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Internal Sources of Recruitment

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Everything you need to know about internal sources of recruitment. Recruitment is the first step in the staffing process, which identifies the different sources of recruiting and selects the most reliable and suitable source to search the prospective employees and stimulates them to apply for jobs in the organisation.

The applications to fill the positions can be invited from people working within the organisation or from outside.

An internal source of recruitment means inviting applications from personnel working within the organisation. Internal sources include the personnel already working in the organization.

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Best employees can be found within the organization. When a vacancy arises in the organization, it is offered to an employee who is already on the pay roll. Internal sources include promotion and transfer.

When a higher post is given to an employee who deserves that post, it stimulates all other employees of the organization to work hard. The employees can be informed of such a vacancy by internal advertisement.

The  internal sources of recruitment are:-

1. Promotion 2. Upgradation 3. Transfer 4. Demotion 5. Former Employees 6. Retention 7. Dependants 8. Acquisitions and Mergers 9. Job Posting 10. Suitability.


Internal Sources of Recruitment: Promotion, Transfer, Demotion, Former Employees, Job Posting and Suitability

Internal Sources of Recruitment – 2 Important Sources to Recruit Employees: Promotion and Transfer (With Advantages and Disadvantages)

Internal sources of recruitment include promotion and transfer. Firms depend upon internal sources for recruitment, when there are competent staffs within the organisation to handle additional and new challenges and responsibilities.

Internal Source # 1. Promotion:

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Promotion is an upward movement of employee from current job position to a hierarchically higher job position with increase pay and responsibilities. Promotion is a recognition and reward for knowledge, efficiency and talent. Promotion promotes employee satisfaction, improves the morale of the employees, and encourages them to perform better. An opportunity of promotion motivates them to acquire new skill, knowledge and education.

Promotion may be on the basis of merit i.e., individual employee’s skills, knowledge, ability, efficiency, achievement and aptitude as measured from educational, training and past employment record and employee’s performance or on basis of seniority i.e., tenure of service in the same job and in the same organization. Promotion is a preferred source of recruitment as the vacant post can be filled by the existing employees and it also motivates employees to improve their performance.

Basis of Promotion:

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Promotional decisions are based on seniority, experience, educational attainments, work performance and productivity. The organisations frame a clear cut, formal and systematic promotion policy. The promotion process should be fair, impartial and unbiased so as to ensure best utilization of talent and secure maximum productivity of work force.

a. Promotion on Basis of Seniority:

In case of promotion on basis of seniority the tenure of service of the employee in the organisation is considered. This basis of promotion is preferred by the employees as longer association with the organisation assures promotion and pay hike. However the management prefers merit based promotion policy.

Advantages:

Promotions on basis of seniority furnish the following advantages:

(a) Seniority is an objective basis for promotion and avoids favouritism.

(b) A longer association with the organisation guarantees promotion .This develops a sense of loyalty among the employees and improves the morale of the employees.

(c) The tenure of service determines promotion. Hence employees are motivated to work efficiently so that he continues to remain in service for longer period.

(d) It avoids the use of any controversial method of ascertaining the merit of the employees.

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(e) It minimises the chance of disputes with employees regarding promotion.

Disadvantages:

There are certain reasons for which seniority is not preferred as basis of promotion:

(a) This method of promotion does not recognise individual employee’s skills, knowledge, ability, performance and productivity.

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(b) This basis of promotion damages the morale of the efficient and talented employees who because of their shorter period of service cannot be promoted.

(c) Number of year of service being the only criterion of promotion, the employees try to remain somehow within the organisation. This hampers the quality and quantity of production process.

b. Promotion on Basis of Merit:

Merit based promotion policy recognises employee’s skill, talent, knowledge ability, performance and productivity. The quality of services rendered by the employees is the criterion for promotion.

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Advantages:

A promotion on basis of merit has the following advantages:

(a) Merit-based promotions foster a culture of healthy competition and productivity.

