The success of your business relies on finding, keeping and growing the right people. Indeed, it is imperative that CEOs prioritize the question of where the next generation of talent is coming from. But it might be right under your nose.
As the world changes, the battle for top talent – your greatest asset – is fierce. Your biggest competition is no longer a handful of companies within your industry: it’s every company, everywhere. And, with what is known as the ‘Great Resignation’, employees are reassessing their work priorities: leaving the workforce or, more commonly, the organization they find themselves in.
Talent is often cited as a top priority. 88% of business leaders told us that acquiring and retaining employees is more important to them now than it was 18 months ago (The Talent Trap). Gartner’s recent survey of CEOs and their 2022-23 priorities found that the importance of ‘workforce issues’ had risen yet again, and was now in 3rd place (from 5th in 2020). PwC’s latest Pulse Survey found that “the ability to hire and retain talent” is most critical to achieving growth for 77% of C-suite executives... and this figure was higher amongst CFOs (83%) than CHROs.
Meanwhile, 83% of leaders surveyed for The Talent Trap said that fierce competition for new hires is forcing them to compromise on quality.
The Great Reassessment
We know that people are thinking differently about work. There are many jobs to be done to build the workplace of the future, with the workforce that the future will require. But one big missing link is internal mobility: the importance of looking within your business for the talent that your company needs to thrive. Why is hiring from within such a good idea?
1. Find the hidden treasure (and find efficiencies)
Recruitment is generally narrowly focused on “strangers”: external candidates that seem to fit the bill, often thanks to a perfunctory LinkedIn search. In the past (until the 1970s), around 90% of roles in organizations were filled via promotions and lateral assignments. Today? One third are filled this way.
What if you thought of your existing employees as potential candidates? Suddenly you have a greater pool to fish from, more detail on their skills and experience, and (crucially) a much shorter time between identifying and hiring the right person for the job.
You can also save money on training and development: research by Matthew Bidwell finds that those hired externally will take three (more) years to get to the same level of performance as internal hires.
Finally, external hires will command a higher salary. The 2011 research by Bidwell found that internal hires took 7 years to reach the same pay as external hires (more recent research shows external hires are commanding 8% more money, in the US). As Peter Cappelli points out in HBR, “Outside hiring also causes current employees to spend time and energy positioning themselves for jobs elsewhere. It disrupts the culture and burdens peers who must help new hires figure out how things work.”
Of course, no organization understands its workforce as deeply as it ought to. To ensure your top talent is uncovered, and presented with options and opportunities to progress, move, and upskill, you will need to take a new approach. New technologies allow you to match those internal ‘candidates’ with roles (or ‘gigs’, or projects) – and gives employees a ‘Talent Marketplace’ to find their own way to shine.
Rather than the same set of people being asked to participate in team tasks, the hidden gems will come to light. As Wagner Denuzzo, Head of Capabilities for Future of Work at Prudential Financial, said on The Talent Blueprint podcast: “Imagine if all this comes to fruition through AI and machine learning… we don’t really need anybody to tap on my shoulder and say, ‘Hey, you’re top talent’.
“We are missing all the hidden figures; all the hidden jewels of people, who might be a little shyer, who’ve never had the exposure, but actually are brilliant people. And especially when you think about diversity and inclusion; how you’re going to find diversity and inclusion in every corner.”
2. Build the workforce of the future
The skills requirements in businesses are changing all the time. You know that you will need skills in the future that you do not have today. You also know it is getting harder to find people to fill roles, who have the skills you need. So smart businesses are planning to upskill and reskill their existing employees, and hire from within.
As a starting point, existing employees already know the business, have demonstrable track records, and can start adding value in a fraction of the time it takes to source, interview and onboard totally new candidates. On top of that, offering opportunities to move around the business gives employees the best possible ‘learning and development’ scenario: to learn by doing.
Moreover, by offering existing employees new roles, you are retaining people who might otherwise have left, and helping people achieve their full potential: this is a true win-win.
When you hire from outside, you bring one new person onboard. Internal hiring allows a number of employees to progress and develop their skills.
3. Stop the leak: retain your best people
Today, churn levels mean that businesses are constantly chasing their tails when it comes to recruitment.
In the fourth edition of the Beamery Talent Index, 51% of people said they planned to leave their job in the next 12 months. The reasons? As well as desiring higher salaries and better perks, people were seeking out meaning, flexibility, and opportunities to develop. But this survey also revealed that 54% of people who had left a company, due to feeling unhappy or unfulfilled, later regretted doing so.
This means that your business has an opportunity: a chance to retain people who feel they have no choice but to leave. You can hire them.
That is to say, by offering opportunities inside your company, you help people develop and use their skills, feel encouraged to remain, and feel valued by the business – and, crucially, you fill the skills gaps in your organization, very efficiently.
One approach to ‘hiring from within’ is to create internal careers communities, where employees at risk of leaving can be offered relevant jobs, tailored learning routes and opportunities.
You might say: “Yeah, but hiring from within just means shuffling people around and we still need to backfill roles.” Remember: If someone is unfulfilled, keen to learn, and wants a new challenge, stopping them leaving their team will likely lead to them leaving your organization. If they can’t move desk they will simply move companies.
4. Improve your company culture
A healthy culture is what makes the difference between an organization thriving or not. As Mary Meaney noted, it’s crucial to build a “healthy” culture of learning, innovation, and excellence; one where talent can thrive. That relies on understanding the skills you have internally, allowing people to move around, and having the right technology to do that (a Talent Marketplace).
While it has always been true that people are your biggest asset, the focus has shifted: customers are increasingly making purchase decisions based on the perceived culture of your business. And this isn’t just a case of clever hiring. You need to look at how you keep your best people, and help them reach their potential so your organization can reach its potential.
By investing in your people and offering opportunities for internal mobility, you give employees a chance to see where they fit in; where they might go next. This visibility and empowerment is not only a route to retention, but a method for ensuring greater engagement (which we know makes companies more successful). People leave when they think they have nowhere left to grow. You have a proportion of your workforce that may not actually leave, for various reasons, but has mentally checked out and needs new stimulation; a vision for the future; a reason to believe.
Hiring internally not only increases engagement, but people tend to refer others more frequently when their own career has grown within the organization. The positive ripple effect of internal mobility cannot be overstated: it allows many employees to progress and develop their skills, in turn boosting morale, loyalty and productivity. This won’t just be felt on one team, but can be experienced throughout the company.
A smart approach to internal mobility ensures that vacancies and opportunities are clear and shared with employees, so they are empowered to plot their own career paths.
Talent Marketplace: doing internal mobility properly
Of course, you may already be open to lateral moves in your business. What we find, though, is that often employees are not aware of opportunities inside an organization (and that companies do not have a comprehensive, systematic way to present those opportunities to employees). The experience isn’t normally great.
We advise internal mobility programs that form part of a holistic, skills-based talent management strategy. This means looking at your talent as individuals with a living, evolving set of skills; with dynamic levels of proficiency, as opposed to static collections of requirements that fit an existing open role. Companies will soon be able to look at an individual and understand not only the skills they have today and the value they can currently bring to the business, but how they can and want to grow, and how they might grow with the business.
Building a talent-first company means that you reach YOUR full potential as a business, by unlocking the potential of your people.