The Talent Pool Is Shrinking — Is Internal Hiring the Solution?

Last month, HR strategist and expert Josh Bersin published a new article that paints a stark picture of the current hiring landscape, where a dwindling talent pool and an aging workforce pose growing challenges for today’s businesses. 

In today’s installment of “Views on the News,” we’ll dive into Bersin’s insightful article and explore the benefits and challenges of his proposed solution.

Josh Bersin’s Most Recent Take on Internal Hiring 

Josh Bersin’s recent article, That great new hire you’re looking for is already working for you, asserts that it’s high time for businesses to ramp up internal hiring given our current workforce numbers. The article notes the impending US labor shortage, emphasizing the alarming statistics surrounding the diminishing pool of available workers and the aging workforce. With labor economist David Autor’s grim projection that the U.S. and other affluent nations may soon face a shortage of workers, Bersin’s message serves as a clarion call for business leaders to take proactive steps to address this looming crisis before it’s too late.

Bersin advocates for a paradigm shift towards internal mobility and flexible work arrangements as viable strategies to combat these oncoming talent shortages. Instead of defaulting to external hiring, Bersin suggests that HR leaders get creative about their approach to meeting talent needs. 

Drawing from real-world examples and data, he illustrates how organizations have leveraged internal hiring since the peak of the pandemic to manage their workforces more effectively. 

There Are No Stupid Questions: What is Internal Hiring? 

Before we dive into the benefits and challenges of internal hiring, it’s important to level-set. Let’s take a quick moment to outline a clear definition of what Bersin is referring to when he uses the term “internal hiring.”

Internal hiring, also known as internal mobility or internal recruitment, refers to the practice of filling job vacancies or promoting employees from within an organization rather than sourcing candidates externally. It can take various forms, including promotions, lateral moves, job rotations, and transfers.

In internal hiring, businesses consider existing employees for new roles, either within or outside of their current department. This process allows businesses to leverage the skills, knowledge, and experience of their current workforce to meet their talent needs, while also providing continuous career development opportunities for top-performing employees. 

Major Pay Off: The Compounding Effects of Internal Hiring 

Now, Bersin makes it clear that internal hiring is a critical practice for teams to stay afloat. At Skillcentrix, we tend to agree with his expertise, but let’s break down the key benefits of internal hiring for any skeptics out there: 

• Higher Retention Rates. As highlighted in a 2022 SHRM study, the lack of opportunities for growth and advancement ranks as one of the primary reasons for employee turnover. Internal mobility programs play a pivotal role in improving employee retention by offering a clear pathway for career development. By implementing internal mobility programs, companies can proactively address retention concerns by providing employees with avenues to explore new roles, acquire new skills, and advance their careers without having to seek opportunities elsewhere. Rather than feeling stagnant or unfulfilled, employees are encouraged to explore new growth opportunities, leading to higher levels of job satisfaction and loyalty. This ultimately creates an environment where employees are more likely to stay for the long term.
• More Skilled Employees. Internal hiring practices are like giving your employees a passport to explore the diverse landscapes of your organization. By promoting from within and encouraging internal mobility, you’re not just offering them a sturdy career ladder but a journey through different climates within your company. With each new role or promotion, employees expand their horizons, gaining valuable insights into various departments and projects, much like exploring different countries on a map. This experience cultivates a workforce that is not only well-versed in your organization’s culture and values but also adaptable, resourceful, and resilient—like seasoned travelers equipped to navigate any terrain. Just as a well-traveled individual brings a wealth of experiences and perspectives to the table, internal hires emerge as more well-rounded professionals, ready to contribute meaningfully to the ever-changing landscape of your business.
• Faster and Cheaper. Real talk: shrinking US talent pool aside, internal hires are like gold mines within your organization, ready to be tapped into with minimal effort and expense. Think about it: these candidates are already familiar with your company culture, processes, and expectations, saving you the time and resources typically spent on slow and costly external recruitment. With internal hires, there’s no need to splash out on expensive job postings, recruiter fees, or exhaustive interview rounds. Plus, since these candidates are already part of the team, they can hit the ground running, requiring less time for onboarding and training. 