(b) Since merit is the criterion for promotion employees make continuous effort to improve their performance.

(c) This method of promotion improves the production and the overall performance of the organisation.

(d) This method of promotion attracts young talented workforce to join the organisation, as they know that their merit will be rewarded.

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Disadvantages:

This method of promotion has certain disadvantages and hence not preferred.

They are as follows:

(a) There is hardly any specific and objective method of ascertaining and calculating the merit of the employees. This gives passage to favouritism and nepotism.

(b) This method of promotion invites misuse of power and corrupt practices among the supervisors, in recognising merit. Hence this method of promotion invites chances of conflict between the employees and employer.

(c) This method of promotion may create pressure on the employees to improve their performance, thus creating frustration among really efficient employees.

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Seniority versus Merit Basis of Promotion:

There is a controversy as to which basis of promotion is best and should be adopted. Both the basis of promotion has its advantages and limitations. Therefore a blend of seniority and merit as basis of promotion will make a sound promotion policy.

Internal Source # 2. Transfer:

Transfer involves shifting of persons from present job to another similar job. It does not involve any change in salary, rank, responsibility or prestige. According to Yoder et.al (1958) transfer is, “a lateral shift causing movement of individuals from one position to another usually without involving marked change in duties, responsibilities, skills needed or compensation”. Transfer helps to maintain cordial relationship between employees avoids monotony in the work of an employee and makes the employee conversant with different task.

Advantages of Transfer:

(a) A transfer provides the employees, the opportunity to gain wider and broader experience within the organisation.

(b) It enhances the knowledge and skills by performing a different job that requires new skills and provides different responsibilities.

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(c) It helps the employees to overcome boredom and dissatisfaction with their current job by having a new and different job with changed responsibilities and tasks.

Disadvantages of Transfer:

(a) When an employee is transferred to a new job he has to learn a whole new job.

(b) Transfer of an employee requires learning, and adjustment on the part of the employee. The organization may also incur expenses for training to staff the employees to new job.

(c) If the transferred employee doesn’t like the job, the work or his co-workers then this will adversely affect the productivity of the organization.

Normally, an organization can fill up its vacancies either through promotion of people available in the organization or through the selection of people from outside.


Internal Sources of Recruitment – 7 Unique Sources: Promotion, Upgradation, Transfer, Demotion, Former Employees, Job Posting and Suitability

Internal sources include personnel already on the payroll of an organization.

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Filling a job opening from within the organization has the following advantages:

i. Stimulating for possible transfer or promotion.

ii. Increasing the general level of morale.

iii. Having more information about candidates through past performance appraisal.

A comprehensive programme of talent inventory and analysis, central coordination of recruitment and lay-offs in the personnel department and systematic posting of job openings will contribute much to the success of an internal recruitment programme. Retrenched employees, retired employees, dependence of deceased employees may also constitute the internal sources. Whenever any vacancies arise, someone from within the organization is upgraded, transferred, promoted, or even demoted.

The process of filling job openings by selecting from, among the pool of present workforce can be implemented by the following methods-

i. Reviewing the personnel records.

ii. Job posting and job bidding.

Review of the personnel records and skills inventory provides adequate information for the personnel director to find suitable candidates for a particular position. Under job posting and bidding system, the organisation notifies its present employees of openings, using bulletin boards, and company publications, etc.

This is more open approach where everyone gets the same right to apply for a job and bid for the same. If the labour shortage is of short-term nature and great amount of additional labour is not necessary, then organization employs ‘inside moonlighting’. It is a technique where organization pays bonuses of various types to people not on a time payroll. Overtime procedures are, in many organisations, developed for those on time payroll.

Internal sources of recruitment are as follows:

i. Promotion:

Filling up of positions through internal promotion has a favourable reaction among employees. They are likely to associate themselves with the organizations as they see their future secured in the organization through promotion.

