Recruiting is expensive, with estimates ranging from an average of $4,700 per hire to three to four times a position’s salary. And with rising inflation and a looming global recession making us all tighten our grip on our wallets and budgets, one fact is clear: Organizations simply can’t afford high turnover right now. More than ever, this is the time for companies to commit to people strategies that keep the business lean and keep their best talent with the company.
Investing in internal mobility is one of the most effective ways to reduce turnover and improve employee retention.
The retention puzzle
No matter how positive your company culture, how high your employee satisfaction, and how great your employee experience, holding onto good people is hard. According to recent LinkedIn research, “the likelihood of an employee staying with a company decreases” as time passes. After a year of employment, an individual’s retention rate is 76 percent. But after five years? It goes down to 38 percent.
But, there’s one factor that helps boost the chances of someone sticking with the company. You guessed it: internal mobility. People who receive promotions within their first three years at a company have a 70 percent chance of staying. Meanwhile, people who have moved laterally have a 62 percent chance. And those who received no promotions or job changes over that same period only have a 45 percent chance of sticking around.
Why internal mobility works
So why is internal mobility such an effective solution for organizations’ retention challenges today? And why is it especially relevant as we move into a recession?
Internal mobility heightens people’s confidence
Economic downturns are scary for us all. As people see companies lay off their friends and family members, they become terrified of losing their jobs. But being promoted, seeing colleagues get promoted, or accepting a lateral move within a business instills confidence in people’s financial security and their position within the company.
Internal mobility improves retention
Let’s let the numbers do the talking. According to more research from LinkedIn, 81 percent of HR professionals report that internal hiring improves retention, helping keep the business lean and strengthen the bottom line—two factors that are crucial to weathering a recession.
Internal mobility improves the EVP
It’s not just your internal talent who will benefit from improved internal mobility. By boosting your employer brand and improving your employer value proposition (EVP), internal mobility helps spread the word about your company, encouraging top external candidates to come to you. Reducing talent acquisition costs like recruitment and marketing can help streamline your operation and cut costs even further.
Internal mobility is cost-effective
Internal hiring is incredibly cost-effective and costs only 6 percent of companies’ recruitment budget on average. This is because it allows you to avoid publishing (and paying for) external job ads, recruitment, and onboarding brand-new team members. It also puts less pressure on existing team members taking on higher workloads and helps boost engagement (and productivity).
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Building a successful internal mobility strategy
Internal mobility is one of the best ways to beat inflation and economic downturns. But how can HR professionals successfully implement more of it in their organizations?
To succeed, internal mobility programs need to come from the top. HR and other company leaders must work together to define what internal mobility looks like for their company.
To truly integrate internal mobility into your company culture and workforce planning strategy, it’s important to view every team member as a long-term investment. Internal mobility isn’t a stop-gap solution to get you through until the economy picks back up again. It’s a mindset shift and a cultural cornerstone that can help improve your bottom line in any economic climate.
The key is to show your people you’re invested in their growth and career development.
First, be transparent about job openings and encourage internal candidates to apply.
Second, ensure your company commits to a robust L&D program. The most successful internal mobility strategies offer ongoing L&D opportunities internally and externally, including mentoring and training.
Third, align L&D programs with your organization’s upskilling and reskilling needs to close skill gaps and help individuals become better candidates for open roles across the company.
Finally, this means prioritizing an annual learning budget to support these needs.
Future-proof your business with internal mobility
From individual contributors to managers to executives, we’re all feeling the pressure of rising costs and the coming recession. To give your organization and its people a much-needed boost of confidence while simultaneously lowering costs, take this time to invest in an internal mobility program. Everybody will benefit as a result, and your company will come out the other side of this downturn more robust and resilient against the economy’s ups and downs.