Buy or build? The answer to this classic workforce development question should be clear by now: Hiring from the outside costs 20% more, takes longer and often hurts morale for existing workers.
Despite all the evidence that internal hiring makes more sense than external, research conducted by University of Phoenix and Executive Networks of 300 HR leaders and 300 knowledge workers across America found that fewer than half of all open roles are filled by internal talent today.
HR executives know that internal talent development is the right thing to do. It builds employee loyalty, reduces turnover and gives hiring managers a clearer picture of what they’re getting—an employee being considered for a new internal role already has a clear track record within the business and understands the company culture.
But many middle managers are reluctant to let go of their best workers. They hoard their talent. It’s not easy to find and replace ambition. Why should busy managers make more work for themselves by encouraging workers to move on and grow their skills?
There’s one reason: The best companies nurture and grow their employees. A Deloitte survey of business executives found 77% agree organizations should help their workers become more employable by growing their relevant skills, but only 5% strongly agree they are investing enough in helping people learn new skills to keep up with the changing world of work.
Our research found one-third of HR leaders say that the biggest reason companies are not investing in talent mobility is the perception that internal employees do not have the right skills for moving into new roles. But 40% of workers say they do not have a clear path for development, and they do not know the skills they need to qualify for new opportunities.
How to resolve this disconnect? It will take vision and commitment among leaders to create a culture where employees can see career pathways and apply their skills to new roles, projects and tasks at the company. Here are three ways you can promote your company as a place that encourages internal talent mobility, recognizes employees for the skills they possess beyond their job title and rewards growth.
See also: What drives internal mobility at Enterprise Holdings?
Make mentoring mandatory
As many as 70% of all employees at major companies are frontline workers, often without advanced education. Three of four frontline workers want to be promoted, but less than one in four achieve this goal. Many have the desire to move up but not the know-how. University of Phoenix Career Optimism Index, conducted with a sample of 5,000 workers and 500 employers, has a solution: Make mentoring in the workplace mandatory by requiring experienced employees to guide and tutor junior employees. This is a great way to help the careers of both: The more advanced workers grow their managerial skills, and the junior workers get valuable advice on how to move ahead. The most common reason mentoring programs fall short is that mentors aren’t given the time to make them work. Guarantee some time every week for mentors and mentees to connect and engage in mentoring. Perhaps companies can consider adopting Google’s 20% rule (where employees are encouraged to spend 20% of their time learning new skills) and direct this time to mentoring employees.
Create a culture where employees can move easily within the organization.
This starts with leaders and hiring managers adopting a mindset where they focus on skills and capabilities each worker has rather than the job title they possess in their department. When considering employees for new roles, leaders often look only at the job title they hold in the company. They should also look at the full portfolio of an employee’s skills, capabilities and achievements. Unilever, for example—a pioneer in internal talent mobility—provides employees the opportunity to move fluidly to new projects as either a permanent employee or as a “U-Worker,” defined as a worker who has a guaranteed minimum retainer and who contracts with Unilever for a series of short-term projects. This commitment to internal talent mobility has increased productivity. Since the launch of internal talent mobility, Unilever also notes that 67% of new positions went to female candidates, furthering the company’s DEI goals.
Adopt skills-based hiring so opportunities are open to a large population of potential employees.
Employers need to put an end to “degree inflation,” the practice of requiring completion of a four-year degree for jobs that do not need them. A Harvard Business School study, Dismissed by Degrees, found millions of job postings listed college degree requirements for positions currently held by workers without them. For example, in 2015, 67% of production supervisor job postings asked for a four-year college degree, even though just 16% of people in those roles have a four-year degree.
Slowly, degree inflation is being reversed. A more recent study by Harvard Business School and Emsi Burning Glass found a growing number of companies, including many in technology, are dropping the requirement for a bachelor’s degree for many middle-skill and even higher-skill roles.
But this is just the start. Employers need to go further by demystifying the process of moving within a company so workers can easily see a career pathway for themselves and then how to access internal and external learning and development programs. This way, they can grow their skills to be considered for new roles or stretch assignments.
If we want to increase equity in the job market today, one important way to do this is to remove barriers like the four-year degree (when it is not needed for the role), creating a culture where talent mobility is a value of the company and every worker is asked to be a mentor.
With fewer than half of all openings today being filled by internal candidates, one thing is clear: Companies can and should do better.
Jeanne Meister is Executive Vice President, Executive Networks, a Forbes Contributor and author of Building Internal Talent Mobility: The New Business Imperative.