Recruitment and Staffing Methods

Frequently Asked Recruitment Questions

  1. What are the benefits of recruiting internally?
  2. What problems are associated with internal recruiting?
  3. Under what conditions would a company seek to recruit externally?
  4. What are the advantages of external recruitment?
  5. What are the drawbacks to external recruitment?
  6. What is involved in “leasing” employees?


Whether yours is a new and growing company or a mature one, there will come the inevitable need to fill vacant positions within the organization. These positions may be newly created as a result of growth or diversification, or come about as the result of resignations, terminations or retirement. Regardless, the company will have to choose whether to recruit internally or externally for the position or employ a combination of methods. Following is a discussion of the advantages and disadvantages of each strategy.

Internal Recruiting

To the extent possible, most organizations try to follow a policy of filling vacancies above entry-level through promotions and transfers. Generally, filling jobs from within has more advantages than disadvantages.

External Recruiting

Sometimes certain jobs, especially at the middle or upper levels, require specialized training or new skills and experience that cannot be obtained from within the organization. Such is often the case when expanding into a new venture or implementing new technology. In either case the position must often be filled from the outside. This is especially true in smaller organizations. Additionally, new individuals may be brought into the organization to replace those who have been promoted or terminated.

Ultimately, the HR manager will have to consider several factors when making the choice to recruit internally or externally: Is the position a vacancy or newly created position? Will the position require new skills or merely expanded duties? How would others in a department, or the organization as a whole, respond to an insider being promoted or an outsider being given authority? The answer may be different from one position, department, or office location to another. Weigh your options fully before deciding.

External Recruitment Methods: Formal

In order to grow and prosper, all organizations must eventually bring new people into the organization. The outside source from which employees are to be recruited will vary with the type of job to be filled. Typically, an employer at any given time will find it necessary to utilize several different recruitment sources. Formal recruitment sources include advertisements, third-party recruiters, online candidate databases, college/school recruiting, and job fairs. Informal sources are employee referrals, walk-in candidates, and unsolicited resumes.


Many employers advertise open positions by placing an advertisement in newspapers, magazines, or trade journals. When advertising in the newspaper, the selection of the paper to advertise in, the type of advertisement (classified or display), and the placement of the advertisement are all important decisions and will have an impact on the response. Managerial and executive positions are generally advertised in national newspapers such as The New York Times and the Wall Street Journal, whereas most other types of positions are generally placed in local newspapers. Professional and technical jobs are frequently listed in trade publications and magazines. In addition to placing newspaper advertisements, some employers advertise on local radio and cable television. Both sources are generally low-cost ways to reach a wide audience. Of course, the widest audience can be found online; but that itself has advantages and disadvantages which must be weighed.

Third-Party Recruiters

There are two types of third-party recruiters: contingency firms and executive search firms. Contingency firms, also called employment agencies, refer candidates in the hope of placing them and charge a fee if a placement is made. Generally, the fee is one percent per thousand of the candidate’s annual salary, not to exceed 20 percent of the candidate’s annual salary. Because they are paid on a commission basis, contingency firms may encourage job seekers to accept jobs for which they are unsuited.

In contrast to contingency firms, executive search firms are paid on a retainer basis. Their role is to seek out the candidates with the qualifications that best match the requirements of the position that their client is seeking to fill. The retainer fees charged by search firms may range from 25 percent to 35 percent of the annual salary for the position to be filled, plus expenses. This fee is paid by the client firm whether or not the recruiting efforts result in an individual being hired. Because of this, executive search firms are generally used only for senior-level executive positions. As with advertising, there are some advantages and disadvantages to using third-party recruiters. The advantages include reduced work load for the human resources department, positions tend to be filled in less time than when running an advertisement, and recruiters can sometimes convince currently employed individuals to apply. Disadvantages are the high costs of recruiters’ fees and the tendency of recruiters to “push” applicants to accept jobs that may not really be a good fit for them.

Certain employer liabilities may be involved in recruiting through third parties. To avoid any issues, employers should have all third-party recruiters sign a contract and the contract should be reviewed by counsel.

College/School Recruiting

College recruiting is a popular recruitment method for organizations with a need to fill entry-level professional and/or technical positions. Some large organizations even have a college recruitment department whose sole responsibility is to coordinate campus recruiting and maintain year-round relations with the faculty and placement department staff at selected colleges and universities. Some employers chose to recruit only certain types of students such as those with master’s degrees in business administration or engineering graduates.

When deciding which campuses to visit, employers should consider colleges and universities with a diverse student population. This will help minimize the company’s exposure to liability for employment discrimination and enhance the company’s ability to recruit qualified women and minorities. Technical, trade, and secretarial schools are often good sources for recruiting technical (e.g., computer operators), blue collar, and clerical employees. To recruit, the employer ordinarily lists job openings with the school; the school’s placement director refers qualified and interested candidates to the employer. Some employers also visit such schools personally and interview prospective employees on-site.

Job Fairs

Job fairs are often hosted by industry associations, search firms, and consulting organizations. Employers should ensure that the selection of candidates invited back to the company from job fairs for interviews is unbiased, to avoid charges of discrimination.

External Recruitment Methods: Informal

Employee Referrals

The recruitment efforts of an organization can be aided by employee referrals, or recommendations made by its current employees. Employers have found that the quality of employee-referred applicants is normally quite high since employees are generally reluctant to refer people who may not perform well once employed. To encourage employee referrals, many employers offer referral bonuses to employees who refer individuals who are hired by the company. Negative factors associated with the use of employee referrals include the possibility of “inbreeding” and violation of EEOC Regulations. Employers typically set the following requirements for bonus programs:

  • The employee who was referred must remain with the company for a stated period (e.g., six months) in order for the employee making the referral to be eligible for the bonus.
  • The employee who made the referral must still be employed at the end of the qualifying period.
  • Referral bonuses range from $250 at some companies for a clerical referral,to $1,000 or more for a professional or managerial referral.
Walk-In Candidates/Unsolicited Resumes

Some individuals walk in and apply directly for employment by completing an application or dropping off or mailing in a resume. Although an individual may consider himself or herself an applicant because of such actions, an employer that elects not to consider unsolicited resumes or any walk-ins who fail to fill out applications for specific openings need not treat such job seekers as “applicants.” Problems arise when employers handle unsolicited resumes in an inconsistent manner. By responding to only those resumes that the employer wishes to consider further, the employer has effectively evaluated all the resumes. The employer must use the same procedure with all resumes or risk a discrimination claim. An employer has no legal obligation to communicate with individuals about whether they are considered applicants, although some employers choose to do so.

Leased Employees

Leasing employees is becoming increasingly popular, as employers are struggling to keep benefits and payroll costs down. This option, however, must be given careful consideration in light of the restrictions imposed in the tax laws to curb abuse of this alternative. 

Recruitment At-A-Glance

  1. There comes an inevitable need to fill vacant positions within the organization.
  2. Because of certain advantages many organizations try to fill vacancies through promotions and transfers.
  3. Internal recruitment does have disadvantages.
  4. There are times when a company must recruit externally.
  5. External recruiting has it’s benefits.
  6. There are also drawbacks to external recruiting.
  7. There are several factors to consider when choosing to recruit internally or externally.
  8. When advertising positions make sure not to use discriminatory language.
  9. There are two types of Third-Party recruiters.
  10. To avoid problems, make sure to consider certain factors when dealing with Third-Party recruiters.
  11. The Internet can provide the ability to reach a large number of potential applicants, but be wary.
  12. Leasing employees is becoming increasingly popular, as employers are struggling to keep benefits and payroll costs down – The Business Tools you need. Developed by leading HR experts.