According to the Work Institute’s Retention Report, employers could alleviate 78% of the reasons employees leave. Some of the reasons stated within that report as to why employees leave include a lack of career growth opportunities, poor work-life balance, and salary, among others. Other studies say that 73% of today’s employees are open to new career opportunities, with 44% currently looking for new employment.
While these statistics may seem daunting for employers, they point to a silver lining. If companies had the right internal recruitment tools, these statistics wouldn’t be so dire, and their impact would be nowhere near as severe. Thankfully, there is such a tool, and it’s called an internal talent marketplace.
So, what is an internal talent marketplace, and how can it help your company improve employee retention? We’ll answer this question by defining the costs of employee turnover and the risks associated with outside hires. Next, we’ll provide insight into why an internal talent marketplace is the best possible tool for maximizing your talent, keeping your best employees, and reducing the high costs of employee turnover.
The Costs of Employee Turnover
You’ve likely heard the statistic that an employee leaving can cost the company upwards of a third of that employee’s annual salary. Surprisingly, some estimates put this cost even higher. The time, resources, and training your company allocates to employees’ personal and professional development can disappear within minutes.
You can calculate employee turnover by totaling the number of employees who resigned within a given year multiplied by 33 percent of their salaries. You could then repeat this exercise from previous years. You probably already have that data. Ultimately, what you’ll find is that these costs are incredibly high. However, it’s not just the cost of employee turnover, but ultimately the impact losing valuable employees has on your company’s operations, customer relationships, sales, and market share.
What About Outside Hires?
Perhaps you’ve enacted strategies to increase employee retention with little success. Maybe you’ve adopted multiple employee engagement strategies and still have an employee retention problem. You may have resigned yourself to simply looking outside your organization to fill positions. Companies do it all the time, so what could be wrong with hiring from outside?
To answer this question, think about your organization’s onboarding process. Think about how much time, effort, and internal resources must be devoted to an outside hire. Think about how long it takes that external hire to bring themselves up to speed with your organization’s culture, mission, values, business approach, and business strategy. It takes a long time before outside hires can operate entirely independently.Onboarding Outside Hires Takes Time
Any onboarding strategy aims to quickly ramp up the outside hire’s productivity levels to that of an existing employee. To achieve this goal, companies typically use plans with 30, 60, and 90-day milestones where a new hire’s progress can be measured. They may even allocate a mentor to the new hire, schedule multiple one-on-one meetings, and have periodic reviews to assess performance.
Companies now like to refer to their onboarding process as “rapid onboarding.” The consensus among HR professionals is that your outside hire should be productive within three months. However, the data doesn’t back it up. It can take 8 months for a clerical position and 20 to 24 months for an executive to be productive. That’s nearly double the consensus three-month timeframe.Outside Hires are Risky
Your onboarding plan might have plenty of milestones and easy-to-measure goals and objectives and yet still not be able to reduce the time it takes for outside hires to be productive. However, there’s a much more significant concern with external hires; it’s commonly accepted that 33 percent of new hires leave within the first year, and some estimates put the percentage even higher. That makes outside hires a risky proposition.
An internal talent marketplace can put these problems in your rearview mirror. An Internal talent marketplace is a must-have for any company looking to retain their talent, improve employee engagement, promote from within, and avoid the high costs of onboarding outside hires.
What is an Internal Talent Marketplace?
Much like the name implies, an internal talent marketplace is a repository of all the talent in your organization. Think of it as your very own LinkedIn. Your employees' profiles, competencies, capabilities, and expertise are only visible to you. This makes it your very own internal recruitment tool.
Instead of dealing with executive search firms, temp agencies, and multiple external resources, you use a ready-made internal recruitment tool that pools your company’s best resources. No more endless interviews in a desperate attempt to find that all-important replacement. No more trying to appease everyone’s criteria for the new hire. Instead, you’re dealing with existing employees that department heads know and can vouch for.
Internal opportunity marketplaces can empower individual contributors and staffing leaders alike. Leaders can quickly ascertain who has the requisite skillset to solve whatever problem your company is faced with at a given time. A robust, and automated, employee directory provides insight into an employee’s education, skills, experience, interests, role, and current capacity to take on new projects. And when you find that perfect candidate, it's incredibly meaningful for the employee to be tapped on the shoulder for an opportunity tailored to their skillset. So meaningful in fact, that recent MITSloan report cited that: "offering lateral job opportunities for employees is 2.5 times more predictive of retention than compensation."
