Recruiters know better now than to make the mistake of looking for candidates externally and gaining misguided assistance through recruitment agencies when more often than not, the right candidate for a new job opening is actually in front of you.
iHire’s 2023 Hiring & Job Search Outlook Report is a testament to this; it shows that 49.5% of U.S. employers encourage internal hiring strategies and actively plan to hire or promote employees from within their organizations to fill vacancies.
Why is internal hiring suddenly a smart strategy, though?
New research shows that 47% of employees in the U.S. and 50% of employees globally said they keep an eye out for new job opportunities. Whereas, 38% of Gen Z and 37% of millennials are more likely to say they want to quit.
And, I wish I could say it was all talk, but one in two companies now has an employee turnover rate of 15% or more, while one in five has a rate of 30% or more.
Now, all this begs the question of why so many employees not only want new opportunities but are ready to jump ship at the first chance.
A LinkedIn report shows that three out of the top five reasons your employees are looking for new jobs are related to career growth within the company, opportunities to develop and learn new skills, and chances to do challenging and impactful work.
If your employees don’t see these opportunities at your company, they’re looking somewhere else.
One would think that the #1 operational priority for organizations would be revenue, but it is in fact, retaining their talent, according to the Organizational Wellbeing Report 2023, Gallagher.
And, this may be because the current cost of employee turnover is approximately 1-2 times the employee’s salary.
Given today’s talent shortages and the challenges in employee retention, internal hiring doesn’t seem like a bad idea at all.
With a solid internal hiring approach, you can choose from qualified candidates within your company who will perform well in the new role, instead of taking a risk and struggling financially and administratively to attract and onboard someone else.
Hiring internally does not only increase employee retention but has a lot of other benefits too.
In light of a fluctuating economy and uncertain labor demands, internal hiring is a smart move financially.
It is three to five times less expensive than traditional hiring methods.
When you hire or promote from within, you incur little to no recruitment expenses, such costs associated with advertising job openings, working with recruitment agencies to find the right candidate, equipment costs, and background checks.
You also simultaneously enhance your workforce without increasing headcount and adding another employee to your payroll.
It takes approximately 36 days to fill a position and sometimes even longer, depending on the industry and complexity of the role. Internal hires reduce your time-to-hire by 20 days, allowing hiring managers to focus on more critical projects.
Searching internally for qualified talent also helps hiring managers avoid the lengthy process of sourcing, screening, and interviewing candidates.
Let’s also not forget the time it takes to negotiate salaries and onboard new candidates who have yet to prove they fit well with your company’s culture and workplace.
Your employees are already familiar with your company’s processes and culture, making it especially useful when you have open roles that need to be filled immediately. The familiarity also eliminates the need for a lengthy, costly onboarding process and ensures a better cultural fit.
Similarly, you have a rapport with that employee and are already aware of their capabilities, potential, and work ethic, reducing the risk of a bad hire. These employees have already decided your company is worth sticking around for, and that's a big deal when 17% of new hires leave after the first month.
Along with the LinkedIn report mentioned earlier, iHire’s 2022 Talent Retention Report also found that 28.3% of workers quit their jobs because they saw few opportunities for growth or advancement.
Your employees want to know they have upward mobility and room to learn, challenge themselves, and develop new skills.
When your company offers promotions and learning opportunities, employees are more motivated to learn and grow. You’ll discover new talents you didn't know your employees had and nurture a culture of learning that helps you attract new candidates and retain the employees you already have.
Similarly, when employees apply for an internal position, they prove they’re willing to invest more career time into your organization and are less likely to leave. Choosing these employees for promotions shows them that you value them and are actively looking for ways to help them advance their careers.
Internal hiring may seem complicated, but it all comes down to knowing your in-house talent and understanding your employees' long-term ambitions.
Here are a few popular methods you can explore depending on the nature of the new role:
Exploring a variety of internal hiring strategies gives your team options to choose from to find the perfect candidate for a new role.
An internal hiring strategy isn’t just a nice-to-have for your company. It’s an invaluable talent acquisition approach that reaps countless benefits for both your workforce and business at large.
With a strong internal hiring strategy -
The question for your organization isn’t “should we focus on hiring internally or externally?”
Rather, it’s “how can we best use the internal hiring strategy to retain our top talent, ensure cost-effective hiring, and realize our growth goals?”