When You Don't Hire an Internal Candidate

​When employers post a job, they often grapple with the question of whether to hire from within or seek expertise from outside the company. While many choose to offer current employees a shot at newly created or vacant jobs, sometimes internal candidates aren't selected—for valid reasons. When this happens, though, it raises the risk that internal candidates will become disheartened and disengaged. Worse, they may begin to seek positions outside the organization, feeling that their opportunities for advancement are nonexistent.

How should organizations communicate with internal candidates who have been turned down—and minimize the odds they'll jump ship?

[SHRM members-only toolkit: Recruiting Internally and Externally]

Don't String Employees Along

The most important advice for HR professionals and hiring managers is "honesty is the best policy," and that honesty should start during the application process.

Be clear about the requirements of the position, said Sarah Woods, senior vice president of global consulting at Bates Communications. "There needs to be a lot of transparency around what is required for the role and what the selection process looks like. Clearly written descriptions of the role and its requirements will make it more plausible to go outside if there aren't internal candidates who can easily match those requirements."

While it may be tempting to offer any internal candidates the opportunity to apply and interview for any open positions, managing expectations at the outset is important. "Internal candidates have to feel that there is a fair process for evaluation," Woods said. "They can't feel it is rigged or that there is a false promise that they are being interviewed."

If you know an employee is simply not ready to take on the challenges of an open position, say so. If the candidate still wants to apply, consider scheduling an interview as a development opportunity. The experience of interviewing and receiving feedback after the interview can be valuable for internal candidates. Just be sure not to mislead the employee during the process.

Be Forthright

A high-potential internal candidate applies for a job and is selected as a top prospect. He or she moves through the interview process, but, after all applicants are reviewed and interviewed, a decision is made to hire from outside the company. While this can be an uncomfortable situation, it's best tackled head-on.

Unfortunately, "the world of HR has a tendency to avoid communicating specific reasons why someone is not hired," said Rich Franklin, founder and president of KBC Staffing in Oakland, Calif. "While that can work quite well for external candidates, it is a terrible way to handle an internal candidate."

Others agree that being upfront is a critical best practice that can minimize the odds of losing a good employee.

Adam Cannavo, SHRM-SCP, is a senior consultant with Groove Management, a consulting firm in Charlotte, N.C., and has more than 15 years of HR leadership experience. "A best practice that I've seen work well in a variety of contexts is to thank [internal applicants] for their interest in advancing their career with the organization, explain why they didn't get the job, discuss what they can do to position themselves for the next opportunity that arises and facilitate the development of a plan to get them there." This can be an opportunity "to pivot an employee from disappointment to optimism and enthusiasm," Cannavo said.

Your commitment and communication to the unsuccessful internal candidate doesn't stop after the hiring decision is made. Both HR and direct managers can play an important role in helping to develop internal candidates for future opportunities.

Pave the Path for Development

Just because an employee isn't prepared now to move into a higher-level position doesn't mean he or she might not be ready in the future—and you can help that candidate get there. When employees express an interest in taking on more responsibility but are not ready for a new role, organizations can work with them to develop the skills necessary for being a viable candidate for future opportunities.

However, make sure to avoid any implications that a candidate is guaranteed a future opportunity. Each time a position is open, the field of potential candidates is different. Make it clear that, while you are committed to helping employees build their skill sets to make them top candidates for future roles, hiring decisions will be made based on all the candidates available.

Watch for Red Flags

An employee who was passed over for a new role could harbor resentment toward the external candidate who landed the position. HR and the employee's direct manager should be on the lookout for this and prepared to intervene if necessary.

Finally, stay in contact with the employee who was passed over. "If you want to maximize the odds of future success, it's best to set up a plan with frequent check-ins," Franklin said. "A meeting every six months to see which goals have been achieved and which are still a work in progress will go a long way in helping your employees get their promotion the next time."

Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.