Internal recruitment: strategies, best practices and checklist

Your next star hire might already be on your payroll. Yet, when a job opens, the default reaction is often to look outside. But the reality is, 45% of businesses are spending more on hiring than they were. The time, energy and cost of using agencies to search for the right person is too much. Especially when you have proven, high-potential talent working for your business already. Failing to see the value in internal recruitment isn’t just a missed opportunity, it’s a costly mistake.  

We’ll dive into everything you need to know about internal recruitment and how you can take advantage of it. 

What is internal recruitment?

Internal recruitment is the process of filling vacant positions from your existing pool of employees. Instead of advertising externally, you look to your own people first. It’s about creating pathways for growth within the walls of your business, turning jobs into careers and showing your team you’re invested in their future.

Examples of internal recruitment

Internal recruitment strategies can take many forms, offering businesses flexible ways to develop and retain their best people. Here are a few examples of ways businesses can hire from within: 

• Promotions: An experienced Sales Executive is promoted to Sales Manager, rewarding their performance and retaining their expertise.
• Secondments: A marketing specialist is temporarily assigned to the product team for six months to help with a new launch, gaining valuable cross-functional experience.
• Internal mobility and transfers: A data analyst from the finance team moves into a new business intelligence role in the operations department, bringing their skills to a new area of the business.
• Talent pools: An employee identified as a future leader through succession planning is moved into a role designed to prepare them for management.

Why internal recruitment matters for UK businesses

In a competitive UK labour market, retaining and developing your existing talent is just as important as attracting new candidates. Here’s why internal recruitment strategies matter for UK businesses. 

• Reduces recruitment costs: Hiring internally eliminates the need for job ads, agency fees and long onboarding periods. You already know your employees’ strengths and cultural fit, saving both time and money.
  
• Speeds up hiring: Internal candidates are already familiar with your systems, values and ways of working,  meaning they can step into new roles with minimal downtime.
  
• Boosts retention and engagement: When employees see clear career progression opportunities, they’re more likely to stay. Internal recruitment shows your team that you value development and loyalty.
  
• Strengthens culture and morale: Promoting from within builds trust and motivation, showing employees that hard work leads to genuine growth opportunities.
  
• Aligns with learning and development goals: Internal hiring supports your wider talent strategy by linking recruitment with succession planning, performance management and professional development.
  
• Encourages fair and transparent hiring: A structured internal recruitment process ensures equal opportunity, consistency and compliance with UK employment law and fair hiring practices.
  
• Builds organisational resilience: By developing internal mobility and flexible talent pipelines, your business becomes better prepared for change and future skills demands.

The link between internal mobility and retention

It’s clear that employees who see opportunities for growth are more likely to stay. But it runs deeper than that; when your team members see their colleagues being promoted and moving into new, exciting roles, it sends a powerful signal that loyalty and hard work are rewarded. 

This culture of growth and development directly combats the primary reason many people leave their jobs: a perceived lack of career progression. By focusing on internal recruitment strategies, you reduce costly employee turnover and keep valuable institutional knowledge within your business.

Compliance and fair hiring practices

It’s important to keep in mind that internal recruitment strategies are not a free-for-all and businesses need to ensure that the process is fair, transparent and compliant with UK employment law. This includes adhering to the Equality Act 2010. 

So what does this mean in simple terms? Essentially it means ensuring that there are equal opportunities for all eligible employees and preventing any form of bias or favouritism. 

Implementing a structured hiring process, based on clear policies and objective criteria, not only helps you find the best person for the job but also supports your commitment to ethical and fair hiring practices. This is a key part of upholding ethical hiring principles.

Internal vs external recruitment

While businesses don’t need to pick one or the other (remember you can use a mix of both), knowing when to hire externally vs internal recruitment isn’t always straightforward. 

Both approaches have their place in a balanced hiring process and knowing the most appropriate option for the circumstance is crucial.

Common internal recruitment strategies

There are several proven internal recruitment strategies you can use to find talent within your own walls. The right method depends on the role, your company culture and your specific goals.

Promotions

This is the most classic form of internal recruitment. A promotion involves moving an employee into a role with greater responsibility, seniority and usually, a higher salary.

• Pros: Highly motivating for the individual and the wider team. It rewards performance and loyalty.
• Best practices: Base promotions on objective performance data and a clear set of competencies, not just tenure. Ensure the employee receives the necessary training and support to succeed in their new, more senior role.

Transfers and secondments

Transfers involve moving an employee to a similar-level role in a different department, while secondments are temporary assignments.

• Pros: Excellent for employee development, breaking down departmental silos and increasing collaboration. Secondments allow you to cover temporary gaps without external hiring.
• Best practices: Define the scope, duration and objectives of the move clearly from the start. Ensure there is a proper handover process and a clear plan for the employee’s return or permanent transition.

Employee referrals

While often associated with external hiring, you can adapt your referral program for internal roles. Encourage employees to recommend colleagues from other departments who they think would be a great fit.

• Pros: Leverages your team’s knowledge of their colleagues’ skills and work ethic. It’s a low-cost, high-trust method.
• Best practices: Create a simple process for internal referrals and offer a small incentive, just as you would for external ones.

Talent pools and succession planning

This proactive method involves identifying high-potential employees and grooming them for future leadership roles.

