Michael is a human resource consultant with Insperity. He specializes in team building, employee engagement and performance improvement.
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With data from the Bureau of Labor Statistics showing there were almost two job openings for every unemployed person in the U.S. in January, businesses planning for 2023 should be thinking about internal mobility, or the movement of employees within an organization. A strong internal mobility strategy can allow employees to seek out roles that align with their interests, contribute to an agile culture and create a competitive advantage.
To design an effective internal mobility strategy, leaders should understand why internal mobility matters so much in 2023. In my experience, the answer lies in internal mobility’s impact on improving retention and engagement, lowering recruitment costs and encouraging innovation.
Internal mobility can raise retention and engagement.
Even with some major tech companies making layoffs, many businesses continue to cope with the impacts of the tight labor market. Those impacts include reduced employee retention and, in some cases, lower employee engagement, as many workers do not expect to stay in their roles for much longer.
With an appropriate internal mobility strategy, leaders can combat both challenges. In an organization with low internal mobility, when an employee feels disengaged, they may see a new job as the best option. The employee may move on even if they feel content with the organization’s culture and leadership, but not with the duties of their role. When that happens, organizations lose valuable talent. On the other hand, in an organization with high internal mobility, employees who grow unhappy with their role have other options. Pathways to internal mobility might include a formal internal career program or a candid conversation with HR.
When organizations set up structures so employees can pursue their interests within the organization, studies show employees grow happier and retention rises. A 2019 Deloitte report described one organization that saw a nearly 30% increase in employee engagement after introducing an internal career program to help employees learn new skills and seek alternative roles. The same is true for retention. In 2020, LinkedIn found employees stay 41% longer at organizations with high internal hiring than those without. This data furthers the notion that internal mobility is key to navigating the tight talent market.
Internal mobility can result in cost savings.
Recruitment is expensive. According to Gallup in 2019, the cost of replacing a single employee starts at one-half times the employee's annual salary and can even cost twice as much. That cost applies to every employee who leaves an organization without robust internal mobility because they have outgrown their role. For every employee who chooses to accept an open role on another team at their company rather than leave entirely, the organization avoids spending significantly more on a new, untried candidate.
Over the course of an employee’s career, the cost savings of internal mobility only grow. Organizations should look at junior employees as an investment. With time and training, junior employees can eventually grow into higher and more fulfilling positions in or outside of leadership. In my experience, the youngest employees also tend to explore the most in the early years of their careers.
Instead of watching those employees leave for other businesses, recruitment teams can save costs in the short term and long term by investing in an internal mobility or rotational program. Rotational programs that expose employees to multiple aspects of the business may require a high upfront cost. However, these programs also plant seeds for the future. Even employees who leave a business after a rotational program may leave on good terms and return later in their careers with the knowledge and experience necessary to lead their own teams.
Internal mobility can promote collaboration and creativity.
If workplace culture is the foundation of business success, then internal mobility is a building block of a strong culture. In a tight labor market, employers might assume employees feel more valuable than ever. However, data shows that may not be the case. McKinsey found in a 2021 report that the top three reasons why employees left their organizations were not feeling valued by their organization, not feeling valued by their manager and feeling a lack of belonging at work. Robust internal mobility is one way to address those feelings.
That is not only because internal mobility encourages employees to explore new interests and skills, but also because internal mobility can make employees feel valued by their organization. When organizations invest in an internal career program and internal hiring, employees can feel appreciated for reasons beyond their daily duties. Their organization begins to feel like a world unto itself where employees can explore new paths with the support and resources of their employer behind them. When organizations invest in employees through internal mobility, culture can grow stronger.
As businesses go into 2023, internal mobility should be at the forefront of leaders' minds for its benefits in employee engagement and retention, its ability to lower budgets and its contributions to workplace culture.
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