There are numerous advantages in recruiting internally. The candidates’ performance is known well, as are their attendance records and their strengths and weaknesses. From an employee's viewpoint, an internal promotion is normally a far more satisfying move than the risk involved in moving to another organization when service rights are lost and a mass of cultural and technical information has to be learnt in a very short time.
A promotion generally gives a healthy signal both to the individual, who will feel valued but a signal is also given to the rest of the workforce who will be encouraged to stay, all being well, with the hope of following in the successful employee's footsteps. Moreover, an existing employee knows the organization, its systems and procedures, and should find it easier to adjust and settle in the position. Finally, internal recruitment is normally short, except in the largest public sector organizations and it is certainly cheaper than external advertising. The vacancy can be advertised through internal advertising on notice boards and in newsletters to denote that it is open to all employees and to support a culture of transparency.
Nothing is more de-motivational than the sudden announcement of internal promotions without the position being advertised.