(i) It discourages capable persons from outside to join the concern.
(ii) It is possible that the requisite number of persons possessing qualifications for the vacant posts may not be available in the organisation.
(iii) For posts requiring innovations and creative thinking, this method of recruitment cannot be followed.
(iv) If only seniority is the criterion for promotion, then the person filling the vacant post may not be really capable.
Inspite of the disadvantages, it is frequently used as a source of recruitment for lower positions. It may lead to nepotism and favouritism. The employees may be employed on the basis of their recommendation and not suitability.