Why Companies Overlook Great Internal Candidates

By Harvard Business Review
February 21, 2019

Are organizations passing over the skilled people in their own workforce? Here are three common scenarios that cause employers to recruit outside their ranks. 

While the days of retiring from one company after a 40-year career may be long gone, many believe that the pendulum seems to have swung far into the opposite direction.

In 2018, voluntary turnover in the U.S. reached a level not seen since the pre-recession days of 2007. And the much-documented job-hopping trend might seem to indicate that employees have left company loyalty in the rearview mirror.

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This may be true for some. However, a 2016 study by LinkedIn showed that 25 percent of professionals today have their eye on a promotion. They don’t want to leave their company; they would prefer to move up the ranks. The problem is, being overlooked for a promotion is the reason that 24 percent of those surveyed are open to jobs elsewhere.

So what’s the disconnect here? Are companies overlooking the skilled people in their own workforce?

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Perhaps. There are three common scenarios that can cause employers to recruit outside their ranks for talented people.

Hiring managers don’t feel that internal candidates have the right skills: This can shake out in a couple ways: Hiring managers think existing employees lack the skill match they’re hoping to find, or hiring managers are looking for newer skills that aren’t in evidence yet at their organization. One way to approach a perceived internal skills gap is to consider not just what an internal candidate has done but what they are capable of doing. Be on the lookout for candidates with crossover skills.

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Companies are planning for attrition rather than training for retention: It’s true that workers today are more open to opportunity than in years past. But overlooking internal candidates on the assumption they’ll take the promotion and then eventually leave, taking their valuable training with them, creates a chicken-and-egg scenario. The pendulum might swing back if more companies focused on training and building career paths for the people working for them today.

Company culture discourages poaching: Most organizations don’t have an open marketplace culture. This means it’s often easier to find an external role than an internal one, because outside companies don’t come with rules of engagement. But a lack of mobility discourages those who do stay from achieving great things.

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If you’re harboring concerns about loyalty at your organization, make sure you’re holding up your end of the bargain. Have your managers outline career paths for high-performing employees. Encourage them to search internally when they have roles to fill.

Ultimately, the goal is to hire talented people whose career aspirations align with the growth and success of your business. Betting on the potential of talent and creating a culture open to advancement can have a material impact on retaining your best employees.

Copyright 2016 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate.

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