Promotion refers to paying high scale and high responsibility. To be effective, promotion requires using job posting, personnel records and skill banks. Job posting means notifying vacant positions by announcing at staff meetings, posting notices and inviting employees to apply for notified vacancies. Examining personnel records may help in identifying talented employees for higher positions. Skill banks are a list of employees who have specific skills.

Promotions have the following advantages for an organization as well as its employees:

a. It builds morale among employees as organizations consider them for higher positions.

b. It is cheaper than going for outside sources.

c. Internal employees are familiar with the organization.

d. Promotion when carefully planned acts as a training device for developing employees for higher level jobs.

e. It improves the probability of good selection since the person is already known to the organization.

f. It encourages competent individuals who are ambitious.

Here, it should be observed that promotions can be dysfunctional to the organization as the advantage of hiring outsiders who may be better qualified and skilled is denied. Promotion also results in inbreeding and discourage new employee from entering the organization which is not good for the organization.

ii. Upgradation:

It refers to giving higher responsibility to the internal employees.

iii. Transfer:

It refers to changing place from one position to another, but no change in pay scale and responsibility. A transfer is a change in a job assignment. A movement of an employee between equivalent positions at periodical intervals is called transfer. Transfers are normally made to place employees in positions where they are likely to be more effective or where they are likely to get greater job satisfaction. Transfer is often important in providing employees with a broad-based view of the organization. It is a lateral movement of employees.

iv. Demotion:

It refers to low pay scale and lower positions. However, it is a one kind of punishment.

v. Former Employees:

Former employees can include those who have worked on part-time basis and now desire to work on a full-time employment, retired employees or those who have left the company for some reason but are now willing to come back. Former employees are a good internal source of recruitment. They have the advantage of knowing the organization and the organization knows the performance of these people.

Typically, these are people who were laid off, although they may also have worked seasonally (during summer vacations or tax seasons). Forming online alumni at work could be a simple and cost-effective way to maintain a hiring pool of competitive candidates. Furthermore, a network of former employees can be a source of employee referrals because they are familiar with the company, its culture, and its values.

vi. Job Posting:

Job posting is a way of hiring people from within. In this method, the organization publicises job openings on bulletin boards, electronic media and similar outlets. For an example, Hindustan Lever introduced its version of open job posting in early 2002 and over 40 positions have since been filled through the process.

HLL even allows its employees to undertake career shifts like from technical position to non-technical jobs such as marketing, market research, etc., through the open job posting system.

For example, the AV Birla group allows its employees an opportunity to apply not just for jobs within their own companies, but for jobs in any company in the Birla group, in India and in abroad.

One of the important advantages of this method is that, it offers a chance to highly qualified employees working within the company to look for growth, opportunities within the company without looking for outside.

vii. Suitability:

Suitable when internal candidate are good and well qualified.

Pros and Cons of Internal Sources of Recruitment:

Pros:

1. It improves the morale of employees for they are assured of the fact that they would be preferred over outsiders when vacancies occur and it provides the company with more information about the candidate.

2. Considerable savings can be made as individuals with inside knowledge of how a business operates will need a shorter period of training and time for “fitting in”.

3. The organization is unlikely to be greatly disrupted by someone who is used to working with others in the organizations.

4. Internal promotion act as an incentive to all staff to work harder.

5. The employer is in a better position to evaluate those presently employed than outside candidates. This is because the company maintains a record of the progress, experience and service of its employees.

6. It promotes loyalty among employees, for it gives them a sense of job security and opportunities for advancement.

7. They are tried people and can, therefore, be relied upon.

8. It is less costly than going outside to recruit.

9. It encourage good individuals who are ambitious.

10. As the persons in the employment of the company are fully aware of and well acquainted with, its policies and know its operating procedures, they require little training, and the chances are that they would stay longer in the employment of the, organization than a new candidate would.

