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Despite the clouding of the current economic situation, many employers in Germany continue to struggle with an acute skills shortage. Areas such as IT, medical technology and life sciences are particularly affected, as are nursing and construction. These companies can no longer rely on enough qualified specialists applying of their own accord. Even greater recruiting efforts are needed than ever before.
Larger companies in particular, such as the telecoms provider Swisscom, are increasingly relying on internal recruiting measures to fill vacancies in a targeted way, often before they are even published. The building of in-house active sourcing departments is also in full swing. (Städeli, 2022)
In this article we want to look at the advantages and disadvantages of "internal" versus "external" recruiting and show when it can make sense to draw on external support in recruiting as well.
Internal vs. external recruiting: the differences, advantages and disadvantages
We speak of internal recruiting when companies fill their vacancies with candidates from their own workforce. The potential new employees (often registered in an internal applicant pool) are approached about new vacancies early on, often before these are advertised externally. This type of recruiting is particularly suitable for larger organisations where long-term and stable workforce planning is possible. In addition to considerable cost savings (for example on advertising), this type of recruiting offers numerous other advantages: internal recruiting leads to fewer bad hires, your own employees are shown prospects and are developed within the company. The onboarding phase is also significantly shorter, since the candidate already knows the company. This too saves valuable time and money. (Searchtalent GmbH, n.d.)
What is very advantageous on the one hand can nevertheless have disadvantages. When internal employees move, new vacancies usually arise elsewhere in the company, and these then have to be filled. In addition, the company forgoes the chance to gain new impulses and ideas from external employees. (Searchtalent GmbH, n.d.)
While internal recruiting therefore concentrates primarily on candidates from the company's own ranks, external recruiting focuses on attracting outside candidates. (Searchtalent GmbH, n.d.)
Because of the skills shortage, hardly any sufficiently qualified candidates apply of their own accord any more, so here too companies have to take further measures and approach potential new employees themselves. Many businesses are currently relying on building their own active sourcing departments to do so.
However, many companies lack the necessary capacity for this, which is why external headhunters and recruitment consultants are often brought in.
What are the advantages of in-house active sourcing departments, and what are the advantages of external headhunters?
Through so-called active sourcing departments, companies take care of both internal and external recruiting themselves. These can be very valuable, because the company's own employees in such a department are thoroughly familiar with the culture and inner workings of the company. In an application process they can therefore tell immediately whether a candidate fits the company culture or not. Disadvantages, however, often show up in digital infrastructure and networks. These departments do not always have the same digital infrastructure and candidate reach as headhunters, and, when the need for new employees fluctuates strongly, they are often not flexible enough to respond adequately to the peaks. (Searchtalent GmbH, n.d.)
But that is not the only thing that limits in-house active sourcing departments: their staff all too often have to observe non-poaching agreements, which massively restricts the pool of suitable candidates. It also appears that conversion rates when approaching potential applicants are lower for recruiters employed by the company. This is presumably because "in-house" recruiters are seen as less neutral.
What is an advantage for active sourcing departments often turns out to be a disadvantage for external service providers. First, they have to understand the company culture and the specific requirements of their clients correctly, which is not always easy for outsiders. This form of recruiting is also quite costly and time-consuming. In addition to the commissions paid to agencies when a position is filled, the new employees have to be onboarded at length and often need longer to settle into the new company.
Conversely, successful headhunters use professional recruiting tools and their extensive networks of candidates. These help them to find, as quickly as possible, a qualified specialist who fits the advertised vacancy well. They come across as more neutral to applicants, achieve higher response rates and can answer important questions from applicants in advance that they would not yet have asked the employer at that stage.
The advantage for companies is thus clear: they have a larger selection of candidates and get a good overview of the recruiting situation on the market. In addition, new, external employees bring "a breath of fresh air" to the teams.
So what does the recruiting of the future look like?
Today's labour market demands a great deal of flexibility. Segments with a severe skills shortage are set against segments with a surplus. Recent crises such as COVID and the war in Ukraine are causing further upheaval. To recruit qualified staff successfully in this environment, we believe companies should pursue a hybrid recruiting strategy.
That means working with external support alongside their own recruiting measures, in order to absorb recruiting peaks, to speed things up for urgent appointments or to reach a larger pool of applicants. At the same time, the potential of internal recruiting should always be kept in mind. With this recruiting mix, employers can do justice to a changeable market.
Sources:
Searchtalent GmbH. (n.d.). Retrieved from https://searchtalent.de/hr-lexikon/internes-vs-externes-recruiting/
Städeli, M. (15. 01 2022). NZZ Magazin. Retrieved from https://www.nzz.ch/wirtschaft/swisscom-personalchefin-klementina-pejic-ueber-interne-headhunter-ld.1786249
