Are you overlooking your greatest source of talent?

08 August 2018

Is hiring internally beneficial, and if yes, then what stops companies from doing so? Host Tanya Ott spoke with Robin Erickson, Denise Moulton, and Bill Cleary about the promise internal mobility holds and the barriers to its more widespread adoption.

Literally what happens in some organizations is that they have no way of finding internal candidates.
Who are you? What experiences do you have? What kind of projects have you worked on? This just isn’t captured. Just like Amazon recommends to you your next shirt … how can we recommend to you a next job based on the skills and experiences that you’ve obtained within an organization?

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TANYA OTT: Ever been passed over for a job with your own company and you can’t figure out why?  Turns out, it could be the company and its processes—not you.

Tanya Ott: I’m Tanya Ott and this is the Press Room from Deloitte Insights. Each episode on this show we tackle a big business issue. And this week, it’s one that probably all of us can relate to. A job’s come open at work and you know you’d be perfect for it. But you also know the company’s doing a full talent acquisition search and will be recruiting externally. How do you make yourself stand out?

Or—let’s flip that script and say you’re the hiring manager at a large corporation and you want the best person for a job that’s just opened. But what if you don’t know—and can’t even easily find out—that the best person might be in another department somewhere in your company? I’ve got three guests today who’ve just written a report titled Are you overlooking your greatest source of talent?

Robin Erickson: Hi, my name is Robin Erickson and I lead Bersin's talent acquisition research practice. I’ve been with Deloitte for about 11 years and I'm thrilled to have a chance to talk to today.

Denise Moulton: I'm Denise Moulton and I lead Bersin’s HR practice. I've been with the firm almost five years and spent the bulk of my career in HR as a working practitioner.

Tanya Ott: Before we get to the big topic—which is internal mobility—Robin, can you give us the lay of the land in terms of what the employment picture looks like these days? How competitive is the job market?

Robin Erickson: Our job market here in the US is very competitive right now. I've been doing some research for the last 10 years or so, and as you track voluntary turnover against unemployment here in the US, you find that there's an inverse relationship between the two. Which means as unemployment goes down, voluntary turnover goes up. And right now in the US, we have very low unemployment and we have, therefore, very high voluntary turnover levels. So many organizations are concerned that people are leaving. In addition, Gallup found last year that 51 percent of Americans have a foot out the door, which means that they're not as engaged as they should be, that they would be willing to leave if something came up or changed in their lives.1 So, we really feel like we need to be thinking about ways that organizations can try to help attract and retain their talent.

Tanya Ott: You say a lot of companies miss the talent. It may be a large company with tens of thousands of employees that doesn't really know how to recruit internally or doesn't do it effectively. What's going on there?

Robin Erickson: It's a little bit counterintuitive, but typically you think of talent acquisition just as bringing in experienced hires. But talent acquisition needs to have systems and processes in place to help move people around in the organization. And they also need to be able to create candidate pools of both internal and external candidates when there is an open position.

Tanya Ott: It's all about having a really robust candidate pool when you've got a position that you have to fill. And that can come from an internal source or an external source. Denise, what are some of the advantages of looking at an internal candidate and building a system that supports a robust internal choice?

Denise Moulton: I mean, honestly, you're working with them every day. You're seeing how they lead, how they manage projects, etc. So, when you're looking at the internal marketplace that exists right within your organization, you have a long history to reference. You have their manager feedback. You have a verifiable list of accomplishments. Not to mention you have all of the experiences that you yourself have had with the talent over the course of their tenure. So that's a really good place to start because often what happens with external hiring is you run that risk—what if the person that you interview isn't the same person that shows up on day one and they don't fit within the culture of your organization? Or what if, unfortunately, they sold you a bill of goods about their skills and experiences and their abilities that don't actually align with what they're able to deliver when they're on the job? But when you're hiring internally you know your talent, you know they're going to be productive right away. And it creates this kind of self-fulfilling prophecy for the talent that they can come and live with your organization, build their career, and build their brand with you and not have to look externally to find those experiences to better themselves.

