Internal sources of recruitment means shifting of the existing employees of the organisation from one department to another department and from one post to another post.
In the internal sources of recruitment, the HR department invites applications for a job position from the present employees of the organization.
Internal recruitment is performed by means of promotions, transfers, employee referrals, hiring former employees, offering previous applicants, inside moonlighting, and informal communication channels.
The internal sources of recruitment are:-
1. Promotion of Employees 2. Transfer of Employees 3. Demotion of Employees 4. Recruitment of Ex-Employees 5. Present Employees 6. Employee Referrals 7. Previous Applicants
8. Inside Moonlighting 9. Informal Communication Channels 10. Job Posting and Bidding 11. Direct Applicants 12. Human Resource Information System 13. Identifying Talent through Performance Appraisal and Using Assessment Centres.
Additionally, learn about the advantages and disadvantages of internal sources of recruitment.
Internal Sources of Recruitment in HRM: Promotion, Transfer, Demotion of Employees, Recruitment of Ex-Employees and Others
Internal Sources of Recruitment – Promotion of Employees, Transfer of Employees, Demotion of Employees and Recruitment of Ex-Employees
Recruitment is the basic personnel function in an organisation. Each and every organisation requires some qualified personnel to perform their function for the realisation of its goal. This function is perform by recruitment. It is the process through which personnel agency will recruit the best the most talented and competent personnel it is the process of attracting qualified applicants for jobs.
Recruit is “the cornerstone” of the entire personnel structure. If recruitment process is not soundly conceived there is little chance of building a first rate staff. Aim of this process is that employees are engaged in jobs where in they have a fair chance of succeeding and at the same time feel well adjusted to their work environment in India, it was introduced by East India Company in 1853. It is the duty of the Union Public Service Commission at union level and State Public Service Commission at state level to provide effective recruitment to the administration.
Internal sources of recruitment means shifting of the existing employees of the organisation from one department to another department and from one post to another post.
The sources of internal recruitment are as under:
Source # 1. Promotion of Employees:
Promotion implies vertical movement or advancement of an employee from a lower position to a higher one. Positions falling vacant in higher ranks may conveniently be filled up by promoting suitable employees from below. This promotion may be based upon both, the seniority and merit. In a good promotion policy, employees should know what will be the contribution of their seniority in merit for their promotion.
The employee has the privilege of working in the real situations of the business, so he does not feel any difficulty in case of promotion. Thus, promotion leads to shifting an employee to a higher position carrying higher responsibilities, facilities, status and pay.
Source # 2. Transfer of Employees:
Transfer involves the shifting of an employee from one job to another without special reference to change in responsibility, rank or compensation. Transfer is the change in a job equal to the old one in terms of pay, status and responsibilities. If the management finds that a person is misfit or he will be more useful at some other place, he is shifted. However, it may significantly affect the efficiency and morale of the employee, depending on the type of environment where he has been transferred.
Source # 3. Demotion of Employees:
Employees may be demoted back to their original jobs. Demotion shakes the morale and self-respect of employees, so it should be avoided. Demotions are generally made, when the promotion is conditional or the court has disapproved or vacancy was temporarily caused by the leave of a senior employee.
Source # 4. Recruitment of Ex-Employees:
This source of internal recruitment is adopted to re-employ the ex-employees of the organisation. It may happen when employees who have left the organisation are willing to re-join it. In such a case, the organisation accords them priority and enterprise too gets trusted, competent and experienced employees.
(i) Up-Gradation of Several Employees:
The existing employees of the organisation get an opportunity for promotion. When a certain person is promoted, several other persons below his rank are automatically promoted. In this way, one vacancy filled from within, results in up-gradation of several employees.
(ii) Familiarity with Policies:
The Existing employees are aware of policies, plans and the actual working conditions of the enterprise, so they are not required to waste time and energy in learning it.
Internal source is economical because the enterprise is not required to incur expenses on recruitment from outside the organisation. There are lesser number of candidates and the most suitable candidate is selected according to merit or seniority or both.
(iv) Availability of Experienced Employees:
Promoted employees have already been performing the job in the organisation before their promotion, so they do not have any difficulty. The organisation is also benefitted because employees are efficient and experienced and they start working without any formal training.
(v) Increase in Employees’ Morale:
Promotion from within the organisation increases employees’ morale. The policy of internal promotions makes them enthusiastic and optimistic and they contribute their best efforts and energies.
