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72% of companies face a shortage of qualified workers, making talent discovery and retention more critical than ever. When budgets are tight – be it due to seasonable changes in revenue, trade policy, or budget cuts – hiring talent becomes a real challenge.
Fortunately, finding and promoting talent from within an organization is often the better and more affordable choice. An automated, AI-driven talent intelligence solution such as Censia can help you quickly find the best internal talent and compare them to outside candidates.
The result: Human Resources can instantly identify the best candidates for a position, and can quickly evaluate a combination of internal and external candidates for multiple roles and optimize the use of their hiring budgets.
Finding and promoting talent internally has many benefits, ranging from shortened training and onboarding periods to higher retention and fewer costs associated with the actual hire, such as human resource hours and hiring bonuses.
Promoting from within also drastically cuts the common risks associated with new employees. A study by Matthew Bidwell from the Wharton School found that while external hires tend to have more education and experience than internal hires, they also tend to cost 18% more, receive worse job reviews, and are 61% more likely to be fired.
There may be some structural or political hurdles in place to prevent companies from upskilling, reskilling, and promoting internal talent. In some cases, a simple mechanical fix might be sufficient, such as better internal communications about educational programs and job openings. Even more effective is creating a work environment where education and internal mobility are part of onboarding and training so that people prepare for and anticipate a promotion.
Such efforts may be met with some resistance by managers who are loathe to lose their star performers, but once a holistic system of internal promotion is in place and internal promotions free up resources to hire new talent internally, these situations tend to resolve on their own. The resulting retention, especially among millennials (38% of who plan to leave their organization in two years due to a lack of mobility, according to a 2017 Deloitte study), further drives momentum and loyalty.
Finding internal talent can be difficult, as they are part of the latent talent pool – the 95% of workers that are not actively looking for a job – and may be working for managers that have little interest in offering employees to other departments.
One marker of companies excelling in internal promotions is that they closely link talent to strategy. They are continually looking for ways to align and improve their existing talent arsenal to further a strategic goal. This involves coaching and developing employees, creating cross-training and stretch assignment opportunities and a strong focus on workplace culture. While these actions themselves don’t necessarily improve retention, on-the-job development opportunities can increase engagement by up to 30 percent, according to the Fuel50 Global Benchmarking Research, 2017.
Integrated AI-driven talent intelligence solutions such as Censia help companies find their ideal candidate based on a holistic composite of skills, experience, work history, education, career insights, and more. Companies then use this profile to quickly find, evaluate, and compare both internal and external candidates and evaluate the costs and benefits associated with hiring them.
The result is that a company can find the ideal candidate inside their company while searching for outside talent, and if successful, save time and resources on transitioning them to their new role.
Reducing turnover and pursuing internal mobility usually tend to pay for themselves. While replacing an employee with a lower-salaried employee might free additional funds, they can also lead to significant losses, such as the loss of productivity, institutional knowledge, and client relationships, not to mention the cost of recruiting and training a replacement. A common figure in HR circles is that the price of a lost employee is roughly equal to a year’s worth of their income.
The more significant impact may be on the company’s employment brand, which more than 70% of employees look at before considering working at the company. In a phenomenon known as the negative talent cycle, the company fails to invest in internal mobility, and the best talent, seeing that there is no path for progression, defects to other companies.
Ultimately, investing in internal mobility pays off in many ways. If you’d like to learn more about how Censia can help you find the best internal talent for a role and compare them to new applicants in just seconds, you can request a demo at censia.com.