Robin Erickson: And I'll just add a few more points to what Denise said. Internal candidates tend to be higher performers, at least more quickly. They typically receive better performance reviews. They're usually more adaptable, requiring less time to adapt to a new position simply because they already know the organization. They've already decided that they want to be at that organization. And they're usually cheaper to find because they cost less to hire than external candidates.

Tanya Ott: Because the recruitment costs can really add up when you're looking at external candidates. And then, of course, if you bring an external candidate in and it doesn't work out and you realize that pretty quickly, you still have to then fill that position again. That can be kind of challenging.

Robin Erickson: Definitely.

Tanya Ott: One of the other advantages to hiring an internal candidate is the visuals. The optics of internal candidates getting promoted is also itself a great recruitment tool when you're recruiting people from outside of your company, because they see there are opportunities for growth and expansion there.

Denise Moulton: Yeah, absolutely. The talent market is looking at you all the time and when they see an organization that actively looks to develop skills with their own internal employees—and it doesn't necessarily need to be skills that result in a promotion, sometimes it can be a lateral or broadening experience—it almost creates this magnet. So that external marketplace is looking and saying I want to go work there because I can become the better person that I want to be professionally. I can have an organization that stands behind me and is a champion of my ambitions and my desire to grow and develop.

Tanya Ott: What are organizations getting wrong about this internal mobility situation?

Denise Moulton: I would say it's not so much that they're getting things wrong. I'm not suggesting that organizations don't recognize that hiring from within is really important. But there's a big disconnect between knowing you should do it and actually acting on it. Robin can speak on this a lot, but there are often a lot of hurdles that actually prevent internals from applying to a posted position. For me, it starts with a culture shift and really transforming your organizational culture to promote internal mobility. Internal mobility should not be seen as a one-off or an occasional talent practice. So, for instance, somebody applies for a position and you hire them and that's a great thing and then you forget about doing it ever again. Instead, we really like to say that it should be part of a larger, more systemic relationship with talent. There has to be a lot of effective ways to promote mobility, to promote this retention and the engagement that Robin spoke of. And such efforts need that executive champion and preferably a very high-ranking member of the organization.

Tanya Ott: Robin, Denise mentions this idea of hurdles that companies have in front of them.  What are some of the hurdles that you see commonly?

Robin Erickson: Some of the hurdles are that oftentimes employees don't know how to find internal roles. Many organizations don't post job openings internally before they post them externally. A lot of organizations have a culture that supports job hoarding, position hoarding. And so, people don't want to ask to move someone from one department to another because then that person's lead might not make their numbers. They don't want their best talent to go.

Other organizations we've heard of actually don't allow recruiters to reach out internally. Even if they find the candidate on a social networking site at their organization, some organizations won't allow recruiters to reach out to those candidates proactively.

Tanya Ott: Are you saying that they won't allow recruiters to reach out to an internal candidate, but they would allow recruiters to reach out to an external candidate?

Robin Erickson: Correct.

Tanya Ott: That's bizarre!

Robin Erickson: Literally what happens in some organizations is that they have no way of finding internal candidates. So, when you apply to an organization or an affiliate, it goes into an applicant tracking system and that's oftentimes what recruiters use as their pool, and/or they use their candidate relationship management tool. But they don't have any way to even see the employee profiles. They're not included in either their CRM tool or their ATF tool.

Tanya Ott: So they just have this big hole and they don't know who's an internal and who's not.

Robin Erickson: Well, no! They only know who's external.

Tanya Ott: Oh, they only know who's external. Wow!

Robin Erickson: Yes. So then the recruiter is doing a Boolean search, you know, putting in all of the things that they need and they are like, oh my gosh, one of the candidates came up on our social networking site. Guess what comes up: Oh my gosh, they work for this organization. Some organizations won't let those recruiters reach out to those candidates. So, you literally have employers saying it was easier for me to quit and move to a different part of the company than it was for me to transfer internally.

