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Inside Job

By: | May 14, 2019 • 3 min read
David Shadovitz is editor of HRE. He is also co-chair of the HR Tech Conference and chair of the Health & Benefits Leadership Conference. He can be reached at [email protected]

If there ever was a time for employers to get creative in their hiring practices, you would think it would be now.

In March, the labor market continued to show impressive strength, with the creation of 196,000 nonfarm jobs and unemployment sitting at 3.8 percent. (In 2018, nonfarm payroll averaged 223,000 per month.)

With the job market as tight as it is, it’s no surprise that we’re seeing more and more key employees heading for the exits. A survey by Robert Half last year found 64 percent of professionals think changing roles every few years can be beneficial, with the biggest benefit being a higher salary. This marks a 22 percent increase from a similar survey conducted four years ago.

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To be sure, there is no shortage of reasons employees may decide to look elsewhere for opportunities. A higher salary is certainly one, or perhaps more attractive benefits, greater flexibility or a better boss. But as Phenom People Chief Evangelist Ed Newman recently noted during a breakout session at the recent Recruiting Trends & Talent Tech LIVE!, it could have something to do with the barriers in place that prevent employees from pursuing a job internally.

Newman cited a study by Cornerstone OnDemand that found 66 percent of employees would prefer to look inside their organizations for new and better positions. Sadly, he added, many organizations don’t have the programs and policies that are needed to address that preference. In fact, he said, some seem to go out of their way to block internal mobility from happening. One example: the common policy of preventing employees from moving to a new position internally during their first 12 months of employment.

Sure, maybe they can’t look for a job internally, but that doesn’t prevent them from looking for one externally.

When it comes to internal mobility, Newman explained, HR often takes a “hands-off-the-wheel” approach. Let managers control what happens. The net result of that strategy, however, is often nothing ends up happening, since managers aren’t eager to give up their stars.

Naturally, many of those same employees become frustrated and leave anyway. The two main reasons employees move on, Newman said, are the lack of career advancement and developmental opportunities. Money is No. 3.

Newman cited performance ratings, particularly the use of forced-distribution rankings, as one of the key drivers of attrition. Those who are being rated a two on a five-point scale (with one being highest), he said, end up being the most likely to depart. “They believe they should be No. 1. But what we tell them is that the 5 percent increase they were given was 2 percent higher than the normal 3 percent.” That reasoning only goes so far when someone is getting external offers that are 10 percent higher.

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To address this problem, Newman suggests that employers replace their “birdcage mentality” with a “bird-feeder mentality.” In other words, they need to give their employees reasons to stay, beginning with improving the processes around internal job opportunities.

Given today’s tight jobs market, I think it would be wise for HR leaders to heed Newman’s advice. And, if they’re not already doing so, they should begin to take full ownership of this problem by doing everything in their power to ensure that their top talent doesn’t have to look outside the walls of their organizations for that next opportunity.

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