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Occupational and classroom training
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Bloomsbury
IZA World of Labor Bulletin
February 2016
 
Spotlight on: Internal versus external recruitment 
Interview

Recruitment is one of the most important decisions businesses face. To ensure productivity and profitability remains high it is crucial that the right people are in the right roles within the company. However, there is an important decision to make when recruiting new personnel: Should you recruit internally from existing company talent, or look for an injection of new ideas and skills from external candidates?

Jed DeVaro writes—in his new article Internal hiring or external recruitment?—that "Internal hiring should be preferred to external hiring when knowledge and skills specific to the firm are important, when promotions are crucial for motivating current workers, and when the costs of a hiring mistake are particularly large."

However, internal hiring decisions should be made carefully and consider the implications for employees elsewhere in the job ladder, particularly at the lower levels. This chance to rise within the ranks of a company may have positive effects on the motivation of more junior employees, but promoting from within can then create a chain of job vacancies to fill, with the added costs of recruiting for multiple positions.

External hiring is beneficial as it increases the pool of applicants which may increase firm success in the long run by bringing someone with a different perspective and skill-set into the team. The option of recruiting someone from outside of the business could also discourage employee complacency due to the expectation of promotion once jobs become available up the ladder.

Where do you stand on the internal versus external recruitment debate? Let us know on Twitter @IZAWorldofLabor.

Please visit the site for more articles on human resources and management practices.

Top stories
News and views in labor economics
  • A new study has found that the UK government’s plan to double hours of free childcare is threatened by funding shortfalls. Read more...
  • Having more women on boards of directors and in more executive positions has been linked to greater firm productivity. Read more...
  • At a time when 60% of Africa’s unemployed are 15-24, are digital jobs are the answer to Africa’s youth unemployment challenges? Read more...
  • American women who grew up in poverty are less likely to be unemployed than their male counterparts. Read more...
Latest articles
Newly published articles from IZA World of Labor
  • Do patient people have greater career success? In his new article The labor market consequences of impatience, Brian C. Cadena assesses whether this is the case.
  • Jungho Kim looks into the negative impact women's education has on fertility in his new article Female education and its impact on fertility.
  • To what extent can different attitudes towards competition for men and women explain the gender gap in labor markets? Mario Lackner looks at the Gender differences in competitiveness.
  • Organizations interested in promoting prosocial activities could use incentives to engage people in donating money or time to relevant causes. Find out more in Nicola Lacetera's article Incentives for prosocial and intrinsically motivated activities.

Visit the IZA World of Labor site for more concise, informative, evidence-based articles across the spectrum of labor economics.

Publishing soon - Information for journalists
Please contact Sarah.Williams@Bloomsbury.com for more information, if you would like exclusive access to an article, or for an exclusive author interview.
  • Do child care policies influence female labor supply? Child care allows the primary care giver, usually the mother, to take time away from child rearing to  participate in the labor market.
  • What are the effects of minimum wages on youth employment and income? Reduced employment opportunities for youths due to minimum wages can delay entry into the labor market, and reduce the lifetime income stream of young unskilled workers.
  • Start-up subsidies for the unemployed: Turning unemployment into self-employment is an alternative to traditional active labor market policies in many developed countries.
  • Can market mechanisms solve the refugee crisis? A way to distribute refugees efficiently, while respecting their rights, is to combine two market mechanisms: a market for tradable refugee admission quotas, and a matching system for countries and refugees.
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