Tanya Ott: That's so wild.

Robin Erickson: Amen. That's part of what we're dealing with here: There are real systems and talent acquisition that don't work for internal candidates and all the recruiters do is process—so, if I leave and Denise takes my job, they're only processing the fact that Denise is moving from her role to my role. And most employees aren't going to wait till their boss leaves or kicks the bucket, right? So that is the issue and that is why the fact that you need to get talent acquisition involved is the new news.

Denise Moulton: And I think it comes back to the culture, because the challenge—and this comes from a lot of experiences that I've had on the job—the challenge is there's this general, unfortunate perception that talent acquisition isn't going to be strategic enough to get that pipeline of external talent in play quickly enough to fill that gap. So, when that talent moves on to another team, especially [when] it's going to be a top talent or a rising star, the team that lost that talent is feeling, it's going to take so much time to find something from the external marketplace; we won't be able to meet our goals and our objectives. So it becomes this kind of tug of war between the team that needs somebody and the team that isn't ready to give someone away. And the talent is stuck in the middle and that's actually a hurdle as well. They don't want to get involved in the internal politics of two teams battling, so they oftentimes will just opt out of consideration, which is really unfortunate and also leads to incredible disengagement of that particular individual.

Tanya Ott: That's got to be a really difficult position for them. But, on the other hand, that talent could say—look, if I can't move laterally or up within the organization to a different department, then I'm just going to go to a different organization.

Denise Moulton: Exactly.

Robin Erickson: There's one more barrier I'd like to add and that is that many recruiters don't have access to the employees who already work in an organization, to be internal candidates.

Tanya Ott: What do you mean by that?

Robin Erickson: They don't have any way of finding out what their new skills are. They don't have access to their profiles. That's often the reason why recruiters will find internal employees already on social networking sites rather than internally.

Denise Moulton: And this comes down to the comment, Robin, you made earlier about how talent acquisition isn't always at the table when the organization is having conversations about the folks that are ready to be promoted. So, if the function itself isn't included in those conversations from that beginning, such as with learning or career management or whomever, they're not going to have that awareness of the folks that are actually out there that are even ready for promotion or for a new experience. And if you add the technology implications, it's a really tough hurdle to overcome.

Tanya Ott: Okay… this is where I want to bring our third guest into the conversation. We’re going to go back to my conversation with Robin and Denise in a couple of minutes to hear about some inspiring case studies at companies … but first, let’s talk about this technology issue. Robin mentioned that sometimes talent acquisition can’t even see the internal candidates—or if they can, they don’t have the full picture. Bill Cleary helps companies think through the strategy, processes, structures and—importantly—the technology that can help them transform talent acquisition.

Bill Cleary: Yeah, I'm a little bit of a hybrid. I've spent a lot of time implementing technologies for our clients and with our clients, and I've also done a lot of strategy work.

Tanya Ott: I have to say that our conversation with Robin and Denise really surprised me. I guess I was naive and thought that of course talent acquisition folks would be able to see internal candidates at a company. And the fact that they sometimes aren't and are not even allowed to approach them on social media just really shocked me ... but I guess that's not that unusual?

Bill Cleary: No, it's not. I think, as Robin and Denise said, there's definitely some cultural issues and structure issues and policy issues around being able to do that with internal candidates. I was meeting with a leading financial firm yesterday and we talked a lot about what are some of the cultural constraints to transferring talent from one business unit to another. And what does that mean to managers and to business leaders? Everyone says they want to do it, but push comes to shove, giving up a highly performing individual can be a very difficult conversation. And that's just when they want to leave. That has not even [come up] in the upfront conversations about how do we attract them, to consider that as they think about mobility in their own careers.

Tanya Ott: As you are looking at not just the strategy but also how do you address the barriers to doing talent acquisition or internal mobility, what are the technologies that you're looking at? What are some of the fixes that address these issues that were raised?

