Internal and External Sources of Recruitment

Sources of Recruitment

Sources of recruitment are the means of selecting the candidates for the process of recruitment. Through the sources of recruitment, one gets to know about the availability of several suitable candidates. Once the recruitment plan, outlining the desired number and types of potential candidates is finalized, the focus shifts to identifying suitable recruitment sources. This makes it necessary to identify recruitment sources from which these candidates can be attracted.

Types of Sources of Recruitment

There are two categories of human resource supply sources: internal and external sources of recruitment. These two main sources of recruitment are as follows:

Internal Sources

These encompass HR already on the organization’s payroll, including individuals who were previously part of the company’s workforce and either intend to return or are candidates the company wishes to rehire. This category comprises those who left voluntarily and those subject to production lay-offs.

This is the process of filling job openings by choosing from the pool of existing workforce in the organization. The following methods or techniques can be used while recruiting internally:

Transfer and Promotion
Job Posting
Employee Referrals
Former Employees
Former Employees
Previous Applicants

1) Transfer and Promotion

Promotion and Transfer are used to fill vacancies within the organization. A transfer is a lateral movement within the same grade, involving a shift from one job to another. It may lead to changes in duties, responsibilities, working conditions, etc., but not necessarily in salary. Promotion, on the other hand, involves the movement of an employee from a lower-level position to a higher-level position, accompanied by (usually) changes in duties, responsibilities, status, and value.

2) Job Posting

Job posting is another way of hiring people internally within an organization. In this method, the organisation publicises job openings on bulletin boards, electronic methods and similar outlets. One of the important advantages of this method is that it offers a chance to highly qualified persons working within the company to look for growth opportunities without having to explore better prospects outside.

It is an in-house methods of recruitment in which notices of vacant jobs are posted at important places of the organisation such as employee lounges, cafeterias, elevators, etc., and employees are provided with a large amount of time to apply for the available jobs.

Nowadays, job posting is being used as one of the most creative ways of recruitment in organisations. Various organisations consider job posting as an inbuilt part of an effective career management system. Therefore, it is considered the easiest and most commonly used method for employers to inform employees about job openings.

3) Employee Referrals

Using personal contacts to find a job opportunity is known as an employee referral. It is a reference from an existing employee regarding a candidate is it a friend or a close relative? This approach is commonly known as “it takes one to know one.” A major problem with this method is that it encourages favouritism, i.e., candidates of one’s community or caste are selected, who may or may not be suitable for the job.

Employee referrals are recommendations from current employees regarding job applicants. The rationale behind employee referrals is rooted in the belief that those who are already part of the organization are best equipped to identify potential candidates. In this context, employees are encouraged to suggest individuals they know working in other organizations for possible vacancies in the near future. This method has become a popular way of recruiting people in highly competitive sectors like IT, retailing, etc.

4) Former Employees

Former employees are increasingly becoming a feasible source of recruitment, as employers mostly contact former employees, and try to change them. They are more trusted as internal sources because they have relations with the company. Many of the retired employees may be interested in returning to work on a part-time basis or may propose someone who would like to work for the organisation.

At times people who have left the company to upbringing their families or to complete college education are enthusiastic to return to work after fulfilling their individual objectives. Individuals who had left the job earlier for other jobs may be interested in returning for a high salary package. For attracting retirees or others who had worked earlier in the organisation, the use of job sharing and flextime programmes can be beneficial. Recruiting former employees is beneficial in the sense that the organisation already knows about their work ethics.

5) Previous Applicants

Not only internal sources but those who have earlier applied for jobs can be contacted again by mail. It is a fast and cheap way to fill unpredicted or unexpected job vacancies. Applicants who have participated in a walk-in session will also be taken into consideration. Earlier walk-ins are likely to be more appropriate for filling unskilled and semi-skilled jobs.

For example, a firm which requires two cost accountants may contact previously qualified applicants. This particular action can fulfil the needs of the firm and in turn, will also help those individuals who were dissatisfied with their present job at another organisation.

Merits of Internal Sources

Merits of internal sources of recruitment are given below:

1) Familiarity

The organization and its members are aware of each other very well. This familiarity allows the organization to be fully cognizant of the candidates’ capabilities and skills, as they are insiders themselves. Conversely, employees are also well-versed in the workplace environment and the specific requirements of the vacant positions.

