Internal mobility: Finding the hidden gems in your workforce
CFO Insights
Introduction
As competition for talent grows fiercer, companies invariably decide that they need to broaden their search, redoubling their efforts to find workers with the targeted capabilities and sufficient motivation to successfully join budding projects or help expand into new markets. But rather than looking far and wide, they might be better off beginning, and ending, their quest within their own corporate confines.
By improving internal talent mobility, companies can both optimise their ability to grow and increase their chances of retaining employees. As opposed to simply promoting employees, or shifting them from one geography to another, a dynamic internal talent pipeline gives employees access to a variety of both “vertical” and “horizontal” roles. Moreover, by measuring those employees’ performance with every new challenge, companies can identify those who display the potential to become successful leaders.
Facing an onslaught of technological, economical, and social issues, many organisations are well-aware of the need to nurture leaders in new ways. In Deloitte’s 2019 Global Human Capital Trends survey, 80% of respondents said that their companies need to develop leaders differently. The survey is based on responses of nearly 10,000 individuals—the majority based in the information technology (IT) or human resources (HR) function—representing 119 countries.
Harnessing talent: The inside story
Companies don’t purposely undervalue their inventory of existing talent. Cultivating internal mobility often conflicts with long-standing corporate culture norms and traditional notions of what it means to be a loyal employee. The practice of recruiting an employee to leave one division to join another is often disparaged as “poaching,” and employees who express interest in assuming a different role may be seen as disgruntled or even disloyal by their higher-ups. Among survey respondents, 46% reported that managers resist internal mobility.
As a result, employees may generally think that it’s easier—and more appealing—to find new opportunities in another organisation, as opposed to exploring new roles at their current one. In the survey, more than 50% of respondents said it was less difficult for employees to find a job outside their organisation than inside it—suggesting a situation that leaders would do well to address.
Companies that take a formal approach to doing so can also derive competitive benefits from embedding qualities like collaboration and agility into the culture. Manufacturer Ingersoll Rand, for example, developed a programme to help employees reskill themselves for new positions, investing in technology that enabled workers to explore and access alternative roles across the company. One result: a significant rise in employee engagement.
But achieving such results demands a sustained effort on several fronts. Breaking down structural barriers, for example, involves more than improving the internal job posting system. At one insurer, the talent acquisition team encouraged workers to reflect on their performance, image, and exposure throughout the organisation with the goal of developing a personal brand to open internal opportunities. The result has been a far richer talent pipeline of internal candidates.
Taking on the inside job
Finding ways to boost internal mobility can produce a range of payoffs. But many companies have barely begun. In the survey, 45% of respondents said their employees lacked visibility into internal positions. A slightly higher number, 49%, said that they had few, if any, tools to identify and move people into new internal roles.
Those same organisations might be motivated to overhaul their approach to internal talent, given the double whammy of increasing skill shortages with historically low unemployment rates. But where to start?
Among survey respondents, many have yet to begin to lay the groundwork for rewiring internal mobility. Forty-nine percent of respondents identified the lack of processes to identify and move employees as a top-three barrier to internal talent mobility. Only 32% believe that their organisation’s employees have opportunities to move between operating divisions.
Finding the answer within
The notion of tapping the current workforce to fill open slots sounds much more manageable than plucking a candidate out of an almost infinite landscape. Yet, in the survey, only 6% of respondents said they believe they are excellent at moving people from role to role. In contrast, 59% rate themselves fair to inadequate.
Most organisations, of course, aren’t as flat as they want to become. While many leaders may foresee a time when management will staff projects with internal teams and networks, their organisations are still pyramid shaped, competing to reach the top. Moreover, siloed organisational models make it difficult for managers to see the talent beyond their own functions—and block the view for employees who work elsewhere in the enterprise. Indeed, 45% of survey respondents said their employees lacked visibility into internal positions.
That said, employers who succeed at using internal mobility often have no difficulty seeing the payoff from their investments. Internal mobility programmes can add value to the company in a number of ways.
As employees gain a sense of the multitude of opportunities open to them without leaving the organisation, their view of their employer invariably shifts. They are able to see themselves as working within a culture that values what they have contributed—and, more importantly, can contribute—rather than being perceived as commodities that can be easily replaced.
External mobility: Tapping into an evolving talent ecosystem
Talent mobility isn’t only an internal phenomenon. The alternative workforce—composed of independent contractors who work on short-term projects rather than taking full-time positions—has evolved into a fast-growing resource. And many companies, facing both skills shortages and a low unemployment rate, are eager to tap into it.
Leveraging and managing this diverse workforce will become essential to enabling business growth in the years ahead. CFOs and other C-suite executives will need to be able to manage alternative workforces as a strategic asset, one that can add value to the organisation.
Originally conceived of as contract work, these non-traditional positions include work performed by outsourced teams, contractors, freelancers (typically paid by the hour), and gig workers (those paid by the task or project). Once considered a resource best suited for IT or other technical tasks, alternative workers increasingly perform a broad range of activities. In Deloitte’s 2019 Global Human Capital Trends study, 33% of respondents report extensively using alternative arrangements for IT, 25% for operations, 15% for marketing, and 13% for finance.
Globally, membership in the alternative workforce is growing. Freelancers now represent 35% of the US working population, and could rise to 50% in the next decade, according to a 2018 study. In the European Union, freelancers are the fastest-growing labour group, with their number doubling between 2000 and 2014; growth in freelancing has been faster than overall employment growth in the UK, France, and the Netherlands.
Learning to use it better
Despite the emergence of digital platforms for sharing alternative workers, organisations are far from fully capitalising on the phenomenon. In Deloitte’s Global Human Capital survey, 41% of survey respondents said they consider this issue important or very important, yet only 28% believed they were ready or very ready to address it.
Most organisations look at alternative work arrangements as a transactional solution, one geared more toward “filling slots” rather than as a strategically important source of talent. For example, only 8% of respondents said they had established processes to manage and develop alternative workforce sources; fully 54% of respondents said they either managed alternative workers inconsistently or have few or no processes for managing them at all.
As the survey found, there’s plenty to be gained by getting better—alternative workers can enhance organisational performance. Like internal talent mobility, the external counterpart can enable an organisation to put the right talent where and when it’s most needed in a labour market where it’s becoming harder to find traditionally on-balance-sheet talent.