Bill Cleary: I think it's easier from an external perspective to understand what someone has done. But if you think about that internally, there's a challenge around the internal system being able to capture and administer that information. Who are you? What experiences do you have? What kinds of projects have you worked on? It just isn’t captured.

Then for organizations where it is captured, how are we then using that information and how are we allowed to “connect with talent”? Denise and Robin talked a lot about that, but we're seeing the role of technology changing drastically. We're asking people to update internal resumes. We're asking folks if they understand or indicate their career preferences? What are their next steps of interest? We think about the traditional succession planning mindset that's been taken. But instead of leaders dictating to someone else where they are in the Nine Box or where they think they want to go, how can we empower individuals to think about that themselves? And how can they use some of this career ladder-type capability that exists in some of these technologies to suggest to them and recommend to them their next job? Just like Amazon recommends to you your next shirt—how can we recommend to you a job based on the skills and experiences that you’ve obtained within the same organization.

Tanya Ott: How does that play out from a technology standpoint? If I'm an employee at XYZ company and I answer some questions in a database or something like that about my experience and the training that I have, and then I continually update that, and then it pings me back with suggestions about what kinds of positions I might be interested in or what I might be qualified for? How does that actually play out in a practical sense?

Bill Cleary: There are a variety of different ways to do this, and some of this capability exists in some of the core HR systems that are prevalent in many organizations, and some of them are interesting and innovative niche solutions that are being bolted on to some of the standard core HR technologies. And what we're finding is that individuals are able to enter their skills and they're able to talk about what they've done. We also know that the machine in the back-end understands what is an entry-level job and what are the skills and experiences for that job, and that as the capabilities increase and the required kind of leadership capabilities and experiences increase, as you go from job A to job B to job C, there's different career-ladder-type jobs that are outlined in these systems. Then as an individual talks about experiences and enters that information, the matching can occur. And we can begin to say you should consider this, and in order to go from A to B you need to increase this competency or gather this experience.

Some of it will be driven through technology. Some of it, technology is still exploring how to do. But I think we're finding more and more of this machine learning, natural-language processing capability coming into this discussion and being able to more naturally do more of this assessment.

Tanya Ott: When you talk about the machine learning and natural-language processing coming into the process, for folks who aren't really familiar with how those things work, how would they be applied in this kind of situation?

Bill Cleary: Let's just take a basic competence such as leadership acumen or business acumen. You indicate your level of competency [on a scale of] 1–10. And then the machine understands, OK, so you're in this job today and these other five jobs require a level six and you're level three today. What things can we do that will help you get from level three to level six? What experiences can we give you? What formal training can we enroll you in? What books should you read? And how can we help you get from a three to six and then once you get to a six and someone else has either verified that or you've entered that information, how can we then begin to match jobs for you and to you? Very similar to how we do some online shopping today. We know you're going to look for a certain product and we know certain people who buy certain products are going to bundle products with that. So, if you buy an in-home coffee mug, you might often need a travel coffee. How do we take that same mentality that we've taken with shopping and marketing and apply that to talent acquisition from an internal candidate perspective?

Tanya Ott: Thanks. That really helped me visualize it. I'm still kind of struggling with the idea that I'm entering what I think my own competency is on a Likert scale of 1 to 10, but is that self-report reliable or is there some sort of other algorithm going on there?

Bill Cleary: There could be a number of different ways to do it. One is the self-reported way, which you just mentioned. The other is the manager-verified way. The third is taking an assessment.  There are a number of different vendors out there that do all kinds of different assessments around understanding your behavioral DNA. And if we're able to understand who you are, what makes you tick, and your behaviors, we can take that and use that information to match you to a job and get a little bit more predictive around your success. So, if we're able to understand them, what makes a successful employee here at a certain job, we can then compare that to your results and then help you do some of the similar things I just mentioned around matching and around suggestions around learning and recommendation-type things where we're leveraging some of this new machine capability that's in the market.

