The Talent Market Is Tight. Should You Develop An Internal Employee?

October 18, 2021 in HR Best Practices



In a candidate market such as the one we have today, there is often not enough top talent to go around. Balancing between the time to train current employees to fill future positions and investing in recruiting to land top-tier external candidates is tricky. So, should you develop an internal employee?

Even if you’ve recently hired your new top performer, it’s important to know the pros and cons of developing talent within your company, because that’s how you will retain that new hire for the long run!

The question today is: Which approach best fits your immediate needs?

The Case to Develop an Internal Employee 

Focusing on internal talent development rather than external recruitment and hiring offers a range of advantages:

  • Measurable decrease in turnover among current staff members – employees with opportunities for career growth are far more likely to stay loyal to their company, reducing the direct and indirect costs that come with replacing those who depart.

  • Greater success in their new roles when compared with their external peers – by some measurements, approximately half of all external hires fail in their new positions, while only a quarter of internal hires meet that sad fate.

  • Significant savings – the costs associated with hiring external candidates are 18-20 times higher than with internal candidates.

  • Reduction in the length of time required to fill open positions – internal candidates are easier and less expensive to reach; remember, it isn’t unusual for an external hire to require three months or more from the original job posting to the first day of work, but it is highly unusual for an internal hire to require such an extensive amount of time.

  • Additionally, through internal hiring, you can avoid the risks associated with bringing an outsider into the fold. As already mentioned, there is often not enough top talent to go around. This means recruiting staff will have to spend more money and expend more effort to fill complex roles externally.

  • It is worth noting that external hires often require a higher starting salary than internal candidates. Too many expensive external hires can lead to company-wide pay equity issues that eventually result in higher pay rates across the board.

The Cons to Develop an Internal Employee 

Of course, there are drawbacks associated with hiring internally, beginning with candidates who lack the skills necessary to fill open positions right away. While a long-term strategy of internal development can ensure staff members are ready eventually, your company may simply not possess the talent required to fill immediate openings.

The issue of back-filling positions after internal employees are promoted is not to be taken lightly either. Moving one individual into an open role can create a domino effect of vacant jobs down the line.

When Internal Hires Are Not An Option

Despite the benefits of hiring internally, there are situations in which an external recruiting strategy makes more sense.

  • Companies experiencing periods of rapid expansion, going through changes in strategy, and/or striving for innovation often find that filling open positions from the outside is a more effective method of reaching their goals.
  • Expanding organizations often do not have the sheer internal employee numbers required to fill all of the open positions and the external applicant pool offers a larger, more diverse selection of skills. However, this strategy requires expert recruiters who are able to engage passive job seekers. After all, the highest quality candidates are already employed.
  • Other benefits to hiring externally include the tendency of these candidates to bring new ideas with them, along with fresh perspectives that challenge existing culture, processes, and methods. This leads to greater efficiency and increased innovation.
  • In addition, when hiring externally, you can often secure candidates with the skills and experience necessary to hit the ground running, saving the time and expense required to develop internal candidates.
  • Finally, external hires poached from the competition may bring critical information with them, increasing your company’s ability to meet outside challenges.

The Balance

The benefits of an internal recruiting strategy can’t be overstated. Employee training typically pays for itself with increased employee engagement, greater retention, and significantly lower recruiting costs. However, an internal recruiting strategy cannot stand alone. Judicious use of external hires for key open positions offers companies flexibility during expansion, as well as exposure to new ideas.

Contact Kinsa Group today if you find yourself with a key job opening that does not have a pipeline of internal talent already developed and ready to go. Kinsa’s recruiters are well-connected in the food and beverage industry and can connect you with a new employee that can hit the ground running.


The content in this blog was adapted from Kinsa Group’s parent company, ABR Employment Services’ e-newsletter, HR Insights. It was written by Amanda Groves, marketing manager at