I think the problem with selective recruitment is that the guild becomes stangnent, frozen in time. Without new members there are no new ideas, no new points of view. And so, eventually people become bored, activity grinds to a halt and you end up with an inactive guild.
Which is why you chose The Mercenary Guild right Windra

? There is plenty of new blood, and the guild is always adapting and changing according to its members suggestions and discussions

. And because there are always new members, there is always new ideas.
Having said all of that, there is still advantages to selective recruitment;
1. People view the guild as an elite, because members are handpicked.
2. People seem to like the idea being let into a closed off elite. If they have to be \"selected\" it makes them feel special, chosen.
3. You get a much better idea of who you are letting into your guild.
In The Mercenary Guild\'s case the \"closed off elite\" is the highest ranks; requiring a great deal of loyalty and commitment to acquire. And the \"knowing who you are letting in\" thing doesnt apply so much; as mercenaries we have very little to hide. And only the very highest ranks; the ones who are \"selected\" or \"chosen\", will know of any secrets we do have.