The case for promoting internal talent
In case you received a university degree in business studies still in the last millennium, chances are high that large chunks of the knowledge acquired are not valid anymore. Market dynamics changed, competition increased, agility slowly replaces efficiency as the main growth driver and digital innovations are many times worth more than infrastructure assets. In the midst of it, younger employees join the workforces with new expectations towards work and employers. Not only the business challenges, also the work environment with its skill and employee experience requirements has fundamentally changed.
But people remain a company’s most important asset. With demographic developments pointing to a future shortage of talent. In the past, companies mostly focused on searching the necessary talent externally. But that’s not sufficient anymore, for various reasons.
- External recruiting is costly. Companies pay external experts to identify suitable persons and invest in onboarding and learning. Meanwhile, they let people go which know the company’s products, culture and functioning very well. Internal upskilling might be the more efficient and effective solution when looking at the total costs involved.
- Loosing talent is costly. One of the main reasons why employees change employers is the lack of growth opportunities. Now that the bulk of employees is made of generations which have little interest in a life-long relation with one single employer, more of the investment made in finding and training them is going up in smoke. And more of their potential is being lost. Retaining employees by providing the opportunity to grow within an organization is clearly a more sustainable solution.
- External recruiting can’t fill all gaps. Job and skill needs are evolving rapidly, especially due to technological change. Finding the right candidates externally takes time and the divide between positions to fill and availability of suitable people will get wider and wider if alternative sources for talent are not considered.
LinkedIn’s latest Global Talent Trends Report states that 73% of organizations consider internal recruiting as increasingly important to their company. Internal recruiting rates have already gone up by 10% between 2015 and 2020. However, companies still struggle to make their internal mobility programs work.
What is standing in the way?
Lack of knowledge about existing skills. It’s difficult for organizations to get a precise overview of all capabilities of their employees (but it’s still possible). Skills are being recorded for the initial hiring profile but usually not being kept up to date. They change and grow over time, through expertise gathered in later projects and also in private environments.
Lack of communication. If not communicated clearly, employees lack information about existing open positions and the skills required to fill them, making it basically impossible for them to identify internal opportunities. They might also not even know about their own possible career paths and what is expected from them to make a step forward. The traditionally larger focus on external communication might need to shift to internal communication.
Cultural barriers. Internal mobility may still be perceived as negatively. Changing departments or teams can be seen as “being disloyal”, making employees unlikely to remain in an organization if they would like to make a career change. This is especially the case if organizations grow by acquisitions. If the new, larger company is not being perceived as a single entity then employees will be reluctant to move between units.
But cultural barriers also exist within a single organization. The view of an internal candidate´s skills is often biased towards what they are doing in their current job. If they have skills which they are not using in their current job, then they are difficult to see and might be considered as non-existing or not valid. This can easily lead to the situation that employees land jobs at other companies specifically for the skills that are being overlooked.
Managerial barriers. There hardly exists any agile approach to talent, yet. People have always been assigned to one function (Sales, HR, Finance…) and offered a career by climbing the ladder in that function vertically. Horizontal careers by moving between functions are a rather new idea and managers are not always up to promote it or at least not stand in the way. They invest time in helping grow and develop talent and are not necessarily happy to see them move on to another area.
Outdated rulebooks. There are companies which have rulebooks in place which were – with all respect – written for an environment which doesn’t exist anymore. I.e. allowing for a promotion only after a certain number of years in a position or only allowing for limited moves, i.e. one level at a time. This leads to the counterproductive situation that precisely the employees with the highest motivation to make a career are being pushed out of the company.
There’s a similar effect when the levelling or grading of jobs in a company is not consolidated and inconsistencies in compensation are not being addressed. A person which is looking for a career move will hardly accept a downgrade (or any other form of unequal pay) and will surely be demotivated when being offered less for the same experience level. Or when a female employee gets offered less than a male employee for the same job. It’s of no surprise to see them leaving the company soon after.
How to overcome the barriers?
Be clear about your objectives. Internal mobility is part of your organization’s overall talent strategy and should be treated like that. But you can still define its own set of objectives such as which employees should be moving internally and how often, if transfers should be initiated by employees or management, which kind of mobility is most important (cross-location, cross-function, cross-business unit) and which measures should be taken to remove cultural and managerial barriers. An internal mobility program needs its own process owner who makes sure that its objectives and activities find their place in the overall talent strategy.
Gain visibility on existing skills and potential for growth. Even though this is a comprehensive task, it sounds more difficult than it actually is and it will give you groundwork to work with for years to come. You can kill two birds with one stone if you involve your employees and their managers in the recording of skills. They know best what they are truly doing and you can look simultaneously at competencies, interests and learning abilities to estimate growth potential. You can use different tools such as own-evaluation, manager evaluations, peer surveys or even social media.
This shouldn’t be a one-off exercise because there is immense value for employers and employees alike if you can track developments. So, make sure to incentivize employees to keep their skill profiles updated. Use a gamified platform with mobile access and great UX, give recognitions, meaningful rewards and include it in internal marketing.
Your skill catalogue will probably not stay the same over time. After all, internal mobility serves (among others) to fill gaps of future jobs which require new skills. Improve your skill catalogue continuously and think about using technology solutions such as skill clouds or extracting skills from texts with machine learning.
Use technology to enable internal mobility. As a minimum, you should provide a platform to inform employees about opportunities. You can personalize it in various ways to ensure that employees retrieve an individual benefit and actually use it. For example, you can link the provided information to their specific career paths, make the required learning content accessible online in various formats and even simplify the process of changing jobs by allowing applications directly in the platform. The trend is currently going towards talent marketplaces which make it easier to apply an agile approach by testing how people react to mobility options in between projects, functions and roles.
Communicate proactively to help building a culture of engagement. It will make employees feel included and positive about internal movements. The majority of internal applicants will probably have to be refused but if they receive feedback and get encouraged to try again, your program will gain credibility. This specifically involves line managers. They should be encouraged to support their team members in the process and develop talent for the whole organization. This could be made part of their own performance reviews.
Build a job architecture. We regularly promote the benefits of designing a high-quality job architecture and we also do it here because it provides various advantages to improve internal mobility. A job architecture is your repository for job descriptions, grades, rewards, skills and competencies. You will have one single source of truth which reflects the true essence of the work of your employees. It provides all the information needed for talent management, unifies grading practices and evaluation procedures. The grades can be mapped to positions and employees, creating clear and fair compensation, and removing the “level issue” as a barrier to internal talent mobility. With a suitable foresight methodology (i.e. here) you can anticipate the future impact of new technologies on your workforce. You can organize reskilling and upskilling activities and will have trained the right people for the right time.
Internal talent mobility will move further up on HR’s priority list. Any company can reap its benefits with a plan and an overview over their workforce. But it needs time to take hold so better start today if you need it in a year or two. Done well, it will clearly set you apart from competitors and even attract external talent.