Why have different evaluation parameters for internal & external hires?

It is often a dilemma for companies whether to go for ready talent from the market, or groom talent internally. However, that’s an old debate.

The big question now is when companies start scouting for talent, both externally and internally, for any given position, should the assessment criteria also be the same for the two?

In fact, it’s a common practice now to evaluate both options parallelly, and then go for the best one.

Senior HR leader, Sunil Singh, questions why the criteria should be the same. It’s like comparing oranges and apples.

“Companies need to bet more on internal talent to operate at a higher level, where they can show their capabilities”

Sunil Singh, Senior HR leader

He explains by drawing attention to the fact that when one hires from the market, several external factors contribute to the making of one’s decision. These include resumes, cross references and inferences from the first few interactions. However, when one is hiring internally, one already has a deeper understanding of the person.

What this translates to is that external hires generally end up being judged on their strengths while internal candidates are evaluated on their weaknesses.

Singh explains that it’s a general human tendency to underestimate the strengths of a person in close proximity and overestimate the strengths of those who are not known to us personally. Therefore, people who are hired internally are at a disadvantage, naturally. At the time of hiring, one tends to underplay their strengths and overplay their weaknesses.

This is the primary reason why companies preferably hire their top-level positions — CXOs — externally. After all, when it comes to internal hires, the organisation is well aware of how the candidates have functioned at lower levels and are in the know of their competencies.

However, Pravin Purohit, Deputy CHRO, Vedanta, has a different take on this.

“When one turns to the market to hire for a position, one’d be willing to hire people only if one deems them a 100 per cent fit for the job at hand, in terms of competencies. However, while hiring internally, even if those being considered have no track record of displaying absolute proficiency at the work in question, one’d still be willing to bet on them,” states Purohit.

“When it comes to internal hires, probation period is generally not as well structured”

Pravin Purohit, Deputy CHRO, Vedanta

He adds that while some criteria may shift for the two types of hiring, the basic competencies will remain the same for a position. He believes the major difference lies in the trust that the organisation places in the hire for the role.

Singh believes that organisations need to be more mindful of their existing workforce’s competencies. Developing a robust internal-hiring mechanism will only promote the morale of the company as a whole. This, according to Singh, should be the primary difference in the two types of hiring.

“Organisations need to build a hiring system, which negates the natural disadvantages posed to their employees at the time of hiring. They need to bet more on internal talent to operate at a higher level, where they can show their capabilities,” he suggests.

Purohit also suggests that while a 360-degree feedback on the person’s background, established through references, is necessary in case of external hiring, the company has a better advantage there when it comes to internal hirings.

“One keeps external hires on a fixed probationary period during which their performance and acumen are gauged. However, the same is not necessarily implemented while hiring internally. When it comes to internal hires, probation is generally not as well structured,” feels Purohit.

“In case of external candidates, the evaluation process is more rigorous for obvious reasons and a lot of emphasis is given to evaluate integrity and culture fit. For internal candidates, there is no such requirement”

Mahipal Nair, CHRO, South Asia, Africa & Middle East, NielsonIQ

However, at Vedanta, there is a different practice in place. Even internal hires are put on probation, albeit for a shorter duration than the external hire.

Mahipal Nair, CHRO, NielsonIQ, shares that in case of external candidates, the evaluation process is more rigorous for obvious reasons and a lot of emphasis is given to evaluate integrity and culture fit. For internal candidates, there is no such requirement. However, another major point of difference comes while negotiating on the salary. In case of an external hire, money is always a criterion for the candidate, while for an internal candidate, the lure is professional growth. This makes the methodology to judge and evaluate the two, distinctive.