Source | FastCompany : By Chad Rabello
Recruiting outside talent is like hunting for your car keys while you’re holding them in your hand. You feel silly when you realize you’ve had them all along. And if you’re a business leader, you might feel the same way if you tallied up how much time, money, and potential you’ve lost in the search for external recruits.
The average mid-market business fills more than twice as many positions externally as internally, according to SHRM’s Human Capital Benchmarking Database. These companies miss out on the not-so-obvious benefits of recruiting internally.
But in order to hire less from without and make more successful promotions from within, you have to rethink how you develop talent. Here are two things I’ve tried at my company that have made a big difference.
Normally, if you want to hire a sales director with 10 years of experience, you compete with other companies for the same candidates. But even a seemingly perfect hire is likely to perform worse than an internal hire who didn’t match your criteria. A study by Wharton School Professor Matthew Bidwell found that external hires at an investment bank were paid 18% more than employees promoted to equivalent roles. Worse still, they had a 61% higher rate of “involuntary exit” (getting fired) and a 21% higher rate of “voluntary exit.”
Despite having more experience and education, the external hires fared significantly worse in performance reviews during their first two years. Bidwell argues that “hires and workers who are simultaneously promoted and transferred must learn new specific skills before they can perform as well as the other internal movers, who already have those skills.” In other words, training takes a longer than we think. Meanwhile, external hires can’t pull their own weight as effectively or as soon. And the costs add up.
Sure, your business may bring employees through the door, but it doesn’t necessarily retain them. And you can’t promote internally if you’re hemorrhaging talent. One of the best ways to keep employees is simply to help them pursue their own career goals.