How do I handle internal candidates fairly?

The same evaluation, adapted in form. Use the identical scorecard, the same structured interview questions and the same competency bar, because that is what makes the outcome defensible to everyone watching. What can reasonably change is the mechanics: you already have performance history, so a take-home exercise or a basic screen is often redundant, and you can weight demonstrated results at your own company heavily. Do not skip the structured interview itself. Familiarity is exactly where informal judgement creeps in, both generously and harshly, and colleagues who like the person tend to assess reputation rather than the competencies the new role needs. Keep the evidence written down in your hiring software with the same rigour you apply externally.

Agree the ground rules before the process starts, ideally as company policy rather than case by case. Most workable policies require the employee to inform their manager once they reach a defined stage, protect them from retaliation, and set a notice period for internal moves so teams are not left exposed. Publish it. The alternative is a system where people apply secretly, managers find out accidentally, and trust breaks in both directions. Managers who block internal moves should be challenged by their own leadership, because a company that quietly discourages internal mobility loses the people it most wanted to keep, usually to an external employer rather than to another team.

In person, quickly, and with specifics. Never let an internal applicant learn from an automated email or from the announcement of who got the job. Deliver the news yourself, explain what the decision rested on in terms of the scorecard, and name what would change the answer next time. Then follow through: agree a development plan with a review date and check in on it. This is the moment that determines whether anyone else applies internally, because the story travels. A rejection handled with care can retain someone for years. A rejection handled carelessly frequently produces a resignation within months, and the person leaves with a version of events that is not yours.

Yes, plainly, at the start. Say whether the role is being advertised externally and where the internal applicant sits in the process. People find out anyway, and discovering it late feels like a setup. Being told early gives them a fair chance to prepare and to decide whether to continue. Equally, be honest if there is a strong internal favourite and you are running an external search mainly for confidence, because stringing external candidates through several rounds for that purpose damages your reputation in a market you will hire from again. Transparency costs you a few awkward sentences and saves considerable trust on both sides. Say plainly what would need to change for a different answer next time, and put a date on that review.