[MUSIC] Okay, so in this video we look at internal versus external recruiting. And frankly, we need to do a little bit of both. And that's why I call it finding a balance because we really aren't going to be able to fill all of our future growth needs for our organization with just the current workforce we have today. And conversely, we want to make sure that we're giving people within our organization an opportunity to grow and develop. So to only hire people from outside, from a marketplace, doesn't allow us to do that. So let's take a look. >> When hiring, it is very likely that you will need to find people both within your organization and outside your organization. And so internally, that we call that make, so really making someone, like grooming that person up into the next position. And then externally, really going out into the marketplace and needing to, we say, purchase or buy that individual. So there are various advantages and disadvantages. Let's take a look first at the advantages of hiring internally. As you can see here, it's less expensive, so finding somebody within your organization, you don't have all the extra recruiting costs. It's also motivating for individuals within an organization to have the opportunity to advance and to be promoted, maybe to expand their roles into new areas that they haven't worked before. Training for specific needs is also an advantage for hiring within because we can really groom people into these kinds of positions that are geared for the needs within our own industry and organization. Let's take a look now at the advantage of getting people from the marketplace. New ideas from new people and new people bring these new perspectives that may challenge the status quo. The way that we've always been doing things and maybe they have a better way. People from the external marketplace might also come with a new unique set of knowledge skills and abilities that you don't currently have within your own competencies in your organization. And so this is really helpful when you are expanding into new markets. You are entering a new product line, mergers and acquisitions, all of these sort of different situations where you need a particular set of knowledge skills and abilities. It also may help increase the diversity within your organization if you have a very homogenous workforce to be able to bring in people externally to increase that diversity. So let's take a look at some of the disadvantages now of hiring internally and hiring externally. Okay, so once we've promoted someone, that's great for that person, but the only thing is that now we have a bit of a ripple effect. So we have a lot of back filling to do, so that's person job needs to be filled and maybe we hire someone internally for that. And then that person's job needs to be filled, so we do have this ripple effect. Hiring internally can also come with some sort of not so great politics. And that might be something where you have a manager who doesn't want someone to be promoted into his or her department. Or you have a manager who has worked really hard to groom an employee to a particular position and then now that employee is leaving the department. And that may not be very favorable for that manager who spent all the time to get that person ready. And a lack of fresh ideas and so, when we go outside, perhaps we gets newer, fresher perspectives, but inside the organization if we keep recruiting from within. Sometimes we can get very insular because we've really gotten used to the way things are done, and we're not able to see things from a new way of thinking of things. Externally, a disadvantage is that that new hire might be unproven and so, we don't know necessarily how that person will perform within our organization. It's expensive to recruit, and so to go outside and look for someone in the market place can be quite costly. There are a number of costs associated with the hiring process. If we continually hire people from outside the organization that does communicate to the people within the organization. That we're not investing perhaps in developing and growing them and moving them into positions of more empowerment and these kinds of things and so that can really hurt moral. So then you maybe asking after all these different pros and cons, shouldn't I just hire the best person for the job? And so, then we need to find out what is best? Is the best person for the job the one that is prepackaged and has the right knowledge skills and abilities for that position? Or is it somebody perhaps within the organization who has worked really hard to get to that level and is prepared, is ready to take that role. Maybe the best person for the job is somebody who fits in culturally? Maybe it's somebody who doesn't have the right skills today but may in the future and so really, again, it's not such a easy question to answer. But I'm going to present an idea here and that is to promote from within whenever possible. In my past experience in human resources, I have seen first hand how much impact promoting from within has on the person who is promoted on that department because a lot of times the coworkers are hopefully, happy for that individual. It sends a fantastic message to other people within the organization, and as a recruiter, I loved being able to sit down with an applicant and say, this job is open because the person who was in it was promoted. It's a fantastic recruiting tool, so let's check it out. It's motivating. It encourages long-term commitment. As I said, it's a great recruiting tool. And also, it's nice public relations for the organization. And so, that person goes home and says I was promoted. And they tell their family and neighbors and word gets around that this is the kind of organization that values its employees and really is trying to develop them. Furthermore, I'd like to present a little bit of research here and this is according to the Wharton School. External hires receive significantly lower performance reviews in the organizations, and they were 61% more likely to be fired from their new jobs than those who had been promoted from within the firm. They made 18% more money so not only are they not as effective in their roles, but we're paying them more to do the job. You may ask well why would it be that an external hire would be less effective than an internal hire? A lot of times the reason why somebody is effective in his or her job is right here. Their strengths depend to a large extent on their last company's resources, networks, colleagues, the relationships they had built there. And so they are much more effective in that particular situation. Now that's not everyone, but it's something really to think about. That the reason people can be effective is really because of the environment in which they work. So this gets back to the political part that I talked about before. Why would managers want to lose their best employees? Why would we want to take our best people and move them into other departments? So let's take an example here of something that might happen in an organization that could be somewhat detrimental. And this is going to be in our example, this is our manager, and then here's our employee. Now this employee, we'll just say, has worked for this manager a long time. He's loyal, he's dedicated, he's hard working, he's got some really unique skill sets. That he didn't necessarily come to the company with, but his manager helped coach and develop this individual to really have this unique set of skills. So the employee then goes and talks to the manager and says hey, I heard about a new opportunity within the organization and I'm excited to apply. And the manager's like, what? No, I don't want to lose my best person. This person has been with me for several years and I've coached and developed this individual. But here's the reality, if the manager sort of tries to stifle this person and say you know what? I don't want to lose you, you can't apply. Then this guy may say, gosh, If the company doesn't offer advancement, I'm just going to go elsewhere! So we may lose that best employee anyway. Well, hopefully, the manager doesn't say this. Well, I hope the research is true and you're less effective in your next company. Now remember our research from before that when we move organizations we may be less effective. So hopefully, the manager doesn't have that perspective. I think this is maybe a nicer response. I really the organization to lose a star performer. I support your advancement! Let's take a case study here on Cisco. Their Talent Connection Program, which is an internal recruitment program in their organization. What it does, it's kind of a neat case, because they really are taking a very active look at their internal candidates. They store all the profiles of these candidates within this system. What has this done for them? Well, it has saved millions in search firm fees Because they are again constantly developing and growing people within the organization. And they do not have to look externally for those individuals. Also, employee satisfaction has risen 20% since they have implemented this program. And so, of course, we're not going to be able to get everybody from within the organization but I do suggest to promote from within whenever possible. But, also remember it's a balance, if we have too many people from inside the organization, kind of thinking back to our systems theory, the organization can become insular. Too many external, employees are going to feel less valued.