(vi) References not Required:
The service records of employees are available in the organisation. It knows the abilities and loyalties of its employees. Therefore, any outside reference about their ability, integrity and moral character is not required.
(i) No Opportunity for Fresh Talent:
The major drawback of this source is that the enterprise may deprive competent, talented and deserving candidates from outside to get an opportunity to take up challenging jobs.
(ii) Promotion of Inefficient Employees:
Sometimes, unsuitable persons use their influence to get promotions. They are promoted from within the organisation without giving any importance to their merit simply because they are working in that organisation.
(iii) Not a Complete Solution:
Internal source of recruitment is not capable to meet entire requirement of the organisation. The management has to knock at the doors of external sources also.
Evaluation of Internal Sources of Recruitment:
(i) Upgrading of several employees
(ii) Familiarity with policies
(iv) Availability of experienced employees
(v) Increase in Employees, Morale
(vi) References not required
(i) No opportunity for fresh talent
(ii) Promotion of inefficient employees
(iii) Not a complete solution
Internal Sources of Recruitment – 6 Important Sources: Present Employees, Employee Referrals, Former Employees, Previous Applicants and a Few Others
In the internal sources of recruitment, the HR department invites applications for a job position from the present employees of the organization. Internal recruitment is performed by means of promotions, transfers, employee referrals, hiring former employees, offering previous applicants, inside moonlighting, and informal communication channels.
The various internal recruitment sources are discussed as follows:
i. Present Employees:
Provide the organization a good and reliable source of recruitment. The promotion and transfer of employees is one of the best sources of internal recruitment for any organization. Promotion means shifting an employee to a higher position, involving higher responsibilities, facilities, status, pay, and perquisites. It involves filling vacancies in higher jobs by promoting existing employees, who are considered fit and appropriate, for such positions by the top management. Promotion can be a very useful source in raising the morale and motivation level of employees.
In addition, since the employees are aware of the rules, regulations, and culture of the organization, there is no need of induction and training to them. This saves the training costs as well as the time and effort required by the organization. Transfer refers to the movement of employees from one job to another, one department to another, one shift to another, or one plant to another.
It involves filling vacancies by transferring employees from overstaffed departments, plants, or shifts to the understaffed ones. The records of employees affect promotions and transfers as they help the HR department in knowing which employees are performing their jobs in a better way.
ii. Employee Referrals:
Involve references or recommendations of candidates given by the present employees, trade unions, or business friends for filling a vacancy. Employees already working in the organization recommend their friends or relatives for a vacancy. The advantage of employee referral is that it helps in reaching numerous prospects at a very low cost. Some organizations give monetary incentives to their employees in the form of finders’ fees for every successful referral. The examples of companies following this practice are Wipro, Microsoft, Satyam, and Infosys.
iii. Former Employees:
Provide a good source of internal recruitment for an organization. Former employees include retired employees or the ex-employees of the organization. Such employees may be interested to work for the organization on a part- time or full-time basis. The advantage of this method is that it is a low cost method.
iv. Previous Applicants:
Refer to the candidates who had previously applied for a particular position in the organization. The previous applicants can be contacted by phone or e-mail to fill an unexpected opening. This may not be a true internal source of recruitment as the recruitment efforts were carried out earlier and the applicants who could not be called for the final selection might be called some other time to fill vacancies in the organization.
v. Inside Moonlighting:
Enables the present employees to take up an additional responsibility that is suitably rewarded. Inside moonlighting can be used when there is a temporary shortage of workforce and no great deal of additional work is required to be done. In this situation, instead of hiring new employees, the organization may encourage the employees not on the payroll of the organization to accept additional work in return for a bonus.
When current employees of the organization are used to take care of the additional work that arises occasionally, it is called inside moonlighting. These policies are expected to address various issues regarding prevention of conflict of interest, and protection of proprietary information.
vi. Informal Communication Channels:
Disseminate information about the current or anticipated job vacancies within the organization through the grapevine or informal hierarchy. For instance, employees of the organization may be informally communicated about the vacancy within the organization.
Internal sources of recruitment have several merits and demerits.
Their merits are as follows:
a. Promote greater loyalty and morale among employees
b. Provide the employee’s performance data readily
c. Involve less cost and efforts
d. Create a sense of belongingness and security among employees
e. Act as a motivational tool
f. Benefit an organization by shifting surplus employees to the department in which there is a shortage of workforce, as in case of transfers.
