A new study suggests that businesses should recruit more among existing employees – why is this true, and how should it be done?
According to its study, 'Internal Recruitment Issues in the European Market', the talent management software company Cornerstone On Demand claims that European businesses are losing out on talent and wasting money by not recruiting as much as they could from within their businesses.
The most striking finding that the survey published is probably the cost of recruiting externally and on staff turnover for businesses. The average figure is £30,000 per position, a price tag which, in itself, should fully incentivise a lot more internal recruitment.
Moreover, internal recruitment seems to be a valued but often ignored source of success. The study recorded that 93% of human resources employees found that internal recruitment had been successful in their experience, though in the majority of companies it accounts for only a third of total recruitment, the rest of which is external.
The study, which involved 363 European companies, also found that the main reason that recruiters would steer clear of internal talent was that they feared missing out on great employees from outside their business. Across Europe, this figure was 25%, while in the UK it was 51%. Specifically for the UK, 36% of businesses reported that they avoided internal recruitment because they didn’t want to show a preference to someone within the company, when filling only one vacancy.
Another aspect of internal recruiting which made 30% of British companies reticent to inside hiring was the risk of creating a workforce lacking in diversity. Clearly, internal recruitment is a powerful way to find the right talent, but there are some things to consider when deciding to hire from within the company. Where and when is inside hiring the best choice, and how should it be executed?
The way in which different countries and different nations recruit varies a great deal. For example, in France, 73% of companies believe it to be the employee’s responsibility to put themselves forward for an internal vacancy. In the UK, this figure is 2%, with the majority believing it to be the responsibility of their HR department.
It might be said, therefore, that if UK companies gave more encouragement to their employees to seek such roles, they might be able to gain more of the associated benefits. Meanwhile, offering an attractive career path within a company is reportedly a great way to engage employees, with 60% of the UK businesses who were consulted naming this as an advantage of internal recruiting.
As Kate Russel wrote in HR Magazine, your choice between internal and external recruiting can affect morale in many different ways according to the situation. It has already been established that the possibility of a new role in the company can motivate employees. At the same time, if a number of employees within your company are interviewed for a given role, in the wrong environment, this could lead to awkwardness, or worse, antipathy towards the successful employee. Only someone who truly knows the company and the workforce can make this call.
Also, the nature of the role that you’re seeking to fill should affect your choice. If it requires a skill set which is relatively new to your company, then it might be best to recruit outside your firm. Existing employees might be able to perform the work, but only in a mediocre fashion. By the same metric, you stand to gain an advantage by looking inside your company when the position requires skills which are already present in your employees. This way, the person who fills the role will already know how your company works and will need far less training.
What Does the Law Say?
In the UK, there are a number of statutes which will affect whether you can or can’t fill a position with an existing employee. As Thompsons Solicitors describes, The High Court ruling Archibald versus Fife Council (2004) affects whether it is appropriate to include outside candidates in interviews if one of your employees becomes disabled.
It states that, if one of your employees becomes disabled and can no longer perform their job, if you can make reasonable adjustments for them to take up a new position that they can manage, you should do so. This means that operating competitive interviews with other candidates, such as outsiders, would be inappropriate. You can find details of the case on the House of Lords Judgements Database.
In addition, according to Spratt Endicott Solicitors, your choice to recruit internally may risk breaking equality laws. For example, if your company does not reflect the national demographics among its workforce and you recruit internally, you risk being accused of discrimination because you will have recruited among certain groups without giving people from other demographics a chance at the position.
Overall, internal recruitment seems to be a valued but underexploited option in the UK. Meanwhile, potent as it is, this style of recruitment does bring with it a number of risks. As such, knowledge is key – the right knowledge of your company and your workforce will enable you to decide whether internal recruitment is the best choice, the proper choice and the legal choice for your business.
(Main image credit: Franco Folini/flickr)