Tanya Ott: Okay. That makes a whole lot more sense; I'm always a little suspect of self-report.  You mentioned that there are some capabilities that are incorporated into platforms or software that talent acquisition teams or HR teams are already using, but you also mentioned that there are some things that are sort of niche, custom-built, or maybe pushing the envelope a little bit on the technology. Taking out the crystal ball—what are you seeing people experiment with on the edge that's really intriguing and maybe holds some promise?

Bill Cleary: There's a number of niche vendors out there that [are] combining some of the different analytics out there. What is your background? How many days did you take off? How many books have you read online? How many flights did you take? How many hotel rooms you stay in? How many conferences did you attend? How many audio books have you listened to? They're kind of aggregating all these different data points that are out there. And there's so many others. We're calling some of the things different signal sets of success. We're using a feedback loop to help us create that view of what is success, but we're using all the different data points that are available to us, and we're finding that there's so much more data today than there was a few years ago. If you look at The Future of Work studies, we talk about data quadrupling over time and what are people doing with that data. So, it goes back to the big data discussion of old, but I think it's also looking at what are some of those signals that indicate performance and how are we measuring those signals to create a new outcome. How are we leveraging that information to make hiring decisions today? If we know someone was successful, what are some of the signals that they sent us that we can conglomerate into a story that makes us understand that they were successful? And what are some of the other opportunities that we see to apply that same model to candidates, internal or external, as we begin to evaluate them for a position.

Tanya Ott: That was Bill Cleary, leader of Talent Acquisition consulting practice at Deloitte. Now back to my conversation with Denise Moulton and Robin Erickson. I promised we’d hear some case studies about companies trying new things in the talent acquisition space …

Tanya Ott: One global consumer-goods company that was struggling with employment set a new expectation. You write that recruiters would have 48 hours to respond to internal applicants and 72 hours to conduct an initial screening, even if the applicant wasn't quite suited to the role. What I found interesting about that is it's a streamlined process and that's great, but I've actually worked at an organization that required an interview with every internal candidate whether they were qualified or not. And as a manager that was a kind of a waste of time.

Denise Moulton: That's a difficult one to overcome, and I think with that organization in particular, they wanted to really develop those relationships with the people across the organization and they wanted talent to feel that they had a partner in talent acquisition that they could engage with and discuss open roles. So, the rest of the story is the recruiting team was very, very dedicated and had access, fortunately from a technology perspective, to see which internal employees were applying for roles. And oftentimes it was a little bit more than a phone interview or a discussion. They actually sat down and if it turned out that the talent wasn't quite suited, they had that very difficult conversation, but then they also asked if they were able to share that finding with HR and so they could help find the right types of development opportunities for their talent. I thought that was an amazing opportunity for the recruiting team to really dig deeper in with the internal market place.

Tanya Ott: So that feedback back to HR and talent acquisition is really crucial, because it's almost like the HR equivalent of machine learning. Right? You'd do this interview. You have the tough conversation about why this person isn't qualified, but then you report back so that you can then adjust and understand the workforce better?

Robin Erickson: Yes, and not only that but you also don't want someone within your organization who really likes your culture, who really likes your organization, who's applied from multiple other positions and been turned down to not have any access to know why they were turned down or what kind of skills they would need to gain before they moved on. So, some organizations are taking more of a talent marketplace perspective, where there's one place employees can go to find out if there are new positions. They can also find out what learning would be required to go join a specific career path. Again, this is where we really think that you need to have not just career management at the table, but also partnering with learning and development and partnering with the talent acquisition function.

Tanya Ott:  One of companies that you looked at was Farm Bureau Financial Services. Where did they used to be and where are they now and how did they get there?