11. Current employees may also be more committed to the company.

12. The organization can pick the right candidates having the requisites skills.

13. The candidates can choose a right vacancy where their talents can be fully utilised.

14. A policy of preferring people from within, offers regular promotional avenues for employees. It motivates them to work hard and earn promotions. They will work with loyalty, commitment and enthusiasm.

15. It reduce labour turnover as it gives employees a sense of job security and opportunity for advancement.

Cons:

1. It often leads to inbreeding, and discourages new blood from entering an organization.

2. The organization is forced to select candidates from a limited pool. It may have to sacrifice quality and settle for less qualified candidates.

3. There are possibilities that internal sources may “dry up” and it may be difficult to find the requisite personnel from within an organization (limits the choice).

4. It discourages entry of talented people, available outside an organization. Existing employees may fail to bring in innovative ways and inject necessary dynamism to enterprise activities.

5. It can be dysfunctional to the organization to utilise inferior internal sources. Promotions based on length of service rather than merit, may prove to be blessings for inefficient candidates. They do not work hard and prove their work.

6. As promotion is based on seniority, the danger is that truly capable hands may not be chosen. The likes and dislikes of the management may also play an important role in the selection of personnel.

7. Recruitment from within may lead to infighting among employees aspiring for limited, higher level position in an organization.

8. You will have to replace the person who has been promoted.

9. An insider may be less likely to make the essential criticisms required to get the company working more effectively.

10. Promotion of one person in a company may upset someone else.


Internal Sources of Recruitment – With Merits and Demerits

Internal sources include the personnel already working in the organization. Management needs to be able to identify current employees who are capable of filling positions. Whenever any vacancy arises, somebody from within the organization is upgraded, transferred, promoted or sometimes demoted. The management and skills inventories permit organizations to determine whether needed qualifications are possessed by current employees.

According to Flippo, “the present tendency among most business firms is to ‘home grow’ their executive leaders”. As the saying goes, ‘a known devil is better than an unknown angel’, the internal source of recruitment has more advantages.

The following are the internal sources of recruitment:

i. Transfer – Workforce requirement is also met by transferring the existing employees from one department to another or one unit to another considering their efficiency.

ii. Upgrading – Based on the performance of employees they are upgraded in organizational positions.

iii. Promotion – Considering seniority and merits of the employees they are provided opportunity to climb up in the organizational hierarchy.

iv. Demotion – In case of consistent poor performance of employees they are demoted to make them realize their potential for development.

v. Job rotation – This is another internal source of recruitment. It is done by engaging the employees to do various jobs on rotation. Everybody in an organization is familiar with the entire job and become a source to do any job.

vi. Retention – If the management considers the retiring employees as an asset to the organization they may retain them after superannuation to meet the workforce requirement.

vii. Dependants – The legal heir or the dependants of the deceased employee may be given a chance to replace the deceased.

viii. Previous applicants – The applicants who have already applied for any job advertised in the past but not selected at that point of time but stored in the data base of the organization are considered as an internal source of recruitment.

ix. Acquisitions and mergers – This is another source of internal recruitment. The internal requirement for personnel is met through the available workforce on account of acquiring other firms or merging with other establishments.

Merits and Demerits of recruiting people from within the organization are as follows:

Merits:

The uses of internal recruiting are:

(i) The employer is in a better position to select right candidates having the requisite skills.

(ii) It tends to increase the morale of employees.

(iii) It promotes loyalty, commitment and enthusiasm among the employees.

(iv) It is less expensive and new vacancies can be filled more quickly.

(v) The internal candidates know the organization well and will operate in a familiar environment.

Demerits:

However, this system suffers from some serious disadvantages:

(i) Inbreeding is a drawback and discourages enter of new talented people available outside an organization.

(ii) Due to inadequate and fewer number of supply from within organization, it may be difficult to find the right person.

(iii) Promotions based on seniority, may prove to be a blessing for inefficient personnel.

