You can’t overstate the benefits of internal mobility. No matter what human resource topic is on your mind, you can bet that internal recruiting is relevant. Engagement, retention, productivity – all of them are enhanced by keeping good employees and moving them up the career ladder. Why then is internal mobility not the main hiring method of organizations today?
A Quick History of Internal Mobility
Way back when, there was an idea of “lifelong employment,” where a worker would stay with the same company for their entire career. Many things allowed this to happen, among them the practice of internal recruiting. Until the end of the 1970s, 90% of companies filled positions through internal hires, both up the ladder and across the organization.
But economic changes in the 1980s basically turned this situation on its head. Currently, about 20% of hires are done internally. This switch occurred for several reasons, including:
- Rapid skill change. It can be easier to recruit someone who already has urgently needed skills than to train an existing employee.
- Proven ability. External hires are often “headhunted” away from competitors after being identified as top performers.
- Organizational attitudes. Recruiting from current employees requires upskilling programs, but only 14% of companies measure L&D effectiveness in relation to business strategy. Without proof that upskilling succeeds, companies prefer to invest in outside talent.
Internal Mobility’s Advantages
There are endless organizational benefits when you maximize the recruitment of existing employees across or up the hierarchy. Let’s divide them into two categories: direct gains for a company, and indirect gains from avoiding problems with new employees.
If the Quiet Quitting movement proved anything, it’s that employees don’t see the relevance of hard work, particularly as a way to achieve upward movement and better conditions through a promotion. Giving them a chance to progress is exactly the motivation they need to see value in their jobs. In our era of dropping engagement rates, HR should think about the fact that internally-promoted employees are 3.5 times more likely to be engaged than those who don’t move up.
The flip side of engagement is retention, as motivated employees tend to want to remain where they are. This concept makes even more sense when you realize that, according to the Work Institute’s Retention Report, a lack of career opportunities is the main reason for quitting.
An essential part of any career is building skills. When an employee remains with a company for a long time, they tend to be trained according to a career path that suits both them and the organization. Over many years, the employee acquires the exact abilities that the company requires.
It’s been estimated that the vast majority of expense that goes to human resource vendors is for hiring processes, while the cost per hire currently averages $4,700. This money covers recruiting agencies, background checks, and advertising. In comparison, an internal hiring process relies entirely on a firm’s own staff and is basically free.
To develop the abilities required for even basic positions, L&D is needed. This is because every company has a certain level of organizational knowledge. From understanding how to fill in your time sheets to getting up to speed with the latest proprietary methods, it takes time and money for new workers to acclimatize. One estimate of this process states that onboarding new employees costs six times what it does to bring in a current worker. Plus, it takes an average of three years for a new worker to equal the performance level of veteran employees in the same role.
An existing employee has already adjusted to the culture, understands the business, and has been accepted by coworkers. On the other hand, a new employee is entering an unknown situation, and doesn’t always fit in, or even enjoy their new job. Statistically, 61% of external hires are likely to be laid off or fired in their first year at a company.
As mentioned above, external hires are often recruited from competing firms. It’s a practice known as “poaching,” and it puts the poaching company in a negative light. That’s because the investment in skills made by the former employer now benefits their competitor. Poaching is also bad for the worker because they can’t be trusted. There’s a sense that they may move yet again for a higher salary. In comparison, organizations that use internal hiring demonstrate that they are loyal to their employees, which is a definite plus for a company’s reputation.
Maximize Internal Mobility with GrowthSpace
One of the reasons why organizations don’t do more internal hiring is because of how most L&D initiatives function. Companies tend to work with L&D experts that they know, run a few courses for a bunch of employees, and call it a day. But they don’t have a method to gauge success, and so top execs look outside for new skills.
GrowthSpace reverses this situation. It enables HR to define very specific skills that are in need, source top experts to teach those skills, and, perhaps most importantly, measure the outcome. By delivering effective L&D, and showing that it works, HR can prove the value of internal mobility and spread its advantages to the whole organization.