoting an IT analyst to a more senior position.

External recruitment: External recruitment is about hiring candidates from outside the organization. For tech companies, this often means scouting talent from other firms, universities, or through online job portals to find individuals with specialized skills or fresh perspectives.

Comparison:

• Speed and Cost: Internal recruitment is generally faster and less costly than external, as it skips parts of the hiring process like advertising and initial screenings.
• Talent Pool: External recruitment offers a broader talent pool, potentially bringing in new skills and ideas, while internal recruitment is limited to existing staff.
• Employee Morale: Internal recruitment can boost morale and motivation by offering career advancement opportunities. In contrast, external recruitment might sometimes lead to internal dissatisfaction if employees feel overlooked.
• Onboarding and Adaptation: Internal recruits are already familiar with company culture and processes, requiring less onboarding time compared to external hires.

Internal recruitment is not without its challenges!

Internal recruitment in tech companies is limited to the existing workforce, which might not always have the required skills or experience for certain advanced or specialized roles. This can also lead to:

• Inbreeding of ideas: Relying solely on internal recruitment can lead to a stagnation of ideas. In tech, where innovation is key, this can be particularly detrimental.
• Potential for internal conflict: Internal recruitment processes can create competition and conflict among employees, potentially leading to workplace disharmony or feelings of unfairness.
• Issues with career progression for lower-level employees: If positions are frequently filled internally, it can create a bottleneck where there are no openings for lower-level employees to advance, potentially leading to employee dissatisfaction and turnover.

Look inwards for top talent!

No successful strategy is reliant on any one method. Recruiting externally will never go out of fashion but that doesn’t mean internal recruitment is not beneficial too. Strike a balance between both methods of recruitment to land the best candidates out there.

Here’s the low down. The most promising talent could be right under your nose should you choose to tap into it! Moreover, internal recruitment in tech shows your employees you care about their careers. Your actions show you are willing to put in the effort to retain them.

Since tomorrow’s workforce, mainly Gen Z looks for companies that truly invest in their employees, this is no longer a good-to-have perk. It’s become a high priority.

Let your employees know you want to see them grow in your company 🙂