Retention

Internal mobility: how to leverage the strength from within

It's well known that internal hires are cheaper and more effective than external ones on average. But many companies are leaving a lot on the table by not having an internal mobility strategy. Here's everything you need to know about types of internal mobility and how to build an irresistible company culture.

Ryan Carruthers

July 28, 2022

In the 1970s, the foremost thought on the minds of workers was to join a company and climb up the internal corporate ladder. This mindset has since changed and Associate Professor of Management, Matthew Bidwell examined this trend in his research on job mobility.

He linked these changes in employment trends to a decrease in the sense of stability and job satisfaction. His research showed that a significant shift from internal to external mobility took place in the ‘80s and ‘90s when career expectations broke down. The assumption that an employee would be with a company forever was shattered. 

This does not mean internal mobility doesn’t have its advantages. However, job hopping is becoming the norm these days. But this is nothing new. 

What is new is that we are now experiencing a shift to the old days when companies want to retain their employees longer.

It’s well known that it’s better and more cost-effective to retain employees: internal hires are predicted to be more productive and perform better than external hires. 

So if we want to promote retention and move employees up, what do we need to do? We need an internal mobility strategy.

Internal mobility strategies are all the rage, but what are they?

Internal mobility strategies are a framework for moving employees either vertically or laterally within the organization. 

  • A vertical move could be an employee transitioning from vice president to president. 
  • A lateral move is an employee moving between roles of the same seniority level. 

When you are hiring for an opening in your company, you’re likely hiring based on a specific skill set or qualification. However, you may have an employee with a similar skill set or experience who can fill that role and is interested in moving to a new position. 

Instead of hiring externally, you can just have an employee fill the role.

Why is sourcing talent internally better than external? The benefits of internal mobility

Internal mobility is critical to an organization’s people development plans. It equips HR or management teams with the resources to identify their employee’s skill sets and recruit internal pools of talent to areas where they are needed. 

Below are several studies showing the benefits of internal mobility:

  • Strength from within: internal mobility and the retention of high performers: This study examined the importance of internal advancement to retain top performers. According to the study, human capital theory suggests that internal hires are immediately more productive than external ones. Also, contextual learning indicated that internal hires become more productive‌ with time. The theories of commitment predicts that internal progress increases retention of top performers.
  • Maximizing the potential of your workforce: According to the Clinch Internal mobility playbook, following the COVID-19 pandemic, organizations are restructuring their human capital development through several strategies. Either by freezing recruitment, maintaining their existing workforce, or by hiring to fill critical gaps. In ‌these, internal mobility takes center stage as it lowers recruitment costs, increases productivity, and lessens the time to achieve tangible results. Internal mobility also increases employee engagement and retention, ‌supporting transparency, diversity, equity and inclusion. 
  • Winning the war on the home front: Deloitte’s research revealed that historically, organizations have focused on external recruiting to fill new roles. However, with the growing shortage of skills and low employment, they have discovered that acquisition isn’t enough to tap into the capabilities they need. Organizations thus need to explore their current workforce to identify and recruit employees with the ‌skills, capabilities, motivation and knowledge of the organization, including its infrastructure and culture. Facilitating internal mobility will pay off in terms of employee engagement and business growth. 
  • Where internal mobility is most common since Covid-19: Apart from saving costs, companies that are effective at internal mobility keep employees almost twice as long. Forward thinking companies develop their employees' skills through reskilling. Nurturing internal hires encourages cross-functional collaboration and helps to keep institutional knowledge. Organizations need stability and agility to navigate whatever troubles they face as a business. Experienced internal hires often understand the mechanics of the business and have strong intra-company relationships, which is an advantage for the organization.

By investing in your existing workforce through internal mobility, your organization benefits. Your top performers will stick around and your employer brand earns the reputation of encouraging development opportunities. You will establish a culture that attracts people that are motivated and seeking growth opportunities. 

Do employees want internal or external mobility?

High-performing employees want to grow. And if the company they work for is giving them that growth, they’re less likely to quit. 

Proactive organizations with strong career pathways for employees will enjoy improved employee engagement and commitment. Here are some reasons employees prefer internal mobility over external mobility.

1. Employees are tired of job hopping

Job hopping and having to readjust to a new company is stressful. 

How do we know this? 

Just look at the questions employees are asking on community forums like Reddit and Quora:

Employees care about their growth. And if you can chart an internal mobility path for them to grow at your company, so they don’t have to go to places like Reddit and Quora to get answers, both you and your employees will benefit.

2. Employees are wary of their manager’s perception

So it’s clear that employees want internal mobility. The only thing holding them back in many cases is their relationship with their managers and the stigma that an internal move may bring. Several posts on community forums speak to the fear of how they think their managers will react. 

What can we do? Talk to managers and coach them on the benefits of internal mobility. A good manager won’t want to hoard talent (more on this later). Get managers to encourage employees to seek ways to grow within the company rather than plateau in their current role. A good manager should be supportive of seeing their team members grow into new roles, especially if it’s still within the company.

3. Companies need to make internal mobility the norm

Companies need to make internal mobility socially acceptable by making it a part of their work culture. You should encourage employees to pursue progress rather than feel stuck under a manager who doesn’t want them to move. Nor should they feel like they are putting a target on their back by applying for another role internally. 

Types of internal mobility

There are several ways to promote internal mobility:

  • Switching roles laterally: Also known as role-to-role mobility. It is a job change wherein an individual moves from one position to another. 
  • Location transfers: This is a change of location without changing responsibilities or compensation. It could be permanent or temporary. 
  • Upward mobility: This happens when an employee gets a promotion by advancing to a more senior position.
  • Building cross-functional teams: This is project-dependent mobility. It is the creation of cross-functional teams to achieve a particular goal or complete a one-off project. Usually, people with different expertise collaborate on such projects.

Each of these internal mobility types has its benefits for organizations looking to adopt them. Now let’s look at how to build an internal mobility plan.

Key steps to developing an internal talent mobility plan

Here are some key steps toward developing an internal mobility plan.

Make room for employees to take on different projects

Here’s what a McKinsey Podcast had to say on making room for employees to take on different projects.

“We find that some of the most effective ways to accelerate talent are learning through coaching and apprenticeship on the job. Smaller companies that may not be able to invest in a lot of more structured learning opportunities can still deliver a lot of hands-on, on-the-job training.”

Facilitate mentoring opportunities

Only 37% of professionals have a mentor. Make mentorship a fair part of your organization with a formal mentoring program. It is a good way for employees to gain valuable skills faster. 

Discourage talent hoarding among managers

Managers should be open to employees under their authority switching roles. It shouldn’t be a great deal, especially if the employee is more suited to the new role. They should also be willing to provide the needed support and guidance for employees to transition without prejudice.

Empower employees to design the career path they want

With career pathing, employees get to see the opportunities available within the organization and are encouraged to work smarter. Building an employee development plan also helps employees achieve their career plans and benefit the company positively.

Build a company culture employees wouldn’t dream of leaving

You need mentoring software to take your employee engagement to the next level. A mentorship program is a key to employee retention.   

Check out our Randstad case study, where the company reduced their turnover rate by 49% among employees in their program. With Together, matching mentors and mentees is easy. 

Keeping track of your mentoring has never been simpler. Join the companies that have launched their mentorship programs successfully on Together. 

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