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Internal hiring best practices you must know

Understand the benefits of internal hiring.
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Internal hiring occurs when you recruit and hire someone within your current workforce to fill an open position. Often, internal hires are promotions, but internal hiring best practices demonstrate that openings can occur in other ways, too. For example, employees may want to move laterally to a different department to hone different skill sets. Or, employees may transfer to a different office location or change jobs because of restructuring. Or part-time employees may find full-time positions.

Since COVID-19, companies have relied on internal candidates to fill more jobs than pre-pandemic. Almost 20 percent of all hires were internal candidates in 2020, a LinkedIn study says.

Why hire internally?

Hiring internally has several benefits. For one thing, recruiting internally is considerably less expensive than recruiting externally. You also are more likely to know what you're getting when you hire internally. The best job interview in the world doesn't necessarily help you get to know an applicant, but, an internal employee will have a track record of performance and be a cultural fit. The possibility of a promotion also motivates employees to do their best in their current jobs.

Another advantage is employee retention. Employees tend to stay almost twice as long at companies that have higher internal mobility than those companies with low internal mobility, according to the LinkedIn study. Finally, internal employees tend to be a better value for the money. A Wharton survey found that they perform better while costing less than external hires, on average.

A successful talent acquisition strategy should start with internal recruitment. The only times external hiring tends to work better than internal hiring are when you specifically need a fresh perspective or want to lift team performance to a new level.

internal hiring

When searching internally, hiring managers can use an employee track record in lieu of  background research for each candidate.

Five Internal Hiring Best Practices

For internal hiring to work well, companies must have a sound system in place. Here are five internal hiring best practices.

1. Awareness

Employees can't apply for internal roles if they don't know about them. Posting the job on internal networks can make employees aware of the opportunity. When posting, companies with the best internal recruitment practices also include specific instructions about how to apply for the job, tips on resume writing and interviewing, and stories from other employees who have successfully transitioned into new internal opportunities, according to Forbes.

Even in companies where the hiring manager knows most of the company's workers, posting the job tends to be more effective than simply recruiting people whose skills you feel match the opening. A Harvard Business Review study showed that employees hired through internal postings performed better on every quality dimension than those hired only through personal contact.

In previous eras, opportunities were posted by being tacked onto bulletin boards in employee lounges and cafeterias. With today's remote workforce, posting needs to be electronic and on a common platform. Employee directory software can make all employees in complex enterprises aware of potential opportunities and how to apply for them.

2. Skills Database

When companies hire externally, they recruit in addition to posting open positions. Sometimes they collect resumes of those with particular skills to keep on file for future openings.

A robust internal recruitment system will work the same way. You'll maintain a database of the employee's skills, interests, and desires so that you can invite them to apply if a particular job arises that might be a good fit.

3. Selection Process

Companies should develop an internal selection process similar to the process they use with external candidates. Although the process can be more informal than with external candidates, it should include interviews, relevant skills assessments, and a reference check with their current manager. Any candidate that appears minimally qualified should receive consideration. With internal candidates, you also have the opportunity to check employment files and past performance reviews to glean information.

The goal is to hire the best employee for the job, not to simply hire an employee you like or have worked well with in the past. If you're afraid you'll choose someone just because you already know them well, ask someone else to help you decide, Robert Half says.

Provide constructive feedback to all internal candidates. This feedback helps the employee continue developing and discerning the best internal opportunities for them in the future.

When developing a process, the company also should include guidelines about who can apply for internal job opportunities. For example, the policy might require that employees spend at least one or two years in their current job or that they have been with the company for a particular time.

4. Management Support

Sometimes the most talented internal candidates fail to apply for internal openings because they fear their current manager will see their move as a betrayal and make life miserable for them. A successful internal recruiting program is part of an overall culture that values employee development and collaboration.

In an ideal culture, managers put time and energy into recruiting and developing top internal talent. They are open to informational interviews and cross-departmental teams that allow employees to learn about other roles within the company and the skills required for them. They work with employees to recognize skills that aren't being fully utilized in their current roles and to find internal positions where they might be a good fit. And, they encourage temporary assignments, often in other departments, that might allow the employees to test fit. A workplace discovery platform can help employees gain information and discover temporary assignments, as well.

5. Employee Development System

To truly develop an internal mobility culture, companies should make employee development a core value at every step of the process. Managers should regularly schedule 1:1 development meetings with employees to coach them in developing new skills. They also should work with employees at performance appraisal time to develop developmental goals for the upcoming year. Then the manager and employee should commit to these goals.

Managers also should create a development framework for their teams that clearly delineates what skills an employee must develop to move into different positions. Continuous training also should be a part of the company culture.

Pitfalls to Avoid

A successful employee recruitment program also must avoid certain pitfalls.

Jealousy and Resentment

When one employee gets a promotion, their colleagues may resent it. If this happens, all the goodwill and motivation you'd hope to gain by recruiting internally just evaporates. While you can never guarantee that someone won't resent a selection, you can take steps to significantly lessen the odds it will occur.

The first is to ensure transparency throughout the process. Having more than one person involved in the decision-making can lessen the perception of favoritism.

Another critical step is to let candidates know that the ultimate goal is to select the best candidate for this particular job and not to reward them for past performance. Of course, if your company has a sound system of developing employees and compensating them fairly, employees will be more willing to accept the goal.

A third way to avoid this pitfall is to ensure each internal candidate has a positive experience with the process. Treat them courteously, be direct, and let them know right away if they don't get the job.

Overtaxing The Former Team

When you hire an internal candidate for one job, you'll generally create a vacancy for their old position. The vacant slot will mean that person's team members will need to do extra work or function without that role and that person's skillset for a while. To minimize this, maintain a development culture so that several people are qualified to step into each role.

Moving Problem Employees

In previous eras when workers typically remained with a company for their entire career, department managers would try to solve performance problems by moving the employee to another job rather than dealing with performance issues. Avoid this by developing a sound internal application process and specific guidelines. Ensure performance appraisals are accurate and specific. Also, establish systems that reward managers for giving good references for employees who perform well in new roles and not rewarding those who provide good references for poor performers.

Key Takeaways

To sum up, internally recruiting for most jobs benefits a company. However, for internal recruiting to be most effective, companies should adopt these internal hiring best practices.

  • Ensure employees are aware of opportunities for which they might be a good fit.
  • Keep a database of employee skills and interests from which to recruit.
  • Develop guidelines and a fair, transparent selection process.
  • Develop a culture of management support for internal mobility
  • Make employee development a core value

Effective internal recruitment programs also minimize negative impacts. These pitfalls are jealousy and resentment of coworkers, overtaxing the employee's old team, and managers moving problem employees to another department rather than dealing with performance issues themselves.

Structural can help organizations with their internal recruitment. The platform can store profiles of every person in the company, facilitate communications of permanent and temporary job openings, and help employees understand other roles within the company. Request a demo to learn how we can help you boost your internal recruitment success.

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