Hiring managers sometimes post job openings for internal applicants only. This means that only employees who currently work for the company or organization can apply for a vacant position. Why would they do this? There are a few reasons.
Someone Familiar With the Organization Is Preferred
The hiring manager might need someone with particular organizational knowledge. For example, someone hiring a senior-level subject matter expert might limit applicants to current employees in an effort to produce an applicant pool of junior-level subject matter experts and other current employees. The manager is likely to know almost all viable applicants. If the manager does not know them personally, he at least has an idea of their reputations around the office or can easily make contact with a supervisor who does.
Someone is Already in Mind
Another reason a hiring manager might limit applicants is that he already has one or a few people in mind for a position and he doesn't want to spend time working through a large applicant pool when he doesn't intend to hire any of them. In government agencies, in particular, hiring managers cannot promote someone without allowing others to formally indicate their interest in the opportunity. Limiting the pool provides a legally justifiable defense for excluding people from the hiring process.
Hiring managers want to save time where they can. Posting to internal applicants only can achieve this, but it can also come back to bite them. A huge drawback to posting as "internal only" is how limited the applicant pool becomes. Hiring managers certainly exclude many people who could do the job satisfactorily, if not excellently. If they end up with an insufficient applicant pool, they might have to re-post the position or force themselves into bad hires that wouldn’t otherwise have been made.
Promoting Current Employees
A fourth reason for limiting the applicant pool is to ensure a maximum number of promotional opportunities for current employees. An organization trying to do this would post most mid- and upper-level jobs as internal only and advertise entry-level jobs as open to all applicants. The organization would divert from this practice if a hiring manager foresees no viable candidates or has to re-post a position after going through the hiring process with an internal applicant pool.
Sometimes internal postings are restricted to particular parts of an organization. For example, a city might post a police detective position and restrict applicants to current city police officers. This would ensure that someone from within the police department would be promoted into the position through a competitive selection process. The city would likely post the vacated police officer position to internal and external applicants after the detective position is filled. Doing this routinely means the police department makes a big assumption: the department will hire and retain police officers who have the aptitude to be detectives, then fill even higher ranks as these officers progress through their careers.