In the midst of recruiting external hires via job boards, LinkedIn and employee referrals, the HR team often forgets about the high value proposition of hiring internally. With many bright employees already with the company, some may be ready for a job switch without the hiring team's knowledge. Hiring internally makes sense for the hiring team from all aspects, unless, of course, the employee doesn’t have the appropriate competencies for the new role. Nonetheless, encouraging employees to switch jobs internally allows the company to retain top talent instead of losing it to competitors.
Here are five reasons companies should look internally when looking to fill a new position:
- Save money. Marketing open positions on job boards, compensating new hires with relocation costs and training employees from the ground up can be costly. A single bad hire can cost more than $50,000, according to a survey by CareerBuilder. And the average cost of recruiting externally is 1.7 times more than internally ($15,008 vs. $8,676), according to the Saratoga Institute.
- Fill the position faster. Recruiting an external hire can take months, from interviews and competency tests to background checks and compensation negotiations. With internal hires, time spent vetting potential candidates is often reduced to a few weeks since the employee’s information and performance evaluations are already in the corporate system.
- Predict performance and culture fit. When hiring an employee externally, there are always the unknown factors of how he will perform and whether he will gel with the company culture. Such unpredictable factors aren’t a consideration when hiring internally since the employee already knows the company culture and his former manager can attest to his performance and reputation.
- Hire for success. Since internal hires don’t need to adjust to a new company culture and generally know what’s expected of them, they are more successful at a faster pace compared to external hires. According to Saratoga Institute, 40 to 60 percent of external hires aren’t successful in their new role compared to just 25 percent of internal hires. “Results show that internal mobility allows the firm to staff higher-level jobs with workers who have better performance but are paid less,” writes Bidwell.
- Internal mobility to boost morale and retention. When companies provide opportunities for growth and career advancement within the company, employees feel they have job security and see the upward path of their career.
The perquisite that enables an organization to carry out internal hiring is the accessibility to a comprehensive talent profile, which shows the competency, goal performance and peer reviews of the employee. Competency-performance based talent profile gives good evidence to support the talent’s overall fitness for the vacancy; hence is undeniably more reliable than a curriculum vitae sourced externally.