Sometimes finding the perfect employee takes place from within your business, instead of delving into the vast public pool of candidates. There are many benefits to hiring internally. However, there are challenges associated with the internal hiring process, as well. When is it a good idea to hire internally? Hiring from an existing employee pool can be beneficial to your organization. Your current employees already know your business and they understand the company culture. Thus, posting to an internal job board to fill open positions can make sense. Some situations where internal hiring might be a good idea include: Promotions - Employees often want to move up within an organization, so they are eager to achieve these positions. Transfers - This would be a similar level job in a different department or location. Temporary to permanent - If an employee begins in a seasonal or temporary position and you need them to become permanent, internal hiring makes sense. Employee referrals - Often, current employees know people who will fit a role perfectly. Businesses should have a system in place to encourage the referral process. Promoting knowledge about your company. It's a good idea to recruit internally when you have a position that requires in-depth knowledge about your organization. Many companies hire human resources or marketing positions internally. They want to fill the position with someone who intimately understands the company culture, values, and mission. Preventing overstaffing and understaffing. It can also make sense to hire internally if you have a lot of qualified candidates within the organization already. Moving employees around can also combat overstaffing and understaffing in certain departments. Investing in your current workforce. When you hire internally, you are investing in your current workforce. This builds trust among employees and makes them feel valuable. It sends a message to employees that you will invest in their professional development and increase engagement across the board. Saving time and money. It's often better to provide a small amount of necessary training to an internal employee, rather than go through the entire expensive and time-consuming onboarding process with a new candidate. The cost of hiring externally can make internal hiring an attractive alternative. Steps to hire an internal job candidate. Small business hiring requires many of the same steps whether you are hiring from an external candidate pool or from within. Here are some of the actions you and your internal hiring team will want to take. Step 1: Write a job description. Describe the day-to-day activities of the job, tasks to be performed as part of the open position, and duties and responsibilities of the job. Your job description should allow your current employees to understand what they would be doing if they took on the new role. You also need to determine exactly what type of person you need to find to fit the open position. Write down skills, knowledge, education, training, and other details about the ideal person's qualifications. Step 2: Determine a recruiting strategy. You need to decide if you want to post your open position externally, internally, or both. If you are hiring for a completely new role in a new department, then you might consider taking applications externally, as well as internally. However, if your open position is within an existing department, current employees may already be familiar with the role. Posting internally can save you time and money if your existing employees already know what you need and have the qualifications. Step 3: Advertise your job internally. You need to get the word out to your existing employees that you have an open position and you'd like to hire internally. There are multiple ways to do this, including emails, bulletin boards, company intranet, or an internal newsletter. Your HR department or managers may even recruit specific people individually. However, you don't want to seem as if you're discriminating against anyone. Everyone should be informed of the open position, and they should all have an equal opportunity to apply. Step 4: Establish hiring stages for internal candidates. Set a deadline for internal applications, so they do not delay your hiring process. For example, you might allow internal candidates one or two weeks to submit applications prior to posting the open position externally. Decide how many interviews internal candidates will have to go through. Typically, one interview is enough for an internal candidate because they already know about the company, and you are aware of how they fit into company culture. Step 5: Find the right candidate. You should consider all employees who apply for the open position. However, be clear that everyone must: Meet the position’s minimum qualifications. Perform current job duties satisfactorily. Have held their current position for a minimum amount of time. Not have undergone disciplinary action within a past specified amount of time. Employees who meet this criteria can be short-listed and won’t have to go through the normal hiring stages that external candidates face, including pre-employment screening and a background check. Hire the right person for the job. Once your employees go through the internal hiring process, you should select the right person for the open position. Extend an offer to them in the same manner that you would to an external candidate. The only difference is that you won't have to go through the onboarding process. You will want the internal candidate to sign new agreements and a confirmation stating that they have received and understand all the paperwork. You should also provide them with the necessary equipment and training if they need any for the new role. What are some disadvantages of internal hiring? While internal hiring is positive in many ways, there are some disadvantages, including: You won’t be getting the fresh perspectives you might get from new employees. You may see workplace jealousy among co-workers who were not selected for the open position. You will still have to replace the employee who accepts the open position. These challenges can be addressed by developing a fair internal hiring process and recruiting externally when necessary. Small businesses can see many benefits from internal hiring. However, there are some challenges to watch out for. When your. business is in growth mode, Lendio is here to help. Learn more about how Lendio can help you expand your small business.