There is nothing like a prolonged hiring freeze to suddenly renew interest in the benefits of internal mobility. We saw it during the pandemic, and we are starting to see it again now.
Our new report from Aptitude Research finds that only one in two companies connect talent with learning and development opportunities, and only 40% of companies allow employees to find jobs based on skills. Meanwhile, 64% of CHROs say that upskilling and reskilling is the most critical priority today, and 75% are interested in talent marketplaces as a way to deliver on a skills-based approach.
Internal mobility as a talent acquisition channel seems to go through the same story with every business cycle. When the markets are booming, talent acquisition organizations put all their efforts into building an attractive external employer brand, and sourcing and hiring new people into the business. For years, internal mobility has been neglected, despite its proven benefits for the business. Then the economy goes into a crisis, and suddenly, people leaders find themselves in a hiring freeze, and are expected to produce wholly functioning internal mobility programs out of thin air.
What are the benefits of internal mobility during a downturn?
Internal hires perform significantly better than external ones in their first two years at a new role, according to a Wharton study published in 2011. They’re also 61% less likely to be laid off, and usually take 18% lower compensation than their external counterparts.
They are an attractive proposition for every organization. Internal hires are a great investment regardless of the state of the economy, but they become incredibly important when they are the only source of talent during a hiring freeze.
The need to keep growing and solving new problems does not go away during a crisis – or at least, it shouldn’t, because that is the time when great teams can create an opportunity to peel away from the competition. If your Home Cooking department is working on a new product that is especially relevant to the current market, and needs a packaging designer that is sitting on their hands in the Outdoors department, then the business as a whole benefits from moving that designer to a new role.
The challenge with the benefits of internal mobility is that they do not always apply universally to all the players. The Outdoors department managers probably do not want to lose their current headcount, for example, or the Home Cooking one might not want to be seen as poaching someone else’s team. It is the responsibility of the people team executives to find a way to realign incentives in these situations, be they from Talent Acquisition, Employee Development, or any other people organization who is involved in internal mobility programs. As Helen Tupper pointed out in HBR, “managers need to be rewarded not for retaining people on their teams but retaining people (and their potential) across the entire organization.”
There are other challenges that can cause the benefits of internal mobility programs to not be fully realized: we’ve summarized some of them in this article on internal mobility and how to fix it, but there are a few that should be explored separately, and are linked to the absence of a centralized talent data platform or Talent Marketplace in most people organizations.
Without a system to connect internal employee data to the talent acquisition’s tool stack, TA leaders cannot navigate the internal talent pool, and match new needs with existing skills in a way that results in a net positive for the business.
This shouldn’t discourage talent teams from tackling this challenge head on during a crisis. While a centralized talent pool would certainly make it easier to scale internal mobility programs, even a simple internal survey can help kickstart the process in the meantime.
Playing the long game in internal mobility
There are a few reasons why a company might start looking into strengthening its internal mobility programs. One of them is the inability to fill roles by looking outside, which is what happens during a hiring freeze like this one. But there are other, less direct reasons.
CHROs who keep an eye on the long term know the power of employee retention. If you crack the code of retention, and you can consistently keep your best people and promote them into impactful roles, you hold a real advantage over the competition. We might be heading into choppy economic waters, but recruiters will always come back to fighting over the best engineers, data scientists, or account managers in niche industries.
A large part of retaining top talent is gaining their trust, and convincing them you will invest in them as much as they will allow you to. Great people are motivated by more than just salaries and perks – they need to know the time they spend in your company is challenging them, contributing to their growth, and taking them closer to their professional goals. That is one of the chief benefits of internal mobility programs.
As of 2015, only 1 in 3 employees in the millennial age group felt that their organization was fully engaging their skills and experience. Until recently, it looked like companies were missing the mark on the necessity to nurture their current employees to retain them. A 2020 McKinsey Global survey revealed that about one-third of respondents say their organizations have begun reskilling efforts, so that might be in the process of changing.
Many talent leaders are perfectly aware of the benefits of internal mobility programs, but weren’t able to prioritize them before. The looming crisis makes their work harder in many aspects, but for internal mobility, it may present an opportunity to set the foundation for durable change.
A recession could be an opportunity for people teams to truly set themselves up for success… as long as they are able to balance out immediate results with long-term strategies.