The demerits of internal sources of recruitment are as follows:
a. Lead to internal politics and bias
b. Demoralize the employees who are not promoted
c. Reduce the scope for fresh and new talent
d. Make the employees lethargic, as they are sure of time bound promotion.
Internal Sources of Recruitment in HRM – Job Posting and Bidding, Referrals and Direct Applicants
It is promotion-from-within concept. Many organizations develop their own low-level employees for higher positions. The internal promotions occur through internal search of current employees who have applied for the posts, identified by the HRM department or referred by fellow employees.
Internal recruitment is done in many ways viz., Job posting and bidding, referrals and direct applicants.
i. Job Posting and Bidding:
Organisations may communicate information about job openings through a process known as job posting and bidding. In this process the jobs are frequently posted on electronic bulletin boards or on regular bulletin boards. It can also announce in employee publications, special hand-outs, direct mail and public-address messages.
(i) In on-line job posting, employees looking for better positions post their names, resumes and the positions they are interested.
(ii) Whenever a position falls vacant, the list of the employees who have posted their details is retrieved to select possible candidates for interviews.
(iii) The employees are notified about the interview schedule and they can track their progress electronically through the various hiring stages.
(iv) This system is effective only when the employees believe that the system is administered fairly.
ii. Direct Applicants:
Direct applicants are the people who apply for a vacancy without prompting from the organization. Most of the direct applicants would have done some homework and concluded that there is a fit between themselves and the vacancy. This process is known as self-selection.
These are people who are prompted to apply for a job by someone within the organization.
(i) Friends, relatives and acquaintances refer people for suitable jobs.
(ii) Some companies even offer financial incentives to current employees for referring people who are accepted and perform acceptably.
(iii) Employee referrals are an excellent means of locating potential employees for hard-to-fill positions.
(iv) This is effective because employees rarely recommend someone unless they believe that the individual can perform adequately.
(v) Employee referrals may receive more accurate information about their potential jobs as the recommender often gives the applicant more realistic information about the job than could be conveyed through employment agencies or newspaper advertisements.
Negative Side of Referrals:
(i) Recommenders may confuse friendship with job performance competence.
(ii) Individuals often prefer to have their friends join them at their place of employment for social or even economic reasons such as sharing of accommodation/vehicle.
(iii) Employee referrals may lead to nepotism i.e., hiring only the relatives of the current employees.
(iv) This method of recruitment minimizes an organization’s desire to add diversity to the workplace.
Nevertheless, employee referrals have universal application. In many organizations lower as well as higher level positions are filled by recommendations of current employees. Higher-level positions are generally referred by a professional acquaintance rather than a close friend.
In addition to the above the following are also employed in internal recruitment:
i. Human Resource Information System:
Organizations create databases that contain the complete records and qualifications of each employee within the organization.
a. Combined with search engines, the management can access the needed information and identify potential candidates for available jobs.
b. Companies have developed resume-tracking systems that allow management to query on online database of resumes.
c. Some companies have developed automated staffing and skills management software.
d. HRIS allows an organization to rapidly screen its entire workforce to locate suitable candidates.
e. HRIS is also used to predict the career paths of employees and to anticipate promotion opportunities.
f. The system includes provisions for recording changes in employee qualifications and job placements as they occur.
ii. Identifying Talent through Performance Appraisal:
Detailed elsewhere, performance appraisal is also used to identify potential candidates in addition to the more important task of developmental and career decisions. While conducting formal appraisals, managers are required to identify their subordinates’ potential for managerial or advanced technical jobs.
Inventorying Management Talent:
(i) Skill inventories are an important tool for succession planning.
(ii) These inventories provide an indication of the skills employees possess and their experiences and interests.
(iii) Skill inventories are used to identify high-potential employees who may be groomed as replacements for managers who are reassigned, retire or resign.
But many companies do a poor job skill inventories leading to chronically shortage of talent.
iii. Using Assessment Centres:
An assessment centre is a process (not a place) by which individuals are evaluated as they participate in a series of situations that resemble real-life job situations.
Many approaches are used in these centres:
a. In-basket Exercises:
The participants are given many documents, each describing some problem or situation requiring an immediate solution. They are thus forced to make decisions under pressure of time. They have to prioritize their activities.
b. Leaderless Group Discussions:
In this activity, employees are to discuss a given topic. No clues will be given either to approach the topic or to the type of decision to be taken. The participants in the leaderless situation are evaluated based on their initiative, leadership skills and ability to work as a group member.
c. Role Playing:
The employees are assigned different roles such as a HR manager, customer-relationship manager or a team leader and instructed to ‘act’ in a given situation. A trained assessor, using a structured rating scale, assesses the participants.
d. Behavioural Situations:
The participants are explained a particular work situation or shown a video clipping and a series of questions are asked about how they would behave under those circumstances.
