How to Optimize Your Internal Hiring Pipeline

Internal hiring or ‘recruitment from within the organization’ is becoming an increasingly popular hiring strategy to be considered. In a talent ecosystem with tight competition to retain and acquire the best candidate organizations are evolving the best practices to retain top talents from within the organization as losing even one would result in benefiting the competitors. 

Despite the rapidly evolving talent market, internal hiring remains one of the best candidate sourcing channels according to a recent study by the University of Minnesota. Not only does it incur lesser expenses, but employees who are hired internally are also more likely to be high-performers, highly engaged, and less likely to leave. 

According to a study, 36% of organizations rely on internal hiring and employers acknowledge that internal hiring is six times more effective than other hiring channels.  

What is internal hiring? 

Internal hiring is the process of filling job vacancies from within the organization. Here recruiters consider employees within the organizations for the new job opening. There are different types of internal hiring strategies and the most common ones are transferring an employee to a different branch, internal promotions, acquiring talents using employee referrals, hiring temporary employees such as interns, and change of department. 

Benefits of internal hiring 

When do organizations consider internal hiring? 

There are certain situations when employers and recruiters find it beneficial to have an internal hiring mechanism in place. Here are different use case scenarios where internal hiring proves to be the most productive. 

Situation 1: It is a delicate situation for companies when they encounter talented surplus staff as laying of talent is a grim situation for both the employees and the employers. It creates a negative reputation for the organization, affecting its employer branding. At the same time organizations cannot keep holding on to their surplus staff and this is where internal hiring is a preferred solution. 

Situation 2: Depending upon the changing business needs there could be a sudden job requisition that needs to be filled as soon as possible. But in reality, an average hiring process might take 40 to 50 days to onboard a quality hire. In this situation internal hiring can reduce the time to fill by several manifolds. Moreover, an internal employee would be highly familiar with the company culture, thereby adapting faster to the new job role. 

Situation 3: Monotonous work is one of the reasons for less productivity and resignation, which can be countered by changing departments. This offers an excellent opportunity for organizations to diversify the skills of the existing employees; at the same time employees get to explore new job arenas and responsibilities. This can be explored as an experimental ground for initiating career shifts. 

Steps to build an internal hiring system 

1. Create an internal hiring policy 

It is important to create an internal hiring policy. The policy should outline the internal hiring process and clear guidelines to make the internal hiring process successful. 

  • Mention the parties involved in the internal hiring process. 
  • Set up a clear communication rule. 
  • Ensure clear guidelines for hiring managers. 
  • Mention the candidate eligibility criteria such as years of experience within the organization, departments and roles eligible for applying, and so on. 
  • Make a clear process to get approval from the existing team heads for applying to a different role. 

2. Have an internal job posting system 

Whenever there is a new job opening make sure to open the role for internal staff as well unless there is a specific reason to consider only external candidates and specific skill and qualification requirements. Consider having a specific dashboard or notification system to notify internal employees regarding the new vacancies. Here make sure to post a crystal-clear job description mentioning the job requirements. 

3. Make sure to consider your current employees as your talent pool 

Every organization invests time, effort, and resources to build and maintain a strong and diversified talent pool. Here it is important to include the current employees in the talent pool along with key information such as their core role and responsibilities, achievements, work track record, experience, skills, certifications, qualifications, and the willingness to take up other roles. This makes it easier to directly search and reach out to suitable internal candidates quickly. 

4. Encourage employees to apply 

Usually when there is a job opening from within the organization employees might be reluctant to apply considering interview process conducted by known circles, rejection, and a fair outcome. This is the reason why there should be an effort to encourage employees to apply. Recruiting teams should consider implementing the following systems to ensure fair recruitment outcomes. 

5. Have a fair and transparent candidate selection process 

It is important to have a robust candidate selection process for internal hiring and it should be in sync with the regular hiring process. Provided there is a highly similar hiring and selection process for both internal and external candidates it is easy for recruiters to identify strong contenders for the role. One significant benefit of hiring an internal candidate is that recruiting managers can easily get access to the candidates' experience and performance history.  

Here it is also important to enable a fair skill assessment process. Therefore, it is important to keep the candidate filtration process blindfolded. 

6. Have a proper feedback system 

Having a robust feedback system in place is important, especially in the case of internal hiring as even rejected candidates are still your employees. 

  • Enable a feedback system from the applicants during the key stages of the hiring process.  
  • Give feedback during important stages of the hiring process. 
  • Suggest training programs and other possible roles for rejected candidates. 

7. Conduct workshops and events 

Conducting workshops and training programs that cover industry specific topics, latest trends, skill upgradation programs, quiz sessions, and competitions helps motivate employees to explore new arenas within the organization. This also helps identify hidden talents and soft skills that were not identified before. 

Further, there can be a system to reward proactive participants to motivate increased participation in the organization’s future internal hiring endeavors. 


The most common challenge that comes along with internal hiring is setting up a robust internal hiring pipeline and integrating it with the existing hiring system. Also, it would be difficult if there were a smaller number of employees in such cases. It might prevent new talents entering, thereby affecting the company’s employee diversity. Therefore, organizations strive to maintain a balance between their various ‘sources of hire’ by keeping track of the same. 

Final Takeaways 

Leading organizations prioritize internal hiring amidst the race to retain top talent as a study suggests that employees hired internally are 41% more likely to stay longer with the organization.

Internal hiring works the best for organizations with large number of employees from diverse backgrounds harboring diversified skills. It is also important to understand that internal hiring should be in sync with the organizations’ regular hiring process to acquire quality hiring outcomes.

Above all, internal hires tend to retain organizational knowledge and understand the business model and therefore they tend to adapt faster to the new role than the external hires.

Signing off:

Vidhya V,

19 October 2022

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