In this candidate short market, hiring managers should look inside the box. If you are lucky, outstanding internal candidates can hit the ground running, as a result of being familiar with the culture and work environment. In addition, the significant costs and risks associated with attracting external talent can be avoided. Hiring internal candidates can also be a strong message to employees that they too have a future in the organisation.
On the other hand, when internal candidates don’t have the necessary skills and experience, hiring managers frequently find themselves in an unenviable position of rejecting such candidates. Studies have shown that rejection of internal candidates leads to reduced job satisfaction and reduced commitment to the organisation. Research indicates that rejected internal candidates are twice as likely to leave an organisation compared to those who were hired or didn’t apply. The resulting lost productivity and cost of replacing them can be substantial. Fortunately, while rejection is inevitable, turnover is not.
Organisations can develop strategies to improve staff retention. Employees do not only apply for jobs solely because they want a new job right now. They also apply to learn what opportunities might be available to them in the future. If an employee is rejected today, they are more likely to stick around if they feel they will have a good chance of advancement tomorrow. In a rapidly changing world, employees can often be perplexed as to where their career paths lie. Applying for a job is often the easiest way for an employee to figure out what opportunities are likely to be available. An interview with the hiring manager provides an opportunity for the candidate to gain feedback on the current gaps in their knowledge and skills, and how they might fill those gaps. Research indicates that internal candidates who were rejected after an interview with the hiring manager were half as likely to exit the organisation as those rejected without a meeting.
Whilst it is impractical for most companies to interview every internal applicant, it should be possible to have an applicant tracking system that identifies talent, which the company seeks to retain. This system can afford them an interview and the opportunity to explore what their career path may look like and to assist them in understanding what skills and experience they need to acquire to achieve their goals.
External hires can bring valuable knowledge and new perspectives into an organisation but if not managed correctly, can increase the odds of current employees taking their knowledge elsewhere. Companies who strategically manage their internal talent when hiring, are better positioned to keep rejected internal candidates onboard.
Source: Keller, J R and Kathryn Diugos. (2021) “Research: Why Rejected Internal Candidates End Up Quitting” Harvard Business Review July 22nd 2021