There’s nothing like the anticipation of a new hire, and the expectation of infusing fresh experience, talent and drive into your workforce. Too often, however, those expectations go unmet. The data has long made it clear that external hires cost much more than promoting homegrown talent, and often don’t perform as well or stay as long as internally promoted employees.
Prior to 2020, a buyer’s job market with plentiful available talent may have hidden the costs of failing to properly value, train and engage existing employees for internal mobility. But the pandemic hastened the end of that comfortable scenario for employers, and it isn’t likely to return anytime soon. The new normal is a persistently tight, remote-working labor market that has seen power swing back toward employees, making it crucial for companies to get serious about developing their internal talent.
Despite knowing the relative benefit of developing existing talent, many organizations still struggle to do so successfully. Employers can feel overwhelmed by the pace and scope of the changes that are required. Prior to the pandemic, the rate of internal hiring fell to 28% in 2017 from 41% in 2015, according to a Gartner report.
A New Day for Hiring
The traditional approach has been to post opportunities on an internal jobs board and see what happens. Successful applications are often based on who you know rather than what you know, resulting in bias and missed opportunities for both employers and employees. The Gartner report found that only 27% of employees said their employer made it easy for them to find relevant internal job opportunities.
HR departments have devoted resources to leadership development programs focused on top talent while neglecting a broader approach that covers entry level positions — where competition for talent is also becoming fiercer.
One reason employers have been slow to change has been a lack of good tools. The emergence of digital talent marketplace platforms may be changing this paradigm, creating the transparency and visibility on internal opportunities that has long been lacking. They also help turn what has traditionally been a one-way street into an interactive exchange between employers and employees that benefits both sides.
Dating App for Internal Jobs
The technology allows employers to constantly scan for the best candidates based on skills and preferences, reducing the subjectivity of the traditional networking approach, and creating more transparency into their workforce. Companies can become much more precise in how they develop their people. For employees, it democratizes visibility into opportunities, giving them more clarity on what skills they may need to be a good candidate and a pathway to develop those skills.
These tools can be used to create a more expansive approach to talent development by encompassing not just full-time roles but other growth opportunities such as mentorships and one-off projects. They allow talent to be owned by the whole organization, helping to break down the siloed approach in which individual managers have fiercely guarded their own talent pools, stifling the ability of employees to try new things.
Over time, this two-way value creation should result in more jobs being filled by internal candidates, boosting retention rates, reducing hiring costs and building a more engaged workforce — something that is also a powerful draw for external talent.
The labor market is in a state of constant flux, and the recent pandemic and macro-economic changes have only amplified the pressure. Despite a recent uptick in layoffs, there were still 1.7 openings per job seeker in November. The early retirement of more than 3 million baby boomers during the pandemic and political pressure to reduce immigration have added to existing long-term demographic pressures on the job market. A recent report from McKinsey noted that some 40% of workers are considering quitting their current jobs in the next 3-6 months.
Talent Hunt Remains Tough
So even if the economy softens or slips into recession this year, the competition for talented workers is going to be tougher for years to come. To remain competitive in this dynamic landscape, companies must focus on developing their internal workforce through upskilling and reskilling programs.
Not only does this approach make good business sense, but it also has the added benefit of reducing gender and race bias in the workplace. Case in point: After implementing an internal marketplace, data-storage company Seagate Technologies reported a 58% increase in the participation and assignment of women to open positions.
But buying and implementing a tech platform alone isn’t enough. The value of the technology can only be unlocked fully if it’s well-adopted by employees and accompanied by major efforts to shift the culture by the employer. That requires a sustained push by leadership to cheerlead change throughout the organization, ensure employees are incentivized to participate, and educate managers on the heavy costs of hoarding talent for their own functions.
Additionally, employers should also work to make these systems less reliant on self-reporting of skills by employees and more focused on validating skills, and/or upskilling or reskilling, through automated processes and proficiency assessments. By working together to maximize the impact of an internal talent mobility marketplace, employers and employees may be able to improve the chances of a long-term relationship and, ultimately, the positive business impact of that retention.