Since the global pandemic, the war on talent has put the spotlight firmly on internal recruitment as HR’s panacea.
In fact, the LinkedIn Global Talent Trends Report 2020 found that 73 per cent of respondents have made it a priority channel for their recruitment activities.
So, what is internal recruitment? What does it look like in practice? What are the advantages of internal recruitment? And what are some of the potential disadvantages you should be aware of?
The advantages of internal recruitment
According to The Undercover Recruiter, for a new staff member being paid an average wage of £27,600, the actual cost is closer to £50,000 in the first year of employment. And with employee turnover for an average size company costing in the region of $49 million annually, there is a strong case for internal recruitment.
Retention! Retention! Retention!
Retention is the employer’s holy grail – particularly under the current climate with 41 per cent of employees in the LinkedIn study saying that they would stay with their current employer if they offered a good internal recruitment scheme.
Onboarding is easier and faster
International recruiter Randstad suggests that an effective onboarding program takes on average 90 days before new starters understand their role and the wider organisational culture. Naturally if an employee already knows the processes and systems, the need for onboarding and induction training is reduced.
It boosts employee morale and engagement
When staff feel appreciated, they respond with loyalty and engagement. Recruiting internally shows that they are valued and have a future in the organisation.
And the disadvantages of internal recruitment?
Diversity can be compromised
Recruiting from outside provides opportunities for all types of candidates – in many cases ensuring that Diversity & Inclusion is put at the heart of the process. This can be compromised when the selection quota is reduced.
Managers won’t let the talent go
Reluctance to let top employees move upwards when time and money has been spent on training them is one of the barriers to internal recruitment. A report by Glint revealed that only one in five staff feel they are able to progress within their current company and are not fully supported by their manager to achieve their career goals.
It can limit the candidate pool and leave talent gaps
There is always a risk that you create vacancies when you need new hires, but if there are only a handful of potential recruits to choose from you could be missing out on top talent.
Impact the company culture and cause resentment
External candidates can stimulate your organisational culture and bring fresh ideas. Hiring internally can stifle this and even cause bitterness if employees feel others have been unfairly promoted.
So, what does effective internal recruitment look like?
Companies that are winning in the internal recruitment stakes focus on internal branding – just ask Hilton, Cisco UK and Salesforce which all ranked in the top 3 of the UK best places to work 2021 survey. Internal brand identity is particularly key for Gen Z with 64 per cent of millennials saying that they wouldn’t consider working for a company without a strong CSR policy. HR can help drive this internal brand story by promoting it at every opportunity.
Organisations with poor onboarding processes are twice as likely to experience employee turnover, so creating a positive all-round employee experience will encourage internal applications, particularly if there is easy access to potential new positions via your HRMS software.
Research shows that retention rates rise 30-50 per cent for companies that build a strong learning culture, yet the LinkedIn study highlighted that only 23 per cent of HR professionals say that they regularly partner up with L&D to identify gaps in skills and hard to fill roles. Teeing up discussions between these departments is a key driver for future success.
Top talent expects to be rewarded for staying rather than seeing all the perks go to the new staff members, so review pay scales and benefit packages regularly. Similarly, flexible work options, reward schemes and career development programmes are all part of the equation. A Deloitte Human Capital Trends Report found that organisations with a personalised reward scheme saw much greater retention rates and more successful internal appointments.
From onboarding and compliance, to training, succession planning and rewards, HR technology can help build a robust internal recruitment strategy. For example, HR teams can access invaluable insights into the onboarding progress of candidates or perform a skills gap analysis that considers current capabilities and visible gaps. This can give L&D an overview to help tailor training and upskill potential internal candidates.
Internal recruitment might not be a new channel for HR but rather than a nice-to-have it has become a must-have. After all, who knows, the perfect candidate might just be sitting a few desks away.
In XCD, you can manage all of your internal recruitment needs easily and effectively.