How do you split your hiring budget between internal and external hires?

1 The benefits of internal hires

Internal hires can offer several benefits for your organization, such as lower costs, faster onboarding, higher retention, and stronger culture. Internal hires typically require less time and money to recruit, train, and integrate than external hires, as they already know the company's policies, processes, and expectations. Internal hires also tend to be more loyal, engaged, and productive, as they feel valued and motivated by the career opportunities within the organization. Additionally, internal hires can help preserve and reinforce the company's culture, values, and vision, as they have already demonstrated their fit and alignment.

3 The benefits of external hires

External hires can offer several benefits for your organization, such as new skills, fresh perspectives, and wider networks. External hires can bring in the skills, knowledge, or experience that you may be missing or lacking in your current workforce, especially if you are expanding, diversifying, or entering new markets. External hires can also bring in fresh perspectives, ideas, and insights that can challenge, inspire, or improve your existing practices, products, or services. Additionally, external hires can expand your network of contacts, customers, partners, or suppliers, as they may have connections or relationships that can benefit your organization.

4 The drawbacks of external hires

However, external hires also have some drawbacks that you should be aware of, such as higher costs, longer onboarding, lower retention, and weaker culture. External hires typically require more time and money to recruit, train, and integrate than internal hires, as they need to learn the company's policies, processes, and expectations. External hires also tend to have lower retention rates, as they may not feel as committed, satisfied, or loyal as internal hires, or they may be more susceptible to external offers or opportunities. Furthermore, external hires may have a harder time fitting in or adapting to the company's culture, values, and vision, as they may have different or conflicting styles, preferences, or goals.

5 How to find the optimal balance

When trying to find the ideal balance between internal and external hires, no single formula will suffice as it depends on the organization's goals, needs, and resources. To make informed and strategic decisions, you should assess your current and future talent needs and gaps, evaluate your existing talent pool and pipeline, compare the costs and benefits of internal and external hires for each role or project, allocate your hiring budget according to your priorities and preferences, and monitor the results and feedback of your hiring decisions. Furthermore, you should adjust your hiring budget as needed based on any changes in goals, needs, and resources.

6 How to optimize your internal and external hires

No matter how you allocate your hiring budget between internal and external hires, you can optimize the outcomes of both types by following some best practices. When recruiting internally, communicate transparently about opportunities and criteria for promotion or transfer, and provide fair and consistent feedback and recognition to all employees. When recruiting externally, use effective and efficient sourcing and screening methods, such as referrals, social media, or assessments, and offer a positive candidate experience. Additionally, provide tailored training and support to both internal and external hires, such as mentoring or coaching, and create a culture of learning and development. Finally, encourage collaboration among teams and departments, and celebrate diversity and inclusion.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?