The decision to recruit internally can cause much debate at the time of expansion and diversification of organization because the people with necessary qualifications and expertise may not just be available within the organization. The likes and dislikes of the management may also play an important role in the selection of internal personnel. Therefore, the organization decides to go for external recruitment.


Internal Sources of Recruitment – With Advantages and Disadvantages

It is not always possible to rely on external sources to fill all HR requirements. No doubt, certain jobs are similar from one organisation to another, but most jobs require specialised knowledge that can be obtained only within a particular organisation. Even those jobs which do not appear to be unique require familiarity with the procedures, policies, people and special features of the organisation in which they are performed. Therefore, internal sources play an important role in providing manpower to a great extent in a good number of organisations, large and small.

Job posting and bidding approach plays an important role in internal recruitment of human capital. Earlier, job posting was just like the use of bulletin boards and company publications for advertising vacant positions, but today, job posting has become an innovative recruiting technique and is considered an integrated component of an effective career management system.

In job posting, postings are com­puterised and are, therefore, easily accessible to employees. Computer software allows the employees to match an available job with their skills and experience and then highlights where the gaps exist so the employees know what is necessary if they wish to be competitive for a given job.

However, observation suggests that the policy of recruitment from internal sources is generally accepted in clerical, supervisory and to some extent even in managerial ranks in many organisations. In some organisations, such a policy is stated in collective bargaining agreements.

Broadly speaking, internal sources refer to the present workforce of an organisation. Whenever any job position falls vacant, someone already working in the organisation is upgraded, promoted, trans­ferred or even demoted.

There are some authors who are of the view that not only the people who are already on the payroll should be included in the internal sources but also those who may not be on the payroll of a particular organisation but are in employment of a subsidiary or affiliated organisation, as also those who were once on the payroll of a particular organisation but plan to return or whom the organisation could like to re-hire; for example, those who quit voluntarily, or those who are on produc­tion lay-offs and so on.

Succession planning which is the on-going process of systematically identifying, assessing and developing organisational leadership to enhance performance is also used to fill key positions whenever they fall vacant and intended to be filled in by internal employees.

Advantages:

1. It avoids the problem of people coming in by one door of the organisation while highly similar talent leaves by another.

2. In increases the general level of morale of employees by assuring them that whenever there is any vacancy, they would be given preference over outsiders.

3. It motivates the present employees to prepare themselves for higher posts. Hence, their effi­ciency goes up.

4. It promotes loyalty and a sense of belongingness among the workers because they feel that their seniority, merit, sincerity and so on will be duly rewarded at the appropriate time.

5. The present employees are already tried people and, therefore, more reliable.

6. It reduces rate of labour turnover.

7. The employer is in a better position to evaluate those presently employed than outside candi­dates. However, this would be possible only if the organisation maintains a proper record of service experience, progress, conduct and so on.

Disadvantages:

Some of the demerits of this system are as follows:

1. In case the company does not maintain proper record of the progress, achievements, experi­ence, service, punishments and so on, internal sources may degenerate into an undeserved monopoly of those on the payroll.

2. During the period of rapid expansion requiring large and different types of people, internal sources may not be adequate.

3. The advantages of infusion of new blood from outside the organisation are not available.

4. It has all the disadvantages of inbreeding, for example, the learner rarely develops ideas which differ widely from those of the instructor; hence, there is little scope of surprising innovations which are of special importance in the field of designing, advertising, marketing and so on.

5. As seniority plays an important role in promotions, really capable hands may not be available.

6. Personal likes and dislikes of the management play an important role in the selection of can­didates from internal sources.

Thus, it is obvious that internal sources of manpower supply can be more effective if proper record of service of the existing employees is maintained and they are given enough notice of preparing themselves for new assignments. However, if we need personnel possessing those specifications which the present employees do not have, then we shall have to look forward to external sources.


