How Internal Mobility is The Key to Retention and Higher Performance

Feb 7 / By Jason Richmond, CEO & Chief Culture Officer at Ideal Outcomes, Inc.
I chuckle when leaders tell me they do not have time to develop their employees and would rather hire externally. There is some truth that buying talent (that is hiring from the outside) is more efficient, especially when you have an immediate need for strong technical skills and lack those among your current workforce. But when you bring people from the outside, you have to invest time indoctrinating them into your culture, helping them understand the political atmosphere, and making sure they are exposed to “how things work”. Incumbents already know these things and we know they are a culture fit. So, do we save a lot of time hiring externally? Probably not. 

Internal mobility refers to an employee’s movement throughout the organization. It isn’t just promotions, but also covers lateral moves, transfers, job rotations, and even demotions. Overall, having a strong internal mobility philosophy, strategy, and program are great ways to leverage the source of talent your organization already has. 

Unfortunately, recruiters are often completely unaware that the best candidate for a position already works inside the organization. I have seen cultures that actually discouraged internal mobility—preferring to call it poaching, which definitely has a negative connotation. Such a mindset creates the concept of talent hoarding as an acceptable and even understandable managerial behavior.

Internal mobility offers many advantages. First, companies can avoid replacement costs and recruitment costs. You also, as mentioned earlier, reduce the risk of losing new hires due to poor culture fit. Most important is the reputation you can create as a talent developer. According to 2018 research by Deloitte, “Many of today’s youngest workers are eager to build their careers rapidly and want to work for organizations that challenge and promote them quickly. Internal mobility—how that happens—is not just a way to retain talent, but also helps to create a powerful magnet for people outside your organization who seek professional growth. The result? The talent market can see your organization as one that champions ambition and performance in everything it does.”   

The result is perhaps ironic: by developing and facilitating the careers of your internal employees, you attract greater external talent, creating a robust pipeline for critical and hard to fill positions. So why do companies have such a hard time sourcing talent internally? The main reason is the lack of a coordinated, collaborative effort across human resources and across different business units. A solid internal mobility culture requires all leaders to encourage and support employees to develop the skills that prepare them for their next role and creating a matching career plan. All too often, such efforts are largely absent: In a 2019 SHRM article, Roy Mauer shared research from Gallup: 93 percent of people who took a new job came from outside the organization. "That's a huge missed opportunity," Eubanks said. "Employees perceived that there weren't any jobs available internally. So, they left the business." 

You can start fostering an internal mobility program by educating leaders that losing a good employee is not a neutral financial event, especially given the research about the cost of turnover. Organizations that promoted internally are 32 percent more likely to be satisfied with the quality of their new hires. That’s because it typically takes two years for the performance reviews of an external hire to reach the same level as those of an internal hire.