• Pros: Ensures business continuity for critical roles and creates a clear leadership pipeline.
• Best practices: Use performance reviews and regular career conversations to identify future leaders. Provide them with targeted training, mentoring and development opportunities to prepare them for the next step.

Internal job boards

This is the most straightforward method: post available jobs on your company intranet or internal communications platform.

• Pros: Ensures a fair and transparent process where every eligible employee has the chance to apply.
• Best practices: Make the internal job board easy to find and use. Post all non-entry-level roles internally for a set period (e.g., one week) before advertising them externally to show you prioritise your current team.

Temporary-to-permanent transitions

If you use temporary staff or contractors, you have a ready-made pool of talent who are already familiar with your business.

• Pros: You get to see their work quality and cultural fit firsthand before making a long-term commitment. It’s the ultimate “try before you buy.”
• Best practices: Maintain regular communication with your temporary staff about permanent opportunities. Ensure they are included in company communications and events to make them feel part of the team.

How to develop an effective internal recruitment strategy

A successful internal hiring programme doesn’t happen by accident. It requires a clear, structured strategy. Follow these steps to build a process that is fair, efficient and delivers results.

Review current workforce and skills gaps

Before diving in to building your internal recruitment strategy, you need to get a clear understanding of your workforce and skill gaps. You can do this through:

• Understanding your existing talent: Start by analysing the people and skills already within your organisation.
• Conducting a skills audit: Map out current employee capabilities, qualifications and areas of expertise.
• Aligning with business goals: Compare your workforce’s current skill set against future objectives and growth plans.
• Identifying skill gaps: Highlight where new capabilities are needed, either through training, upskilling, or hiring from within.
• Prioritising roles for internal recruitment and external hiring: Use your findings to focus on positions best suited for internal candidates or development opportunities.

Define clear internal hiring policies

Transparency is everything. Create a formal internal recruitment policy that is accessible to all employees. This policy should clearly outline:

• Eligibility criteria.
• How jobs will be advertised​​.
• The application process. 
• How decisions will be communicated.

A clear policy prevents misunderstandings and builds trust in the fairness of the process.

Promote internal opportunities effectively

As with most things, there is a right way and a wrong way to internal recruitment. In this case, the wrong way involves posting a job on the intranet and hoping for the best. The reality is, you need to be active in your approach by using a mix of recruitment marketing strategies. 

You can do this by using all-hands meetings, internal newsletters and team briefings to announce new roles. It’s also good practice to encourage managers to have conversations with their team about procession and development within the business. 

Streamline the application process

Don’t make your own employees jump through the same hoops as an external candidate. The internal application process should be simpler and faster. They shouldn’t need to re-enter information you already have in your HR system. A streamlined process respects their time and maintains their trust and enthusiasm.

Evaluate and support internal candidates

Evaluate internal candidates against the same objective criteria as you would external ones, but remember to consider their proven track record and cultural fit. The most crucial part of this step is providing feedback. For unsuccessful applicants, deliver constructive feedback and create a development plan to help them get ready for the next opportunity. This turns a “no” into a “not yet” and keeps them engaged.

Measure and improve your internal recruitment success

Track key metrics to understand if your strategy is working. Key performance indicators to monitor include your internal mobility rate (the percentage of roles filled internally), retention rate of internal hires and time-to-fill. Use this data to continuously refine and improve your complete recruitment process.

Challenges of internal recruitment (and how to overcome them)

Promoting from within comes with its own unique set of challenges. Being aware of them is the first step to overcoming them.

Preventing bias and ensuring transparency

Challenge: Managers may have favourites, or unconscious bias can creep into the decision-making process.

Solution: A structured interview process with a diverse panel and scorecards based on objective criteria is essential. A clear, well-communicated policy ensures everyone understands the rules of the game.

Balancing internal and external talent

Challenge: Relying exclusively on internal hiring can lead to a lack of new ideas and a stagnant culture.

Solution: Aim for a healthy balance. Define which roles are best suited for internal development and which require an injection of external expertise. A good rule of thumb is to aim to fill around 30-50% of your mid-to-senior roles internally.

Maintaining motivation among unsuccessful applicants

Challenge: When one person is promoted, others who applied for the same role can feel disappointed and demotivated.

Solution: This is where high-quality, constructive feedback is critical. Thank them for applying, explain clearly why the other candidate was chosen, and, most importantly, work with them to build a development plan to close any gaps. Show them you are still invested in their growth.

How Employment Hero supports smarter internal recruitment

An effective internal recruitment strategy requires the right tools. Employment Hero’s Employment Operating System (OS) gives you everything you need to find candidates and manage career progression in one place.

Our hiring and ATS features allow you to post jobs internally and manage applicants with ease. Our performance management and goal-setting tools help you identify high-potential employees and track their development. We simplify internal recruitment so you can focus on what matters: building a team that grows with you.

Key takeaways for employers

• Look inward first: Make internal recruitment your default for non-entry-level roles.
• Build a fair process: Create a clear, transparent policy to build trust and ensure fairness.
• Support your people: Provide constructive feedback and development plans for all applicants, successful or not.
• Measure everything: Track your internal mobility rate and other key metrics to prove the value of your strategy.

Stop losing your best talent to the competition. It’s time to build a company where people don’t just work, they build a career.