The Good, The Bad, and The Ugly: Biggest Internal Hiring Challenges 

We’ve covered the benefits of internal hiring, but now the question remains: why aren’t more teams jumping on board? Well, it boils down to two main factors. Firstly, there’s a persistent sense of apathy. Many teams have been comfortable with external hiring for so long that the idea of adopting or expanding internal mobility programs seems like a stretch. Change is hard, especially when the old ways have been somewhat successful. But with the shifting demographics in the US workforce, clinging to tradition won’t cut it in the long run. Those who take proactive steps now to establish robust internal hiring systems will be better positioned for success down the line.

Then there’s the challenge of what Bersin aptly labels as “talent-hoarding managers.” These are the folks who hold onto top talent on their teams, fearing the hassle of finding and training replacements. But this short-sighted approach stunts both the employees’ growth and the team’s potential. While managers may think they’re keeping their stars happy, they’re actually driving them to seek opportunities elsewhere where they can continue to learn and thrive. 

So, how do teams tackle these hurdles? Bersin’s solution is to incentivize internal mobility and cultivate a culture that champions promoting from within. It’s crucial to help managers understand that nurturing talented individuals benefits not only their team but the entire organization. We recommend offering bonuses, public recognition, or even career advancement opportunities for managers who embrace internal mobility. Flexible team structures, like cross-functional projects or job rotations, can also retain key talent while fostering their career growth—a win-win for everyone involved.

5 Ways to Establish a Culture That Supports Internal Hiring Efforts 

So, we’ve explained why teams will have to get creative with filling new roles, we’ve covered the benefits and challenges of internal hiring. Finally, it’s time to get into the nitty gritty of how to get the internal mobility ball rolling within your very own organization. While there are many places you can start, our Skillcentrix experts recommend the following: 

1. Start building a skills strategy. Conduct skills assessments for employees to identify their current strengths and areas for development. Then, create a centralized database or system to catalog all of your employees’ skills and qualifications. This will make it quick and easy to identify strong internal candidates for new roles. 
2. Reward managers. In order to get buy-in from your organization, it’s important to incentivize managers to submit their qualified employees for open roles. You can really get creative here, but a few ideas include bonuses, public recognition, or career advancement opportunities to managers who actively support internal mobility and talent development within their teams.
3. Introduce job shadowing or rotational programs. Start by offering job shadowing opportunities where employees can see what other roles exist in the company and learn from colleagues in different departments. You can also take this a step further by establishing rotational programs where employees can temporarily work in different positions or teams to gain exposure to diverse experiences and skill sets.
4. Create an internal jobs board. Try developing an internal jobs board or platform where employees can look through and apply for open positions within your organization.Make sure to update the board regularly and provide clear information on job requirements and qualifications to get the best applications.
5. Provide interdepartmental mentor programs. Another way to promote a culture of continuous learning and internal development is to establish mentorship programs that pair employees from different departments or levels of experience. Encourage mentorship pairing to focus on skill development, career growth, and knowledge sharing across departments.

By implementing these strategies, teams can cultivate a strong internal hiring framework that empowers employees to grow and advance within your organization while fostering a culture that values continuous learning and development.

Conclusion 

As we’ve highlighted above, the benefits of internal hiring are manifold: from higher retention rates to cultivating a more skilled and adaptable workforce—all while saving time and resources. However, navigating the implementation of internal hiring programs is not without its challenges. Apathy towards change and talent-hoarding managers pose significant hurdles that teams must address in order to achieve success. 

If you’re looking to start building your own internal hiring framework, there are actionable steps you can take to set yourself up for success. From establishing a formal skills strategy to incentivizing managers and introducing job shadowing programs, the path to fostering a culture of continuous learning and internal development is clear and attainable. By embracing these strategies and embracing internal mobility, your team will not only address the pressing challenges of a shrinking talent pool but also create an environment where employees are empowered to grow and thrive.