2) Better Utilisation of Internal Talent

Dependence on internal recruitment makes it possible for the company to use the competencies of its employees in the best way. For example, some extraordinary employees may be worthy of promotion, or some may perform better after switching to other jobs.

3) Economy

The cost of recruiting internal employees is nominal and there is no need for the company to spend a huge amount of money and time on informing and reminding its employees to apply for the job.

4) Motivational Value

Employees feel motivated and encouraged through internal recruitment. The employees work efficiently in anticipation of getting promotions and transfers.

Demerits of Internal Sources

Demerits of internal sources of recruitment are given below:

1) Restricted Choice

Internal recruitment has a narrow base and limits the alternatives and freedom of the firm in selecting the most appropriate candidates for the vacancies. Because of that, the company may not be able to choose the best option available outside the organisation.

2) Inbreeding

Too much dependence of the company on internal recruitment signifies that the company does not want to hire fresh applicants present outside. Existing employees lack dynamism, even if, they are promoted or transferred they may continue to work and behave in similar ways as that of the previous post.

3) Absence of Competition

Employees possibly assume an automatic promotion by seniority as there is a lack of competition from competent candidates present outside. Therefore, they may have no desire to prove them again and again.

4) Conflict

Chances of conflict and hostility among employees who aspire for promotion to the available vacancies may increase. The efficiency of those who have not been promoted drops and they become dissatisfied.

External Sources

These sources are external to the organization, involving new entrants to the labour force without experience. They encompass college students, the unemployed with a broader range of skills and abilities, retired experienced individuals, and others not currently in the labour force, such as married women exploring a second career option.

Organisations can fulfil the job positions from outside through the following methods or techniques:

1) Direct Methods

The most commonly utilized direct method occurs at schools, colleges, management institutes, and university departments. In these methods, the recruiters are sent to educational and professional institutions, building public contacts and exhibits. Typically, this recruiting approach involves collaboration with placement bureaus in educational institutions, which assist in attracting students, coordinating interviews, and providing space and students’ resumes. Organizations benefit from campus recruitment in several ways.

Firstly, it is cost-effective; secondly, interviews can be arranged on short notice; thirdly, organizations can engage with the teaching faculty; fourthly, it offers an opportunity to “sell” the organization to a large student community seeking campus recruitment.

In addition to managerial and supervisory positions, many organizations employ travelling recruiters to recruit skilled and semi-skilled employees from vocational schools and industrial training institutes. At times, even unskilled workers are attracted to using this method.

Other direct methods involve sending recruiters to establish exhibits at job fairs and using mobile camps to visit shopping centres in rural areas and locations where the unemployed may be contacted.

Various direct methods are:

i) Campus Recruitment

Campus recruitment is a method in which recruiters visit campus and placement cells of educational institutions such as engineering and management colleges to get qualified candidates. Recruiters have a large pool of candidates to choose from, and candidates can select the job post that suits them from the available options.

ii) Scouting

Scouting is a method in which representatives from the human resource department are sent to places where recruitment activities are taking place. They get in contact with prospective candidates who are searching for jobs. Applicants go through an initial interview. Job fairs and indoctrination seminars are some of the other ways of this particular method.

iii) Gate Hiring

Gate hiring is the recruitment method commonly used by small and medium-sized organizations, particularly when semi-skilled workers are needed. Job seekers regularly show up at the factory gate, offering their services each day. Contractors are also engaged in the supply of such personnel. The factory date method is a form of direct recruitment in which a notice is posted outside the factory gate, providing details about job vacancies. This approach serves as a means to attract potential candidates for employment opportunities.

iv) Schools and Colleges

High schools can be extensively utilized for clerical, labour, and apprenticeship positions. For technical, managerial, and professional roles, colleges, university departments, and specialized institutes, such as the IITs and IIMs, are employed. These institutions typically have a placement officer or a teacher-in-charge of placement who facilitates the attraction of employers, arranges interviews, provides space and other facilities, and furnishes student resumes. Companies maintain a list of such institutions, stay in contact with them, send brochures indicating job openings and future prospects, etc. Based on this information, students interested in the given job(s) are referred to the company recruiter. Educational institutes provide opportunities for recruiting their students.

