Internal recruitment fills a vacancy from the people already working in the business. External recruitment fills it from outside. A case will usually tell you about the vacancy, the budget and the staff, and you must pick a route and explain why.
This lesson follows specifying the role, because you can only compare routes once you know what the job needs. It sits within recruitment and training.
What does each route offer?
| Point | Internal | External |
|---|---|---|
| Advertising cost | Low, often a notice | Higher, adverts or an agency |
| Speed | Faster, the person is already there | Slower, advert, interviews, notice period |
| Knowledge of the business | High | Low at first |
| New ideas and skills | Fewer | More, a fresh view |
| Staff morale | Can rise, shows a path upward | Can fall if staff are passed over |
| Number of candidates | Small | Large |
| Side effect | Creates another vacancy | None |
The table is a list of possibilities. In an exam, each point only counts when the case supports it.
How to decide, step by step
- State the vacancy and the urgency. How quickly must it be filled?
- Check whether the case names a possible internal candidate and what skills they have.
- Check the budget. Compare advertising, interview and training costs.
- Look at the needs of the business. Does it need new ideas, or someone who already knows its systems?
- Make a judgement with a condition. Say which route suits and what would change your mind.
Worked example
Pasaraya Berkat in Kota Bharu needs a store supervisor. The case says: cashier Zul has worked there for three years and has asked for promotion. An external advert would cost RM600.
Zul needs one day of supervisor training costing RM150 plus RM80 in wages for that day. The shop also says it needs a fresh approach to arranging shelves.
Step 1, cost of internal: RM150 + RM80 = RM230. A new cashier must also be found. Say that costs RM300 to advertise, so the full internal cost is RM230 + RM300 = RM530.
Step 2, cost of external: RM600 for the advert, before the new supervisor’s induction.
Step 3, compare: the gap is RM600 − RM530 = RM70. That is small, so cost alone should not decide the route.
Step 4, use the other case facts. Zul knows the shop and the customers. He has asked for the post, so promoting him may raise morale. The need for a fresh approach to shelves points to an outsider.
Step 5, judgement. Promoting Zul is the better route if the owner values continuity and staff morale. It would be less suitable if the shelf problem is the main concern. The decision depends on which of those matters more to the shop.
The mistake to watch for
A common slip is to claim a route is cheaper without counting everything.
Mistaken answer: “Internal recruitment is cheaper because the business does not need to advertise, so it should choose Zul.”
This ignores the training for Zul and the cashier vacancy left behind. In the case, the saving is only RM70.
The correction is to count the full cost of both routes and then say whether the saving is large enough to matter. Another slip is to answer with “external brings new ideas” as if it were always true. Use it only when the case shows that the business needs new ideas.
Check yourself
Try these without notes, then open each answer.
1. Name one advantage of external recruitment and one disadvantage.
Show answer
Advantage: a wider pool of candidates and new skills or ideas. Disadvantage: higher advertising cost, a slower process, or the new person needing time to learn the business.
2. A workshop promotes its most skilled mechanic to supervisor. Give one possible effect on the other mechanics and one effect on the workshop’s output.
Show answer
Other mechanics may feel more motivated if they see a way up, or may feel upset if they wanted the post. Output could fall for a while because the most skilled mechanic is no longer repairing and the workshop must fill his old post.
3. An advert costs RM500. An internal move costs RM180 for training plus RM260 to fill the vacancy left behind. Which is cheaper, and by how much?
Show answer
Internal: RM180 + RM260 = RM440. External: RM500. Internal is cheaper by RM500 − RM440 = RM60. Whether RM60 is enough to decide depends on the other facts in the case.
Where this leads next
Whichever route is chosen, the new post-holder must be welcomed and, when needed, trained. That is the topic of distinguishing induction from ongoing training. Where a case gives costs, the cash versus profit bridge shows why money paid out early matters to the business even when the benefit comes later.
Some students know the advantages by heart yet still lose marks on the final choice. Our teachers work on that gap in online one-to-one Business tuition.