Following are the limitations of filling vacancies for various job positions from within the organisation (Internal source of Recruitment):
(i) Restricted Choice: Internal recruitment restricts the options and freedom for the enterprise in choosing the most suitable candidates for the vacancies. It has a narrow base. The enterprise may have to compromise on quality of its choice of candidates.
(ii) Inbreeding: If the enterprise depends too much on internal recruitment, it means that the enterprise denies itself fresh talent and 'new blood' available outside. Existing employees, even if promoted or transferred may continue to work and be behave in the same habitual ways, without any dynamism.
(iii) Absence of Competition: In the absence of competition from qualified candidates from outside employees are likely to expect automatic promotion by seniority and sure prospect. Thus, they may lose the drive for proving their worth.
(iv) Conflict: There may be chance of conflict and infighting among those employees who aspire for promotion to the available vacancies. Those who are not promoted are unhappy and their efficiency may decline.