v) Manned Exhibits

Organizations deploy recruiters to conventions and seminars, set up exhibitions at fairs, and utilize mobile offices to visit desired centres.

vi) Waiting Lists

Many firms heavily rely on their own application files. These records include individuals who have expressed interest in jobs, either after visiting the organization’s employment office or making inquiries by mail or phone. These records prove to be a very useful source if they are kept up-to-date.

v) Employees’ Contact with the Public

The organization informs its employees about specific job vacancies, and they, in turn, bring this to the attention of their relatives, friends, and acquaintances.

2) Indirect Methods

The most frequently used indirect method or technique of recruitment is advertisement in publications such as newspapers, magazines, trade journals, as well as technical and professional journals. The effectiveness of advertisements is determined by the choice of media, placement, timing, and appeal to the reader.

A useful advertisement must provide a concise job summary, and an overview of the organization including its product/service, size, industry type, profitability, and expansion programs, along with details of the compensation package. An effective advertisement needs to be specific, clear, reader-friendly, and appealing. Vague and broad-based advertisements may generate numerous irrelevant applications, thereby increasing the cost of processing.

When crafting an advertisement, careful consideration is necessary to ensure that self-selection occurs among applicants. In other words, individuals meeting specific requirements should be the ones considering responding to the advertisement. A carefully worded and well-crafted advertisement can contribute to building the organization’s image. The advertisements should include information about the organization and the job, providing potential candidates with an opportunity to contact the recruitment office confidentially.

Other indirect methods include advertising on radio and television, technical journals and brochures, and trade and professional journals. Another frequently used advertising method is a notice board placed at the gates of the company.

When qualified and experienced individuals are not available through other sources, advertising is done in newspapers and professional and technical journals. While all types of advertisements can be placed in newspapers and magazines, only specific types of positions should be advertised in professional and technical journals; for example, only engineering jobs should be inserted in engineering journals.

A well-thought-out and planned advertisement for an appointment reduces the possibility of unqualified people submitting their applications. If the advertisement is concise and straightforward, candidates can assess their abilities and suitability for the position. Only those who possess the necessary qualifications will be motivated to apply.

Indirect methods include the following:

i) Advertisements

Companies use advertisements to attract prospective job seekers. These ads appear in newspapers, trade, professional, and technical journals, as well as on radio and television. In recent times, this medium has become just as lively, colourful, and imaginative as consumer advertising. The ads usually provide a brief outline of the job responsibilities, compensation package, growth opportunities in the organisation, etc. Advertisement is suitable when the organisation wants to reach a large target group and desires a good number of qualified individuals who are cosmopolitan in distribution.

ii) Employees Trade Associations/Clubs

Meetings, conferences, seminars, and other social functions of employee trade associations/clubs are more ways of spotting suitable candidates.

iii) Professional Associations

Professional associations/bodies of major professionals like Doctors, Engineers, Auditors, Chartered Accountants, and Managers also provide abundant opportunities to discover potential candidates for technical, scientific and managerial cadre vacancies.

iv) Other Reputed Firms

Nowadays, it has become a trend to recruit human resources from reputable organizations. Few companies and firms have established good reputations for productivity, efficiency, and industrial harmony. Many firms have made efforts to discover appropriate candidates from such firms to fill vacant job positions.

3) Third-Party Methods

Various agencies play an important role in recruitment, including commercial and private employment agencies, state agencies, placement offices in educational institutions (such as schools and colleges), professional associations, recruiting firms, management consulting firms, and even indoctrination seminars involving college professors, friends, and relatives.

The most commonly utilized third-party methods involve public and private employment agencies. Public employment exchanges traditionally focus on factory workers and clerical jobs but also extend assistance in recruiting professional employees. Private agencies, operating on a fee-based model, offer consultancy services. These agencies are often specialized for different job categories, including operatives, office workers, sales personnel, and supervisory and management roles. Additionally, trade unions are another avenue explored under third-party methods.

