1) Demoralization: When new persons from outside join the organization then present employees feel demoralized because these positions should have gone to them. There will be a heart burning among old employees. Some employees may even leave the enterprise to find out better avenues in other concerns.
2) Lack of Co-operation: The old staff may not co-operate with the new employees because they feel that their right has been snatched away by them. This problem will be acute especially when persons for higher positions are recruited from outside.
3) Expensive: The process of recruiting from outside is very expensive. It starts with giving costly advertisements in the media and then arranging written tests and conducting interviews. In spite of all this if suitable persons are not available among the applicants then the whole process will have to be repeated.
4) Problem of Maladjustment: There may be a possibility that the new entrants have not been able to adjust in the new environment. They may not temperamentally adjust with the new persons. In such cases either the persons may leave themselves or management may have to replace them. These things have adverse effect on the working of the organization.
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