Internal Mobility: The Benefits of Promoting from Within

Internal candidates often have an edge over external candidates when applying for the same position. Why is this? It’s because they already have a relationship with the company. Sustaining this relationship with employees is especially valuable during uncertain times, such as hiring from within when faced with budget cuts

Internal mobility usually happens when an employee is promoted to a new role. It can also happen through lateral transfers across business units. Ultimately, the data shows that this kind of change is good for companies and employees alike. 

What are the benefits of internal mobility to a company? 

Hiring from within can cause one benefit to lead to another. For example, an improvement in retention may lead to improved engagement when employees see that they’re valuable to the team. Here are some of the main benefits of internal hiring: 

Increased Retention

People who are promoted or move around the company are more likely to stay. According to LinkedIn data, employees stay about 41% longer at companies with high internal hiring compared to those with low internal hiring. In the same survey, respondents revealed that the biggest barrier to internal hiring was “talent hoarding,” which happens when managers don’t want to let go of their best talent. 

Professor Matthew Bidwell of the Wharton School of Business studied internal mobility compared to external hiring at a U.S. investment banking firm. He found that external hires left the company at a higher rate than internal hires who were promoted. Those who were hired from outside were 61% more likely to be fired and 21% more likely to leave the company voluntarily. Bidwell suggests that the external hires were less of a good fit because they initially lacked skills specific to the company itself than someone internal.

Financial Savings

Internal hiring has financial benefits as well, especially when it comes to reducing employee turnover. A Deloitte review argues that there are indirect and direct costs associated with losing an employee. It costs the company to lose productivity and client relationships, in addition to the costs of recruiting and training someone else. They calculate that losing an employee who makes about $130,000 a year could mean a loss of about $110,000. 

Engagement

When employees feel empowered and that they have influence, they will stay longer at an organization. Greater self-efficacy can lead to greater engagement in work, and overall have an impact on the culture of the company. The numbers reveal that this satisfaction is mutual: Places that promote internally are 32% more likely to be happy with their new hires, according to Deloitte

Performance

Matthew Bidwell’s research described a link between internal hiring and greater performance when compared to external hires. In fact, Bidwell found that promoted workers did better than external hires for two years, after which their performance became similar. 

There are advantages that almost every company with a successful internal hiring initiative will experience, such as greater retention or increased employee engagement. Yet there are also unique benefits that could depend on what your organization needs at the moment. Thus, an internal mobility program may look different for each company. To make it work, you should tailor the program to solve the challenges you face. 

Our solution

Censia is an AI-powered talent solution that can help you with internal mobility matching at your company. The software creates an ideal candidate model and then instantly analyzes who is ready to move into the role. You will receive a ranked shortlist of internal talent who are ready for promotions and upskilling. Censia gives you 6x greater effectiveness with internal promotions. As you develop and implement an internal mobility program at your organization, Censia can help you get there quickly and efficiently. 

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