The most common methods, known as third-party methods, are outlined below.

i) Private Employment Agencies

Private Employment Agencies specialize in specific occupations such as general office help, salesmen, technical workers, accountants, computer staff, engineers, and executives. These agencies bring together employers and suitable individuals for a job. Due to their specialization, they can interpret the needs of their clients and actively seek out individuals with specific skill sets. They are used extensively and charge a very small fee from an applicant. These private agencies work as a middleman between employees and employers.

ii) State or Public Employment Agencies

These are also known as Employment or Labour Exchanges. They provide a clearing house for jobs and job information alongwith a wide range of services such as counselling, job searching, information about the labour market, workers and pay rates, etc.

iii) Indoctrination Seminars for College Professors

These seminars are organized to discuss the challenges companies face, with professors invited to participate. Visits and banquets are arranged to create a favourable impression on professors so that they may later speak positively about the company and assist in recruiting the required personnel.

iv) Professional Societies

Professional Societies may offer leads and clues for identifying promising candidates for engineering, technical, and management positions. Some of these societies maintain mail-order placement services. They keep entire information records about employed executives. These consulting firms suggest highly competent individuals for managerial, marketing, and production engineer posts.

v) Trade Unions

Trade unions provide a substantial number of both manual and skilled workers. In a few organisations, formal agreements are made to give priority to the candidates recommended by the trade unions, during the recruitment process. Trade Unions are often called upon by employers to provide any additional employees that may be needed. Unions may be asked for recommendations, largely as a matter of courtesy and evidence of goodwill and cooperation.

vi) Casual Labour Source

Casual Labor Source refers to individuals who present themselves daily at the factory gate or employment office. Most industrial units rely to some extent on this source. It is important to note that this source is the most uncertain of all. Many industries are dependent on casual labour who daily marks his presence at the factory gate or employment office.

vii) Unconsolidated Applications

Companies generally receive unsolicited applications from job seekers at various points in time. The number of such applications depends on economic conditions, the company’s image, and the job seeker’s perception of the types of jobs that might be available, etc. These applications are typically stored in a data bank, and whenever a suitable vacancy arises, the company informs the candidates to apply through a formal channel.

There are specific job postings that receive only a limited number of applications from candidates. In such a case, organisations can search the application forms of those candidates who have approached the organisation for the vacancies available through their own efforts.

viii) Voluntary Organisations

These organisations such as private clubs, and social organisations, might also supply employees like physically handicapped, widowed or married women, aged persons, retired people, etc.

ix) Private Employment Search Firms

A search firm is a private employment agency that maintains computerized lists of qualified applicants and supplies these lists to employers willing to hire people from them for a fee. When a company needs a specific type of employee, job description and job specification are uploaded into a computer, where they are matched with the resume data stored therein. Firms such as Arthur Anderson, Boble and Hewitt, ABC Consultants, SB Billimoria, and KPMG, as well as Ferguson Associates, offer specialized employment-related services to corporate houses for a fee, particularly for top and middle-level executive vacancies.

x) Executive Search Agencies

Executive Search Agencies maintain comprehensive information records about employed executives and recommend individuals of high calibre for managerial, marketing, and production engineer positions. These agencies are often referred to as ‘headhunters,’ ‘raiders,’ and ‘pirates.’

xi) Friends and Relatives of Present Employees

Friends and relatives of present employees are a good source from which new employees may be drawn. However, this is likely to encourage nepotism, i.e., individuals from one’s own community or caste may be the only ones employed. This may create challenges for the organization.

xii) Temporary Help Agencies

Temporary help agencies employ their labour force, consisting of both full-time and part-time workers, and provide them to client organizations to fulfil their temporary staffing requirements.

xiii) Deputation

Individuals possessing certain abilities useful to another organization are sometimes deputed to it for a specified duration. While ready expertise is available, such employees do not easily become part of the organization.

Merits of External Sources

Merits of external sources of recruitment are given below:

1) Wide Choice: Organisations can freely choose candidates from a huge pool of applicants.

2) Injection of Fresh Talent: People with unique skills and knowledge could be selected to energise the present employees and incorporate creative methods of working.

3) Motivational Force: Internal employees are encouraged to work hard and compete with external candidates in search of career growth. A competitive atmosphere like this would assist an employee to work to the best of his abilities and as hard as he can.

