Inside edition: the paradox of internal recruitment

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When making efficient and effective hires, the best source for recruiters has always been current employees. Here’s why employers must finally start focusing on making internal hiring happen.

No matter where in the world you happen to work, it’s pretty safe to say the past year will have been challenging if you’re in recruitment.

Since the beginning of the pandemic, talent organisations across verticals, industries and geographies have withstood fierce hiring headwinds in the face of the biggest contraction in the global economy since the Great Depression.

With businesses of all sizes forced to tighten belts and budgets over the past year, employers everywhere have been forced to make some tough decisions around recruitment and retention, with many organisations opting to implement furlough schemes, introduce redundancies or resort to some form of reduction in force.

Despite the introduction of such initiatives as the Coronavirus Job Retention Scheme or the Job Support Scheme in the United Kingdom, which have protected 11 million British jobs since the onset of the pandemic, an estimated 2.6 million UK workers claimed Jobseeker’s Allowance last month, evidence of the persistent and pervasive effects of Covid-19 on the labour market.

Even today, with unemployment in the UK down to a pandemic-era low of 4.8 per cent, the ONS still estimates that fully one in 20 British workers who are actively looking for a job are unable to find one. And that’s before the CJRS is set to expire at the end of September.

While the future remains clouded in uncertainty, there’s at least one thing employers can count on: the inherent effectiveness of internal recruitment, which remained the top source of hire for recruitment organisations last year, as it has every year for the past two decades or so. There is no doubt, even in the new normal, that the old rules of recruitment still hold: the single most impactful place companies ultimately find the talent they need to achieve hiring success is perhaps the most obvious – their current employees.

Yet, for some reason, despite its track record of efficacy and impact as the top-performing overall source of hire for companies of all sizes, internal recruiting remains one of the more overlooked, and underfunded, components of most companies’ talent acquisition strategies.

The good news is internal talent mobility is finally starting to attract the attention – and resources – that it so rightfully deserves in recruitment. At least, that was one of the key takeaways from The State of Internal Mobility 2021 Report, a new benchmark report from SmartRecruiters which takes a look at the current state – and future outlook – of internal recruitment and talent mobility.

Of the 310 completed responses received from enterprise TA professionals in 14 countries (we ended up filtering out the few who hired for organisations with less than 1,000 employees since these were largely outliers), we found a significant divide between what talent leaders say they’re doing to improve internal mobility and the actions that they’re taking to achieve those objectives.

For example, 61 per cent of respondents reported that their company currently has a “clearly defined, well documented process established for recruiting internal employees.”

This number sounds fairly encouraging, until you consider that these respondents recruit for some of the world’s biggest employers and best-known brands.

Since each works at an organisation with at least 1,000 employees, however, and 98 per cent of respondents reported their company had at least one enterprise TA system in place, such as an ATS or HCM, this number is actually surprisingly low.

It’s fascinating to note that two in five respondents had no formal internal recruiting programmes in place, nor any sort of standard policies or processes in place for internal talent, despite the complexity of the organisations they work for.

Even with relatively large budgets, global imprints and enterprise-grade talent technology systems, 40 per cent of these employers would apparently rather spend money on SaaS subscriptions and paid job advertising than promoting and retaining the top talent already working in their organisation.

This shows that even though every respondent agreed to some extent with the statement that “internal mobility is somewhat or very important to hiring success,” two in five worked for companies without formal internal recruiting programmes in place.

This shows a definite and dramatic gap between action and intent, particularly considering the relative spend each employer allocates towards talent technology or other expensive, but fully external, sources of hire such as paid job boards, recruitment marketing or social recruiting initiatives, or point solutions focused exclusively on passive candidate sourcing and pipeline building.

Despite this disparity in budget and resources, however, the business case for internal recruiting is not a particularly hard one to make.

Consider that while nearly 76 per cent of new hires for exempt roles end up staying for at least one year at an employer, that number drops to only 45 per cent for workers who have been in a role for three years or more, a significant, and steep, drop off in retention (and engagement) that generally occurs between the employee’s first and third anniversary.

This is a small data point, but one that should make it obvious exactly when recruiters and hiring leaders need to actively intervene – or at least minimise unwanted churn while increasing employee retention.

At the very least, on an employees’ first and second work anniversaries, statistics show that career development conversations and encouraging employees to pursue internal opportunities once they’ve reached these milestones more than doubles the likelihood that they’ll feel fulfilled instead of needing a backfill.

For those employees who are promoted, 75 per cent will remain with their company through their third work anniversary; 62 per cent of employees who made a lateral move last until their third work anniversary.

According to this data, simply giving an employer a different role or responsibilities, even if their title and pay remain the same, will improve the likelihood of retaining a top performer over a three-year period by around 20 per cent. This is as close to a no-brainer as exists in talent acquisition today.

That’s because at the end of the day, recruiting in general, but internal recruiting in particular, comes down to trust. And until we as recruiting leaders can effectively build relationships with the candidates we hire, and until we can establish credibility as a career resource rather than a professional inhibitor, we’ll continue to miss the mark when it comes to talent mobility.

But if you can effectively build the processes, procedures and people required to not only make internal recruiting a foundational part of your talent acquisition strategy but also a foundational component of your company culture, you’ll do more than just boost recruiting and retention outcomes. You’ll create the kind of workplace people actually want to work at. And when a job starts becoming more than a job, and when an employer stops becoming a paycheck and starts becoming a true career destination, external recruiting becomes a whole lot easier too.

Everyone is looking for talent. But the companies that find business success – and hiring success – will do so because they’re finally able to cash in on what’s long been their greatest asset, and their biggest competitive advantage.

Download the internal mobility report here

Originally published on Business Reporter