Internal Sources of Recruitment – With Advantages and Limitations

Recruitment is the first step in the staffing process, which identifies the different sources of recruiting and selects the most reliable and suitable source to search the prospective employees and stimulates them to apply for jobs in the organisation. The applications to fill the positions can be invited from people working within the organisation or from outside.

An internal source of recruitment means inviting applications from personnel working within the organisation.

The internal sources of recruitment can be:

i. Transfers:

It involves shifting an existing employee from:

(i) One job to another

(ii) One shift to another or

(iii) One department to another.

It may or may not change the responsibilities, duties, status or salary of the transferred employee. It is horizontal movement of employees. It can be used as a training tool to train people for different jobs within an organisation. It helps to avoid termination or removal of employees of an over-staffed department by transferring the capable people to under-staffed departments.

For example – A sales manager, incharge of the North zone may be transferred to take charge of the South zone.

ii. Promotions:

It involves filling higher positions by promoting employees from lower jobs. It changes the responsibilities, duties, status and salaries of promoted employees. It is vertical movement of employees. It motivates employees and provides job satisfaction.

Example – To appoint head of department, all department members may be invited to apply for the position.

Let us evaluate the internal source for filling vacancies in an organisation.

Advantages of Internal Sources:

i. Motivates Employees for Better Performance:

Company policy of filling higher positions by promoting people within the organisation motivates employees to improve their performance and upgrade their knowledge and skills to prepare themselves for higher positions

For example – Mohit a sales executive is just a graduate. His sales manager informed him that if he achieves his targets he would qualify for a promotion. With an aspiration to become an assistant manager, Mohit not only works hard to achieve his targets but is also pursuing an MBA from an evening college to improve his credentials.

ii. Job Satisfaction and Loyalty among Employees:

Promotion avenues keep the employees satisfied and loyal to the organisation. It improves employees’ commitment towards work.

For example – A company, which offers time-bound promotions, is able to retain its staff for longer.

iii. Simpler Selection and Placement Process:

Internal recruitment simplifies the process of selection and placement. The existing employees have already been through the basic selection process. Transfers and promotions do not require any screening or testing. It involves selection of only those people who possess the required capabilities and meet the necessary criteria.

iv. Tool of Training:

Transfers can be used as a training tool to help employees learn skills to perform different jobs and upgrade their knowledge and skills for higher positions.

v. Saves Cost and Time:

Filling positions within an organisation reduces the cost of recruitment and selection. The employees who are transferred or promoted are already familiar with the organisation so there is no need for induction or orientation.

vi. Maintains Optimal Staff:

Transfers and promotions facilitate the use of capable staff of over-staffed departments by shifting them to the departments where there is shortage of staff. This helps to avoid terminations or removal of capable staff.

Of course, promoting or transferring employees within an organisation makes the process simpler and less expensive. It keeps the staff satisfied and motivated but there are certain limitations an organisation may face while using internal source to fill in the vacant positions.

Limitations of Internal Sources:

i. No scope for fresh talent – If an organisation fills the positions using human resources within the organisation it reduces the scope for induction of fresh talent. In addition, the organisation has restricted choice and has to compromise with talent or capabilities of employees.

ii. Affects employees’ productivity adversely – Frequent transfers or company policy to promote people on the basis of seniority or time may bring in complacency in employees’ behaviour affecting the productivity adversely.

iii. No external competition – Filling positions using internal sources restricts the competition from qualified candidates from outside. The automatic promotion policies hamper the competition spirits among employees.

iv. Not always a suitable source – It is not possible for new business enterprises to use internal sources to fill in vacant positions. Even the existing organisations may not be able to fill in all the positions using internal sources due to lack of capable people or insufficient staff.

v. Conflict among employees – Management promotes only the most capable staff to higher positions. This may lead to conflict or dissatisfaction among employees who may be expecting promotions but may not get it.