4) Long-Term Benefits: If competent individuals join the organisation, they can discover new ideas. This can create a competitive atmosphere which would force employees to give their best, earn benefits, get promotions, etc.

Demerits of External Sources

Demerits of external sources of recruitment are as follows:

1) Expensive: Using various sources of recruitment is not an easy job, and hiring costs could rise considerably.

2) Time-consuming: Advertising, due to the need for repetition when selecting the right employees, is a time-consuming process. The entire procedure must be reiterated if a suitable candidate is not found.

3) Demotivating: Present employees who have given a lot of time in service may oppose the process of filling vacancies from outside the organisation. Employees can experience a sense of demotivation when they perceive that their contributions to the organization are not adequately appreciated. This feeling can lead to a decline in their enthusiasm and a waning interest in fulfilling their job responsibilities.

4) Uncertainty: There is uncertainty that the organization will be able to hire the right candidates. It may end up hiring unsuitable candidates who may not be able to adjust to the new settings.

Balancing Internal and External Recruitment Strategies: Advantages, Disadvantages, and the Importance of a Strategic Approach

A policy of giving preference to internal candidates is advantageous as it enhances employee morale and fosters loyalty towards the organization. Additionally, it benefits employers because they can better evaluate individuals already within the company, and these employees require no induction.

The policy of preferring internal candidates, however, has some disadvantages. It may result in inbreeding, discouraging new talent from entering the organization. If promotions are solely based on seniority, genuinely capable individuals may be overlooked.

Likewise, there are both positive and negative aspects to external sources of recruitment. These outlets offer access to a broad market and ensure the best selection based on skills, training, and education. They also contribute to introducing fresh ideas into the organization. Furthermore, this source remains consistently available. However, in terms of individuals chosen through this system, one must take risks regarding their loyalty and commitment to continue. The organization also needs to make larger investments in their training and induction.

You will now realize that relying solely on one source is not in the best interest of an organization. It must depend on both sources, with a ratio to be determined based on various factors.

Several factors influencing this policy are outlined below:

1) Effect on Employee Attitude and Actions

Employees undoubtedly feel more secure and align their long-term interests with the organization when they can anticipate priority in job opportunities. The widespread application of the ‘promotion from within’ policy may, however, encourage mediocre performance. The organization needs to weigh the importance of employee loyalty against the risk of mediocre performance.

2) Level of Specialization Required

Many organizations primarily rely on the ranks of current employees who have undergone specialized training.

3) Emphasis on Employee Participation

New hires from outside, lacking experience with the firm, may take some time to grasp sufficient knowledge about its services, products, or processes to participate effectively.

4) Need for Originality and Initiative

The organization’s preference for internal or external candidates may depend on whether it believes it is cultivating originality and initiative within its workforce. If not, new individuals with different ideas may be sought externally.

5) Acceptance of the Seniority Principle

The success of the ‘promotion from within’ policy hinges on both management and employees accepting the seniority principle, either as is or with suitable modifications for promotions. If not accepted, open selection processes may be more appropriate.

Internet Recruitment

Internet recruiting is an emerging field, and therefore, only a limited number of companies have gathered substantive data at this point. Companies are successfully attracting a high proportion of online resumes, even for non-technical positions, as increasing numbers of job seekers are turning to the Internet. Job seekers are utilizing the Internet because it simplifies the process of searching for and applying for positions.

The Internet is playing an increasingly important role in recruitment. It advertises jobs and serves as a platform to locate job applicants. Websites can provide internet users with information on the type of work the company is involved in and the job opportunities available. Interested parties can respond by email, offering the advantage of a quick turnaround time and reducing the amount of paperwork associated with written job applications. Furthermore, the Internet allows an organization to reach a larger and broader range of applicants than traditional methods.

Internet recruiting is more cost-effective due to:

Reduced direct costs of newspaper advertisements, job fairs, and headhunter fees.
Reduced mailing costs.
Reduced workload for the HR department.

The majority of companies engaged in active Internet recruiting believe that it helps them attract better-quality applicants. Internet users tend to be better educated and more computer literate than non-users, contributing to this perception.

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