How many times have you felt it?
The perfect candidate for an open position is sitting right in front of you – an internal employee who is deeply embedded in the culture, knows the product, has perfect skillsets, and has the respect of their peers.
It can be a frustrating scenario. Despite having someone internally who is more than capable, the decision is made to bring in new talent. Surely, the external hire may bring something new, but they also require training, time to adapt, and a learning curve that could have been avoided.
As HR, we’ve seen it too many times. Why does it happen? It can be the pull towards a “new perspective” or the belief that new talent means new innovation.
But what we overlook are the hidden costs: onboarding resources, and most importantly, the damage to our internal talent pool.
This isn’t a small issue. How can we expect our internal stars to stay when they see no upward path in the organization? According to LinkedIn’s 2020 Workplace Learning report, 94% of employees would have stayed longer at a company if it invested in their career development. Yet only 28% of global companies believe their internal mobility programs are effective.
This means, 72% of organizations fail to capitalize on internal talent.
The cost of this is high. Internal hires actually perform better, as shown in a Wharton study where these hires excelled more than external hires in their first two years, and they are also 61% less likely to be laid off.
As HR leaders, it’s time we rethink how we prioritize internal talent. Instead of always looking for something “new,” we should focus on the people who have already proven their value.
Because if we don’t, we risk losing them altogether.
So, why are we not making internal mobility a priority – and what can we do to change that?
Addressing organizational resistance to internal mobility
There are various reasons why organizations neglect employee mobility.
The major reason is resistance to change, but another factor is due to lack of data. As per a report, 36% of businesses had no access to reliable data on the top performing employees.
In the example above, this means your company may not have even been aware that you were a strong fit for the role – making the situation even more frustrating.
Companies also resist embracing internal mobility because they fear that once employees are trained and developed, they might leave for better salaries or opportunities elsewhere. This concern pushes them toward external hiring.
However, statistics and strategic considerations tell a different story on this case.
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Employees leave organizations due to a lack of L&D opportunities. Not because they are trained too well.
A 2024 American Psychological Association (APA) found that nearly 24% of American workers are unsatisfied with their career growth opportunities. Moreover, this lack of advancement is one of the top reasons why Americans quit.
There are a few reasons why this happens. According to CFO, nearly half (47%) of US employees believe the management is too focused on their productivity rather than their career development. Another 46% said their management simply did not know how to help with career growth.
Here are some action items to address this issue:
- Ensure employees see a clear path for their advancement within the team.
- Involve them in their development plans.
- Tie training to retention bonus.
- Implement other programs to encourage employees to stay after training.
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Managerial resistance
This is another type of resistance to internal mobility. This arises when managers are reluctant to let go of top performers. While this concern is understandable, given the potential impact on team performance, it’s also important for leadership to adopt a broader view that prioritizes the long-term growth of both the employee and the organization.
To address managerial resistance, organizations can:
- Clearly communicate to the senior management how internal mobility will help the employee and the organization.
- Offer training and resources for managers to effectively manage internal mobility. This should prepare them for transitions effectively.
- Create a succession planning process where successors are identified in advance. This ensures smoother transitions and minimizes disruptions to the team.
Skills-first internal mobility: A notable approach, but is it right for you?
This approach is fairly new.
Instead of considering traditional criteria like tenure, gender, or job titles, it prioritizes employees’ skills.
To make the most of this approach, there are several practices you can adopt:
1. Since this approach relies heavily on matching existing internal employees’ skills with those required, you need to have a process in place to conduct a skills audit or analysis. These exercises shouldn’t just be an evaluation; rather, each of the skills listed must directly support business transformation, growth, and competitiveness.
2. You can develop a skills taxonomy that categorizes skills across functions, levels, and business lines. These can be clustered into core skills and competencies that are important to the role and the business.
Basic framework for developing a skills taxonomy:
Identify core, adjacent, and future skills
- Core skills: These are vital for business operations.
- Adjacent skills: These complement or support core functions. They are often associated with recent technologies or processes.
