Factors Influencing Internal vs. External Hiring for Team Augmentation

November 29, 2023 Krystian Link

Augmenting Teams Through Internal or External Hiring: What Drivers Affect the Decision-Making Process

Growing your team or backfilling a vacant position can be a difficult process. Choosing the right candidate who will mesh with your team’s dynamics and produce the results required is complicated even more by budgetary constraints and executive expectations of team performance. But the heaviest decision of all is should this individual come from within the company or outside? The best option may depend on what (or who) you are looking for.

The Internal Hire: The Known Commodity with Growth Potential

Hiring from within is the safe option where you know who you are going to get. You can review the candidate’s prior performance history and interview their old and/or current managers to get a good feel for their track record and capabilities. Maybe this candidate has rotated through several different roles in the company, allowing them to see an array of problems from different perspectives. Candidates that have spent significant time in product development (whether design, simulation, physical validation or a combination thereof) bring a wealth of knowledge to a simulation team.

This highlights the largest benefit of an internal hire: their tribal knowledge. As I discussed in a previous article, having tribal knowledge is an incredible benefit to a team, because it cannot be bought or accumulated in a short amount of time. An internal candidate who has worked for a long time at your organization will have extensive knowledge of the ins and outs of not only the product but also company dynamics. 

A potential downside with internal hires is that the exact skillset you need may not exist in your organization. Extensive Ansys CFD simulation usage in a mechanical-only product development company probably isn’t sitting a few desks over from you. Perhaps the candidate has 80% of the skills that you need, but the other 20% will need to be taught. Can you and your team withstand the decrease in productivity and increase in training time to bridge that gap? If the answer is yes, your team could save a significant amount of hiring and benefit costs by developing skillsets internally as opposed to paying for them via an external hire.

The External Hire: The Expertise You Need from the Unknown

As specializations in a role increase, the size of the talent pool you can draw from decreases significantly. Generalist roles make for fairly straightforward hiring as the skills that are required to perform the role are:

  1. Readily available in the hiring market or,
  2. easily trainable. 

This is not the case for subject matter experts (such as simulation engineers). Typically, these skillsets are acquired over years (if not decades) of work experience. They are not high-volume roles in most companies, so the candidate pool is significantly smaller and commands a higher salary than for generalist roles. However, there is truth to the saying “you get what you pay for.” 

If you know what skillset is required and cannot incorporate training into the onboarding plan, the salary premium is an acceptable compromise. Typically, the external hire for a specialized role understands the needs, urgency, and deliverables of the position.  This can augment team throughput with a minimal onboarding penalty as compared to an internal hire with little direct experience for the role in question.

Another bonus of external hires is that many have held a variety of positions in different companies. Their experiences allow them to bring far more (and potentially even better) knowledge into the organization that can lead to a more competitive product portfolio.  Furthermore, this new hire can effectively teach your team new skills and processes that they have learned during their career. This can result in sizable training cost savings when you have directly hired the “trainer”.

Conversely, there is a greater risk associated with hiring from outside. There are no “test drives” for external hires. Having multiple interview screenings with candidates helps mitigate some degree of risk, but you really don’t have concrete, relatable performance indicators besides what is shared on a resume, during an interview, or within provided reference testimonials. On top of this, corporate culture fit isn’t something that can be tested ahead of time. Will the candidate thrive in the new team or demand the new team assimilate to how they used to do things? This could be said of internal candidates as well, but more is left to chance with external hires. However, there could be a vastly larger return when taking a risk on an external candidate which outweighs the risk.

Still Not Ready to Hire or Restructure Your Team?

If you're not sure about hiring for your team at this point, Rand Simulation provides end-to-end consulting services for your simulation requirements. Contact us for more information on how we can assist with your current engineering projects.

About the Author

Krystian Link

Krystian is a CFD application engineer at RandSim with over 10 years of product development experience in the automotive and manufacturing industries. His simulation experience focuses on vehicle thermal management, external aerodynamics simulations, and HVAC systems, including a publication in SAE’s Journal of Commercial Vehicles ("CFD Windshield Deicing Simulations for Commercial Vehicle Applications"). After completing his MBA at Indiana University’s Kelley School of Business, Krystian became even more passionate about building and implementing strategic solutions that not only address customers’ simulation needs, but also their business goals.

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