Denise Moulton: Farm Bureau Financial Services was a very, very reactive talent function, meaning they would have a job position that was open, [and] recruiters would "post and pray" for the position. They'd post it up on the job board and hope they would get great talent. And they basically reacted to every need. The way they pushed themselves [was] they wanted to really think differently about how they looked at their talent, what types of opportunities their recruiters were considering from a sourcing perspective. So, they definitely encouraged workers to think more about their own performance, to think about their image, and to think about their exposure throughout their organizational tenure. And so, what would happen is, as they were encouraging talent to really take a focus and develop their professional brand a little bit more, it started to open doors. And again, the opportunities were always a promotional opportunity—sometimes they were lateral, sometimes it was a stretch assignment, sometimes they ended up doing something on the side to develop certain skills. But what ended up happening was they had a far richer talent pipeline because they talked to people about—hey, we're here and we support and champion your initiative to grow yourself. We want to support you no matter what that looks like. We hope that it turns into a promotional opportunity for you, but in the meantime, you can develop your skills and you can continue to grow with the organization. And because of their location, talent is somewhat difficult to come by. They want to make sure that they are bringing the best and the brightest and keeping them. And that was the goal of that program.

Tanya Ott: Denise, you talked earlier about leadership coming in at the top level and setting the culture for this, and one of the case studies that you have is Home Depot, which had top leadership support of internal mobility. How does that play out at Home Depot?

Denise Moulton: The focus is really on storytelling at Home Depot. They really encourage their leaders and line managers to openly share about their own career story. How they were able to be successful. How they grew. And that's really created a nice comfort place and a nice model for new hires to emulate. You start with that during the recruitment process or during onboarding or during training or anything, just talking about, hey, here's what worked for me in terms of making me successful. It gives a good feeling and it makes the new hire realize that there are some ways that I can go ahead and not only come up to productivity very quickly, but to be successful and to make an impact in this role. And focusing on career storytelling and being willing to share stories is not only a good thing to have, but it's also one of Bersin's predictors of High Impact Leadership as well. It's a great way to relate to talent, share experiences that matter, and it really helps build that internal pipeline of talent as they start telling their own career story and people get exposure to them.

Robin Erickson: Robin, earlier in our conversation you talked a little bit about the economics—what it costs to replace an employee that's left, what it costs to do recruitment. Mayo Clinic in Minnesota has a turnover rate that's well below similar-sized organizations in health care. What are they doing differently?

Robin Erickson: They have really encouraged their employees to be lifelong learners and to build career paths based on the things that they're interested in and how they can grow. The managers specifically partner with employees to help them build new capabilities and have new experiences so that then they can be familiar with the career resources that the company offers and be able to find themselves new roles. That comes back to the culture that Denise was talking about, which is people believe in the mission there and the vision and they want to stay. And yet people get bored when they're doing the same job for too long. Organizations need to help provide the resources and the learning and development, as well as a clear career path for employees to move around within an organization.

Tanya Ott: How are millennials shaping this conversation? Research I see shows that millennials really want to feel like they are moving somewhere within an organization.

Robin Erickson: That's definitely true. And in fact, most millennials expect the opportunity to be promoted within an organization very quickly. Deloitte does a Millennial Survey every year and in 2016, less than a third of the millennials believed that their organization was making the most of their skills and experience. In 2017, Deloitte found that 38 percent of the millennials that were surveyed said that they plan to leave their organization within the next two years. And this comes back to the thing we are talking about, which is if employees don't see a clear career path where they can grow and be challenged and learn new skills, they will leave and go to another organization.

Tanya Ott:  I'm really curious and you may not be able to answer this, but if a third of millennials think that their company is not fully utilizing their talents and their skills, is there any way of knowing if they're right or do they simply have expectations that are too high?

Denise Moulton: I think an organization should be making a promise to talent across the board, whether it be a millennial or Gen-Xer or what whoever it is, that talent should be utilized. Folks should be given an opportunity to grow and develop themselves and to be challenged every day and they should have meaningful work that keeps them coming back and keeps them engaged and proud of their output every day.

Tanya Ott: Denise Moulton, Robin Erickson, and Bill Cleary explore the idea of internal mobility in Are you overlooking your greatest source of talent? You can read it at Deloitte Insights. You’re going to find a lot of stuff there we didn’t cover in the podcast today.

I’m Tanya Ott for the Press Room. Thanks for listening!

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