Internal Sources of Recruitment – Transfers and Promotions

Best employees can be found within the organization. When a vacancy arises in the organization, it is offered to an employee who is already on the pay roll. Internal sources include promotion and transfer. When a higher post is given to an employee who deserves that post, it stimulates all other employees of the organization to work hard. The employees can be informed of such a vacancy by internal advertisement.

i. Transfer:

Transfer involves the shifting of an employee from one job to another. At the time of transfer, it is ensured that the employee to be transferred to the new job is capable of performing it. In fact, transfer does not involve any drastic change in the responsibilities and status of the employee. On the other hand, promotion leads to shifting an employee to a higher position carrying higher responsibilities, facilities, status and pay.

ii. Promotion:

Many companies follow the practice of filling higher jobs by promoting employees who are considered fit for such positions.

Filling vacancies in higher jobs from within the organization has the following merits:

(a) Economy in Training Costs:

The existing employees are fully aware of the operating procedures and policies of the organization. The existing employees require little training and it results in the economy in training costs.

(b) Improves Morale:

When an employee from inside the organization is given the higher post, it helps in increasing the morale of all employees. Generally, every employee expects promotion to a higher post (carrying more status and pay) if he fulfils the requirements.

(c) No error in Selection:

When an employee is selected from inside, there is no possibility of errors in selection since every company maintains complete record of its employees and can judge them in a better manner.

(d) No Hasty Decision:

The chances of hasty decisions are completely eliminated as the existing employees are well tried and can be relied upon.

(e) Promotes Loyalty:

It promotes loyalty among the employees as they feel secured on account of chances of advancement.

(f) Self-Development:

It encourages self-development among the employees since they can look forward to occupy higher posts.

Disadvantages:

The following are the disadvantages of internal sources:

i. For posts requiring innovations and original thinking, this method of recruitment cannot be followed.

ii. If only seniority is the criterion for promotion then the person filling the vacant post may not be really capable.

iii. It discourages capable persons from outside to join the concern.

iv. It is possible that the requisite number of persons possessing qualifications/experiences skills/attitudes required for the vacant posts may not be available in the organization.


Internal Sources of Recruitment – With Merits and Demerits  

Internal sources of recruitment are the most obvious sources. Many organisations may overlook the value and importance of recruitment from within. It is not only reasonable but wise to let the existing employees know the vacancies by internal advertisement.

But now it is being realised that the best source of supply for higher or top posts is the personnel who are already in the organisation. This type of recruitment source is ‘the personnel already on the pay-roll of the organisation i.e., its present working force.

Whenever any vacancy occurs, somebody from within the organisation is upgraded, transferred, promoted or sometimes demoted. This source also includes personnel who were once on the pay roll of the company and plan to return, or whom the company would like to rehire such as those on leave or absence, those who retired voluntarily or those on production lay­offs. Recruitment from internal sources includes transfer and/or promotion.

Transfer, involves shifting of an employee from one job another. While transferring an employee it is ensured that the employee to be transferred to the new job is capable of performing it. In fact transfer does not involve any drastic change in the responsibilities ad status of employee.

On the other hand, promotion leads to shifting an employee to a higher position, carrying higher responsibilities, facilities, status and pay. If a higher vacant position, carrying higher responsibilities, facilities, status and pay. If a higher vacant post is given to an employee who deserves it, it will stimulate all other employees of the organisation.

This source of recruitment is generally adopted to fill vacancies of middle and top level personnel. In order to achieve the advantages of recruitment of personnel from the existing employees, the personnel manager should draw up a policy relating to promotion from within and communicate it to all the employees. Such sources of recruitment practice leads to healthy and progressive atmosphere and lower the cost of training and the rate of labour absenteeism and labour turnover.

Merits of Internal Sources of Recruitment:

The advantages of recruiting from within the organisation are as follows:

(i) It ensures stability and continuity of employment.

(ii) It creates a sense of security among the employees as well as opportunities for advancement.

