Startups initially need someone who has some experience to come in and show them exactly what they need to do to improve as a business, so this is the number one choice for most entrepreneurs looking to hire expertise.
Like all recruiting methods, this one also has its pros and cons. It is important to note however that external recruiting is not better than internal recruiting but can be more effective based on a number of different reasons. Let's first take a look at some of the key advantages of external recruiting.
Increased innovation and ideas
The injection of a new person into an already existing organization will bring a surge of new ideas and a new of thinking. This is vital for a company that has not been experiencing recent growth and is looking for a catalyst. Most outsiders are brought in usually from an organization that is very successful and so the ideas that they bring are meant to bolster the company into a new era of growth. For new startups the same intention applies.
The most obvious advantage of external recruitment is the availability of a greater pool of applicants. Thus, only those applicants who have the exact qualifications will apply and be selected. This has consequences for the organization's training budget. Whereas external recruits will require orientation upon being hired, they will not require any extra training assuming they were selected for their capabilities.
Less threatening to hierarchy
With internal promotion there is always the fear that already existing employees will not agree with some of the promotions taking place as they know the people being promoted well and can evaluate for themselves whether or not they are worthy of the position. In the case of external recruiting however, the injection of an outside party into the organization is usually met with little resistance because no one feels unfairly treated.
Here are some of the disadvantages of external recruiting. This form of recruiting is more beneficial to companies looking for change and maybe still in their inception phase. So these disadvantages will be found mostly in larger companies that have been well-established for a number of years.
Recruiting a professional for their expertise is usually expensive and the bargaining power is always in their favor. Because they are meant to come in and produce results right away they usually require a high level of compensation for their commitment to turning the company around since it will involve a lot of pressure. Promotion from within tends to be much cheaper as there is no external equity to worry about.
Slower assimilation period
Adjusting to a new corporate culture as well as new environment, people, restaurants, etc, all play a major role in how quickly an external party can influence an organization to change. They must first get settled into the new environment they find themselves in and this could range from months to years depending on the nature of the work and location of the business. This time frame is usually very unpredictable.
Resumes are not reliable with regards to some of the more important intangible assets like leadership and interpersonal skills. So most times HR managers do not know what they are getting until the person has been assimilated into the company and by that time it is too late. It is much harder to get data on all these things from an outside party and this in turn further complicates the process.
Hinders upward movement of personnel
If an organization spends a huge amount of money to bring in an external party, you better believe they are going to milk them for every last penny they spent. As a result of this, potential for upward advancement is almost non-existent. This has the tendency to reduce overall morale over the long haul because the present employees do not feel they have a fair chance at getting promoted.