- Future skills: Capabilities that will be crucial soon e.g., blockchain for HR.
Also, organizations can use predictive modeling techniques to anticipate which adjacent skills will soon become core. This enables proactive workforce development.
3. Lastly, ensure that this database is updated regularly. You can further elevate the skills-first approach by leveraging AI (Artificial Intelligence) and ML (Machine Learning). Consider using digital tools like HRMS and LMS systems to automatically generate and gather data on employee skills from learning records, performance reviews, project participation, and feedback. This helps avoid the common issue of relying majorly on employee self-assessments.
You can also go beyond assessing current skills by using predictive analytics and forecast future skills requirements. A recent survey of HR leaders showed that 75 percent reported using some type of technology system or bank of competencies and roles.
To move this talent:
- Project rotation.
- Feedback, mentorship sessions, and future alignment sessions.
However, this approach has a few major drawbacks. Focusing only on existing skills can lead you to overlook growth opportunities.
A future-ready approach to internal mobility
The skills-first model might work well for organizations that need to quickly fill a role with someone dependable. However, if you’re aiming for a more strategic approach that drives long-term business growth and improves performance, the growth-first internal mobility is the way forward.
One major shortcoming of the skills-first model is its lack of focus on future potential. While some companies use it to identify the skills needed down the road, how often is this data truly leveraged? Predictive analytics and HR solution technologies are impressive but ineffective if not used strategically.
The growth-first approach:
Rather than just matching employees to roles based on their current skills, the growth-first approach focuses on developing them for future positions. It’s a long-term strategy that prioritizes potential, career aspirations, and business needs.
It incorporates development plans like reskilling, succession planning, and lateral moves. This is ideal for companies looking to build a strong leadership pipeline, undergo strategic shifts, or adapt to changing skill demands.
Let’s say, for example, a company anticipating senior leadership retirements within the next five years could identify mid-level managers with leadership potential. These employees would then receive leadership training, participate in cross-functional projects, and receive coaching.
Here’s how you can implement this approach:
Identifying and developing high-potential employees:
The core of this approach is to identify employees who can assume new roles, even if they currently lack the required skills. While this might seem similar to succession planning, which focuses on key business roles, this approach takes a broader perspective. It considers every employee’s capability and aspirations, mapping out their career paths and providing a sharp vision of their future within the organization.
- Innovation challenges and hackathons: Use these events to identify employees with problem-solving skills and innovative thinking.
- Assessment-based identification: You can also utilize tools and HR solutions to assess employees’ growth and potential beyond their current roles.
- Long-term growth plans: Work with identified employees to map out a 3 to 5-year comprehensive growth plan that includes skill acquisition, leadership development, and role evolution.
Building pathways for transitions:
The above concept extends beyond merely identification; it focuses on actively developing them. This approach contributes to organizational growth by providing meaningful opportunities for advancement.
Therefore, it’s important to not only collaborate with employees in defining their career paths but also to support them in building those pathways to achieve their transitions. This commitment to employee growth translates into stronger organizational performance and a more attractive workplace environment.
- Shadow program: This involves an employee learning directly from their senior by acting as their shadow. It enables the employee to gradually take on more responsibility and authority, ensuring a smoother transition if the senior were to leave or be absent. It prepares them for future roles and strengthens their ability to manage and lead.
- Learning investments: Provide continuous learning opportunities tailored to the future roles employees will take on.
- Cross-functional experiences: Rotate employees across departments to build versatility and a solid understanding of the business.
- Leadership development programs: Create structured leadership pathways to prepare employees for higher-level or specialized roles when they are ready.
Why organizations must prioritize internal mobility
Organizations must no longer ignore the rising demand for internal mobility. Employees, especially the newer generations, are looking for career paths that offer growth opportunities, work-life balance, and the chance to develop new skills.
This also allows organizations to build a more agile, flexible workforce. Employees who can shift between roles strategically, based on business needs, bring diverse perspectives, promote innovation, and help the organization adapt to changing market conditions. Additionally, internal mobility leads to higher employee engagement and long-term retention.