Speaking of employees, it's incredibly empowering to see all the internal opportunities your organization offers in one place. Not only can you get tapped on the shoulder for a relevant opportunity, but you can also raise your hand. Imagine you're a Senior Software Engineer interested in machine learning. On Monday, maybe you join a work group that's focused on Scala best practices. On Wednesday, you volunteer some of your time for a Habitat for Humanity Hackathon and connect with a new colleague who is working on machine learning projects. By the end of the week, your manager shares an open machine learning role with you and encourages you to apply. These are the types of personalized employee experiences and lateral career opportunities that help organizations attract and retain the best talent.
Use Your Thought Leaders and Subject Matter Experts
Thought leadership is everywhere nowadays. It helps companies position themselves as trusted sources of valuable industry information. Your organization has multiple thought leaders and subject matter experts. These are the individuals whose knowledge, expertise, and know-how distinguish your brand. Customers highly value thought leaders. Unfortunately, most companies don’t use them properly.
Finding these critical organizational resources would be problematic at best – and impossible at worst - without an internal opportunity marketplace. Not only can your subject matter experts help with branding, but they can also drive continuous improvement efforts so your organization can avoid the high costs of hiring outside consultants.
Benefit From Collaborative Efforts
Companies often pool resources from multiple departments to resolve organizational problems. Unfortunately, it’s not uncommon for tribalism and favoritism to creep in among department heads. This pushes valuable internal resources to the side. However, there won’t be any questions about team members with an internal opportunity marketplace. Nobody will be able to play favorites when everyone’s capabilities and skill-sets are clearly visible.
What are the Benefits of an Internal Talent Marketplace?
An internal talent marketplace provides several immediate benefits. Understanding these benefits helps ensure that your company is always looking internally before you even entertain the idea of going outside your organization. It’s about maximizing your existing resources instead of rolling the dice with unproven outside candidates.
Address Your Perceived Talent Gap
An internal talent marketplace provides companies with real and accurate information about their talent. Often, an organization isn't experiencing a talent gap. Instead, they’re experiencing a lack of talent awareness. After all, what means does a company have for tracking its talent without an internal talent marketplace? This perceived talent gap often forces organizations to seek outside hires. None of this is a concern with an internal opportunity marketplace.Shorten the Hiring Process
An internal talent marketplace reduces the time it takes to fill critical positions. Companies have a ready-made recruitment tool where they can immediately access capable candidates. Existing employees have a leg up on outside candidates because they already understand the company’s culture, processes, value proposition, and approach to business. They have a history of performance on their side. This makes onboarding a much simpler process for existing employees, and it won’t take anywhere near eight months or longer for them to be productive.Lower Hiring Costs
An internal opportunity marketplace lowers your company’s hiring costs. It reduces your onboarding time and helps your company avoid a price war for candidates. Companies no longer have to worry about trying to match or beat offers for outside candidates.
It’s common for outside candidates to leverage competing offers to increase their offers. They’ll often return to their existing employer and ask them to match or beat your company’s offer. If left unchecked, it can quickly lead to a bidding war. That doesn’t happen when you have your internal recruitment tool.Grow Your Employees’ Careers
Your employees want to grow their careers. They deserve the first shot at your company’s newest opportunities. A survey of 1,500 American workers found that 63% are unlikely to seek employment elsewhere if they feel recognized at work. That same survey showed that 82% of employees are happier when they’re recognized, and there’s no greater way to show that recognition than giving them the first shot at new positions.Maintain or Increase Organizational Efficiency
Finally, keeping your best talent is an absolute must in today’s competitive business environment. The more talent you retain, the more productive and efficient your company’s operations are. Losing talent can have negative impacts company-wide. It can affect your company’s product-to-market lead times, slow down design, reduce the effectiveness of your marketing and sales efforts, and, most importantly, weaken your position against your competition.
Leverage the Full Strength of Your Internal Resources
Structural has helped all kinds of companies in all kinds of industries better manage their existing talent. Our team of tech-savvy innovators, artists, and engineers has one customer-centric goal in mind; Build connections and growth at work, for everyone, every day. If you would like to see first-hand how we can help you maximize your existing talent, contact us now.