(iii) It increases the morale among employees, for they are assured of the fact that they would be preferred over outsiders when vacancies occur.

(iv) The employees in the employment are fully aware of and well acquainted with its policies and know its operating procedures. They require little training and the chances are that they would stay longer in the employment of the organisation than a new outsider would. Moreover existing employees are already familiar with the organisation’s activities and requirements.

(v) They are tried people, they look forward to higher posts.

(vi) The valuable contacts with existing major customers are materialised.

(vii) It is less costly than going outside to recruit employees.

(viii) It eliminates the chances of hasty decisions.

Demerits:

Internal sources of recruitment have certain demerits also.

These are given below:

(i) If vacancies are filled through internal sources i.e. by promotions, the scope for fresh blood entering the organisation is restricted or reduced.

(ii) Frequent transfers reduce the overall productivity of the organisation.

(iii) There are possibilities that the internal sources may “dry up”. It may be difficult to find the requisite personnel from within an organisation,

(iv) The employees may become lethargic if they are sure of time bound promotions

(v) The spirit of competition among the employees may be hampered.


Internal Sources of Recruitment – Top 3 Sources: Transfer, Promotion and Re-Employment of Ex-Employees

The internal sources of recruitment include transfer, promotion and reemployment of ex-employees as discussed below:

Source # 1. Transfer:

It means shifting an employee from one job to another having similar status and responsibilities. Transfers are done to fill vacancies with employees from overstaffed departments.

According to Dale Yoder, “A transfer involves the shifting of an employee from one job to another without special reference to changing responsibilities or compensation”. Transfer means shifting of an employee from one job to another, one unit to another or one shift to another and may involve a new geographical location.

For example, a bank employee may be transferred from one seat (or post) to another or even from one branch to another.

Source # 2. Promotion:

A promotion is the transfer of an employee to a job that carries higher pay and status. A promotion involves reassignment of an employee to a position having increased responsibilities, higher privileges, increased benefits and greater potential.

For example, the vacant post of General Manager of a company may be filled up by promoting the Deputy General Manager. Thus, promotion is a vertical shifting of an employee. The purpose of a promotion is to shift to a job which is worth more to the organisation than the incumbents’ present position.

According to Pigors and Myres, “Promotion is the advancement of an employee to a better job—in terms of greater responsibilities, greater skills, higher status and higher pay.” The existing employees may be given training for promotion to higher positions in the enterprise. If a vacancy is filled from-within the enterprise, it acts as a stimulating force for the employees to develop themselves.

Source # 3. Re-Employment of Ex-Employees:

It refers to employing the people who had left the organisation earlier because of some reason. It is economical to employ the retired and retrenched personnel to meet the short-term HR needs.

Merits of Internal Sources:

The merits of internal recruitment are as follows:

(i) The internal candidates having intimate knowledge of the organisation structure can handle the new jobs easily.

(ii) Promotion will increase the morale of the employees.

(iii) Promotion will ensure sincere efforts on the part of employees because they know that they may rise to senior positions by promotions.

(iv) The costs of training the insiders for the senior posts will be less.

(v) Reliance on internal sources will enable the enterprise to make best use of the capabilities of its employees.

(vi) The cost of internal recruitment is very low.

Demerits/Limitations of Internal Sources:

Internal sources may be associated with the following drawbacks:

(i) Better qualified outsiders may not be reached by the management. Moreover, the person promoted to a senior job may not possess the required qualities.

(ii) The mobility of manpower is restricted once a man joins an organisation; he will stick to that organisation. Employee turnover to a certain extent is good for the health of the organisation.

(iii) In promotion, there might be clash between factors like seniority and ability. Such decisions by managers may lead to favouritism.

(iv) The spirit of competition among the employees is hampered if they are Sure about time bound promotion.

(v) Further growth of the business is hindered by the limited talent of the insiders. The entry of fresh talent into the organisation will be restricted.


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