The candidates may be available inside or outside the organisation. Basically, there are two sources of recruitment i.e., internal and external sources.


Best employees can be found within the organisation. When a vacancy arises in the organisation, it may be given to an employee who is already on the pay-roll. Internal sources include promotion, transfer and in certain cases demotion. 

  1. Transfers: Transfer involves shifting of persons from present jobs to other similar jobs. These do not involve any change in rank, responsibility or prestige. The numbers of persons do not increase with transfers.
  2. Promotions: Promotions refer to shifting of persons to positions carrying better prestige, higher responsibilities and more pay. The higher positions falling vacant may be filled up from within the organisation. A promotion does not increase the number of persons in the organisation.
  3. Former employees: Former employees who had performed well during their tenure may be called back, and higher wages and incentives can be paid to them
  4. Referrals from Present Employees: The employees recommend their relations or persons intimately known to them. Management is relieved of looking out prospective candidates. The existing employees take full responsibility of those recommended by them and also ensure of their proper behavior and performance.


  1. The existing employees get motivated.
  2. This method is cost effective as no extra expense is incurred for advertising and interviewing.
  3. This method saves a lot of time of the management. advertising, interviewing and selection generally takes many months through external sources.
  4. It builds loyalty among employees towards the organization.
  5. Training cost is saved in most of the cases, as the employees already know about the nature of job to be performed.
  6. It is easier for the management to coordinate with the new recruits as they (new recruits) are familiar with the work culture and organizations rules and regulations.
  7. It is a reliable and easy process.


  1. It discourages capable people from outside the organization to join.
  2. It restricts inflow of new talents in the organization.
  3. The organization may miss infusion of innovation and revolutionary ideas.
  4. It is possible that the requisite number of persons possessing qualifications for the vacant posts may not be available in the organisation.
  5. For posts requiring innovations and creative thinking, this method of recruitment cannot be followed.
  6. It may lead to nepotism and favoritism. The employees may be employed on the basis of their recommendation and not suitability.


All organisations have to use external sources for recruitment to higher positions when existing employees are not suitable. More persons are needed when expansions are undertaken. In case of unavailability of suitable candidates within the organization, it is better to select them from outside sources.

  1. Advertisement: Advertisement can be given in newspapers, websites, magazines and professional journals. These advertisements attract applicants in large number of highly variable quality from across the country due to high rich.
  2. Employment Exchanges: People register themselves with government employment exchanges with their personal details. According to the needs and request of the organization, the candidates are sent for interviews.
  3. Campus interviews: It is the best possible method for companies to select students from various educational institutions. It is easy and economical. The company officials personally visit various institutes and select students eligible for a particular post through interviews.
  4. Placement agencies: various placement agencies prepare data banks of suitable candidates according to their qualifications. A databank of candidates is sent to organizations for their selection purpose and agencies get commission in return.
  5. Poaching or Raiding: Poaching means inducing an employee to leave one employer and take up employment with another employer. The purpose of employee raiding is usually to gain access to unique or rare knowledge or skills which the employee may possess. Taking the employee gives the raiding company an unfair competitive advantage.


  1. New talents get the opportunity to join the organization.
  2. It can help in bringing new ideas, better techniques and improved methods to the organisation.
  3. The best selection is possible as a large number of candidates apply for the job.
  4. The entry of qualitative persons from outside will be in the long-run interest of the organisation


  1. Skilled and ambitious employees may switch the job more frequently.
  2. It gives a sense of insecurity among the existing employees.
  3. It increases the cost as advertisement is to be given through press and training facilities to be provided for new candidates.
  4. The process of recruiting from outside is very expensive. It starts with inserting costly advertisements in the media and then arranging written tests and conducting interviews.
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