At the end of the process the assessors’ observations are pooled to develop an overall picture of the participants. A strong relationship is, generally, observed between the results of assessment centres and future performance in job.
(i) It generates applicants who are well known to the organization.
(ii) The applicants are relatively knowledgeable about the vacancies.
(iii) It is generally cheaper and faster.
(iv) It is a good public relation and builds morale among the employees.
(v) Ambitious employees are encouraged.
(vi) Probability of selection will be better as the information on the individual’s performance is readily available.
(vii) Promoting from within can also act as a training device for developing middle-and top-level managers.
(i) It may result in a workforce whose members think alike and may not be suited to innovation.
(ii) In the name of building morale, there are chances that less-qualified internal sources may be selected.
(iii) Internal searches may generate infighting among rival candidates for promotion and decrease morale levels of those not selected.
(iv) It may result in excessive in-breeding i.e. the organization will be full of only insiders without any new blood to generate current ideas, knowledge, enthusiasm and higher productivity.
(v) It may lead to ‘We-have-always-done-it-that-way’ mentality.
Internal Sources of Recruitment in HRM
The internal sources include those ones who are already on the pay-roll of the organisation and those who served the organisation in the past (but quit voluntarily or due to retrenchment) and would like to return to it if the organisation likes to re-employ.
The process of filling job openings by selecting from among the pool of present workforce can be implemented by the following techniques or methods:
Internal Source # 1. Job Posting:
In the method also the people are hired from within. The main feature of this method, is that the organisation publicises job openings on bulletin boards, electronic media and similar outlets.
Internal Source # 2. Transfer and Promotions:
In this method vacancies are filled from within the organisation through transfers and promotions.
An internal movement within the same grade, from one job to another is called transfer. It may lead to changes in duties and responsibilities, working conditions, etc., but not necessarily salary.
While promotion involves movement of employee from a lower level position to a higher level position accompanied by (usually) changes in duties, responsibilities, status and value.
Internal Source # 3. Previous Applicants:
The applicants previously rejected could become an excellent future employees.
Internal Source # 4. Former Employees:
As employers increasingly contact to former employees, striving to convert former employees into new hires, former employees are rapidly becoming a viable recruitment source.
Internal Source # 5. Employee Referrals:
A recommendation from a current employee regarding a job applicant who can be a friend or a family member falls under this category. The logic behind employee referral is that “it takes on to know one.” This method of recruitment, however, encourages nepotism, i.e., persons of one’s community or caste are employed, who may or may not be fit for the job.
Main merits of internal sources are as under:
I. Ensures Familiarity:
The organisation and its employees are familiar to one another. The organisation knows the ability and skills of die likely candidates since they are insiders. Likewise the employees also know about the working conditions and job requirements of the vacancies.
II. Better Utilisation of Internal Talent:
Internal recruitment helps the enterprise in making the best use of the capabilities of its employees. To illustrate, some employees may be so talented that they deserve, promotion, or some may do better on transfer to other jobs.
The cost of recruiting internal employees corner to be minimal. The enterprise need not incur any expenditure on informing and inducing its employees to apply.
IV. Motivational Value:
The employees can look for promotion and transfer with the hope to perform and do their jobs well so as to earn the desired promotion/ transfer. So, it is a source of motivation to employees.
Main demerits of internal sources are mentioned below:
I. May Create Conflict:
There may be chance of conflict among those employees who aspire for promotion to the available vacancies. Those who are not promoted are unhappy and their efficiency may decline.
II. Absence of Competition:
In the absence of recruitment competition from qualified candidates from outside employees are expected to automatic promotion by seniority and sure prospect. In this way they may lose the drive for proving their worth.
In case the enterprise depends too much on internal recruitment, it implies that the enterprise denies itself fresh talent and ‘new blood’ available outside. Existing employees, even if promoted or transferred may continue to work and behave in the same habitual ways, without any dynamism.
IV. Restricted Choice:
The options and freedom for the enterprise in choosing the most suitable candidates for the vacancies is very narrow. The enterprise may have to compromise on quality of its choice of candidates.