Sector News

Internal hiring saves money and boosts retention but has fallen in recent years

September 22, 2023
Borderless Leadership

After a spike in internal hiring and internal mobility initiatives at the peak of the pandemic, the focus on internal recruitment has dropped, falling to 24% of all hires from a high of 40% in 2020, according to a Sept. 13 report from The Josh Bersin Company and AMS.

The shift away from internal hiring may reduce long-term retention, limit employer flexibility and contribute to increasing time-to-hire rates, according to the report.

“Organizations that want to succeed in this post-industrial era, where talent is scarce and hiring times are extended, have no choice but to think laterally about approaches to hiring and career pathways,” Josh Bersin, global HR research analyst and CEO of The Josh Bersin Company, said in a statement.

“Now, more than ever, there needs to be a culture of movement inside the company, whether those moves are part time, project based, or full time,” he said.

At the peak of the pandemic, internal hiring grew as companies filled workforce gaps with current employees. Internal hiring rates rose to 40% of all hires, up from average historical percentages of about 30%. During this time, companies reported that internal hiring led to better company culture, higher employee retention, improved cost-savings and expedited time-to-hire rates — often by 10 to 12 days.

The current internal hiring rate of 24% is one of the lowest rates seen in recent years. Overall hiring has also dropped and time-to-hire rates have increased amid ongoing talent shortages and skills gaps — across a wide variety of industries, roles, and skill sets.

To drive greater internal employee mobility, companies may need to address talent “hoarding,” according to the report, if managers attempt to retain their best people. Leaders may need to consider incentives to encourage internal hiring and cooperation across the organization.

By Carolyn Crist


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