Internal Recruitment: Making the Case for Hiring from Within
#evolve Magazine
July 05, 2023

Whether you work in healthcare, professional services or just about any other sector imaginable, you’ve probably come to realize that you are in the “people business” — and that business is tough.

Persistent wage inflation combined with a generational labor shortage and stingy labor participation rates have left employers struggling to attract and retain talent. If your organization needs more talent to achieve its growth goals, internal recruitment should be the go-to first step for filling new roles because it saves time and money — even when upskilling is required.

Saving Time

The first benefit of internal sourcing is the ability to build a candidate pool in minutes, rather than days. Even a modest human capital management system updated with insights from periodic talent reviews can yield candidate lists infinitely more powerful than a LinkedIn search. Data on education, skills, performance, potential, work history and 360 degree feedback can help you identify strong candidates who fit your culture because they are already part of it.

Vetting can be done faster since fewer interviews are required. Also, onboarding takes a fraction of the time, as existing employees already have the technology, tools and resources required for the new role. Ramp-up is fast or finished since they come pre-equipped with knowledge of the company’s history, culture, capabilities and their speed-to-trust — a key productivity measure — is often higher as they likely have positive relationships with existing leaders and employees.

Saving Money 

Offering existing employees the opportunity to learn and grow boosts engagement and reduces turnover, which is tanatmount to a hidden tax on corporate profits known to cost organizations 50% to 200% of the annual salary of the people lost.

According to the recruiting and team-building consulting firm Topgrading, opportunity costs associated with mis-hiring for high-exposure roles inflate the cost of turnover four to 27 times the employees’ salary. A little back-of-the-envelope math reveals these numbers add up quickly. If an organization loses 20% of its employees at an annual average salary of $75,000 and mis-hires even just a few key roles, it will quietly bleed $1 million or more per year for every 100 people it employs. Anything that helps reduce that turnover number should be considered a boon to owners, stakeholders and operating budgets.

Doubt the math? Check out the mis-hire calculator offered by Topgrading. Running this calculator dozens of times on customer-facing roles for our organization has consistently revealed the cost of mis-hire as eight to 12 times salary.

Talent Mobility Benefits the Organization and Employees

If a position is filled with an internal candidate, does that simply create another opening and another hiring problem to solve? Not exactly.

Talent mobility actually provides a form of compensation arbitrage, as backfilled positions are often at a lower level than the one originally opened, especially when we intentionally use new roles as promotion opportunities for existing team members.

Lower-level roles tend to appeal to a broader candidate pool, suppressing some of today’s inflationary salary pressures. Put simply, rather than hiring someone into a $100,000 role, perhaps you can grow someone from a $75,000 role, offering them a raise of $10,000 to $20,000 and backfilling them at $75,000. You just created a great opportunity for your team member (and saved $5,000 to $15,000 in the process).

Plus, internal promotions can be great opportunities for employees elevated to these new positions. Rather than starting more challenging roles in organizations that have unfamilar standards and cultural mores, your internally-promoted employees will enjoy familiar surroundings that can help them focus on the job, acclimate and more quickly become productive.

Furthermore, talent mobility supercharges recruitment marketing efforts and strengthens your employee value proposition. Internal transfers become success stories to be celebrated both internally and externally, signaling to the labor market that your organization values something that many employees treasure — opportunities to advance their careers. Organizations with a track record for helping their people grow tend to attract more candidates when they make positions available to the outside labor market, which cuts the time to fill new roles and boosts the quality of hires.

Build Your Brand to Effectively Recruit Internally

If you are a leader wondering where to start your internal recruiting efforts, focus on making your slice of the business a desirable destination.

No one wants to trade down for a worse boss or team so develop your personal brand. Clarify your values and share who you are and what you are about. Leverage social media both inside and outside your company to promote the great work you and your team are doing.

Invest a little time doing your best work and living your best life. No one wants to work for a martyr, as studies consistently show that burnt out managers are more likely to manage burnt out employees. Instead, encourage the growth of your people and develop your reputation as someone who supports well-being.

And celebrate your people. Make it easy for someone to see themselves making an impact and earning recognition by advertising the work your current people are doing.

The benefits of building your brand, growing your people and celebrating your successes make sense whether you hire from inside or outside your business. Similarly, the merits of internal recruitment should be ample and self-evident. It saves time and money, strengthens the overall skill-fabric and domain expertise of the organization, and ultimately helps recession-proof your business.

Editor’s Note: Additional Content

For more information and resources related to this article see the pages below, which offer quick access to all WorldatWork content on these topics:

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