The Million Dollar Link Between Internal Recruitment and Retention

What if you could invest in a system that could save your company millions of dollars over the long term? What if this system could lead to better employee satisfaction, thus reducing your training and retention costs. 

At first, you may be thinking of some new app or digital tool. While software is part of this system, the entire thing relies on one element: internal recruitment. All too often, businesses are looking for a shiny, brand-new "Next Big Thing" to solve their problems. However, one of the best strategies for increasing retention is also the most straightforward. 

So, with that in mind, let's dive into the world of employee retention, recruiting, and how they're related. 

The State of Workplace Attrition in 2022

Why is workplace retention such a valuable asset? Well, since the COVID-19 pandemic, there's been a massive shift of workers from certain types of jobs to others. For the most part, this shift is trending away from minimum-wage jobs, like those in retail and food service. However, companies of all shapes and sizes are feeling the pinch of a lack of skilled and qualified employees. 

How bad is the situation? Let's break down the highest attrition rates in 2022 and discuss why these industries are struggling the most: 

  • Apparel Retail - This industry has seen nearly a 20-percent drop in workers. While low pay is a big part of this trend (as with most other sectors), customers have also made these positions more toxic than usual. Pent-up frustration and anger about COVID restrictions have led many people to take out their stress on hapless employees. 

  • Management Consulting - When times are hard, companies tend to avoid "unnecessary" expenses, such as consultations. Management consulting has experienced a 16-percent drop in the last year as businesses tighten their belts and trim the fat. 

  • Internet - With a 14-percent attrition rate, internet jobs illustrate that the Great Resignation affects companies and individuals from all walks of life. As you might imagine, internet-related services are in high demand. Unfortunately, that demand, coupled with burnt-out employees and a lack of care and compassion from management, has forced many workers to leave. 

  • Enterprise Software - This industry is also likely seeing a slump as enterprise-level businesses cut programs and expenses deemed "unworthy." So far, software companies have seen a 13-percent drop in workers. 

  • Fast Food and Specialty Retail - Although apparel retail has experienced the most toxic customers, fast food and specialty retail also get their fair share. Currently, both industries have an 11-percent attrition rate. We're surprised that fast food isn't number one, but many brands have adapted and started offering competitive wages. However, fast food also has another issue - repetitive labor. It's hard to get passionate about the job when you're just performing menial tasks repeatedly all day long. 

When looking at the top five industries seeing the most attrition, we can see some similar trends. Also, by comparing the top five to the bottom five, we can get a clearer picture of why these sectors have higher numbers. The industries seeing the least attrition right now include: 

  • Airlines - Five percent
  • Health System - Six percent
  • Home Health Care - Six percent
  • Industrials - Seven percent
  • Health Insurers - Seven percent

You'll notice that the industries with the least attrition span essential services in high demand. No matter what, people need to get places (airlines) and stay healthy. As a result, companies can afford to offer benefits and raises to retain their current employees. Similarly, these industries are often career choices rather than jobs. So, even though we've seen tons of stories about burnt-out healthcare workers, they're passionate about their industry and are more likely to invest themselves even when the going gets tough. 

Basically, hard times make individuals re-evaluate their priorities. It's hard to risk your health or your happiness for a dead-end job in retail or fast food. However, it's easier to endure when you're in a position you love. 

Fortunately, understanding the why behind these shifts allows companies to get to the root of the problem and adapt accordingly. That's where internal recruitment comes in. 


What is Internal Recruitment? 

Internal recruitment is the process of recruiting current employees for open positions. The easiest way to understand internal recruitment is through promotions. For example, a person could start at an entry-level position and move up through the ranks until they're at an executive level. However, recruitment doesn't have to move vertically in a straight line. Lateral career movement can also help your employees feel fulfilled and make them less likely to search for other jobs elsewhere. 

Lateral movement is a bit trickier to implement because it involves moving employees from one department to another. With a promotion, workers stay within the same area, so they can easily help out as necessary. With a lateral move, you will likely need to replace the employee after they leave. However, the benefits of internal recruitment are valuable enough that the logistics shouldn't deter you from realizing its potential. 

The best way to utilize internal recruitment is to have a back-end network (i.e., an internal talent marketplace) where employees can see openings and apply for them internally. Think of something like an Indeed job site but just for your business. This way, you can notify everyone of the positions and get applicants before promoting the job to the general public. Fortunately, software like Structural makes it easy to build this network from scratch. We'll discuss more about how to do this later on. 


Internal recruitment allows employees already familiar with your company's culture to move laterally within the company.


How Do Recruitment and Retention Work Together? 

As you should already know, employee turnover is an expensive liability for most companies. The costs of hiring, training and onboarding new employees are high, especially when a company is doing it regularly. Also, high turnover rates can lead to inconsistencies within the organization, resulting in poorer performance and client satisfaction. 

But, how does internal recruitment help a business retain its workforce? Here are some of the ways: 

  • Investing in Your Employees - When workers see that a company cares enough about its employees to offer different (and often better-paying) positions, they take notice. Building an internal talent marketplace shows that you're investing in your workers, making them more likely to invest in the business. When workers are seen as an asset, not an expense, they usually stay. 

  • Beneficial Restructuring - Usually, corporate restructuring leads to layoffs and executive bonuses. However, you can restructure your organization without losing valuable employees. Instead, you can determine where your employees will work best by utilizing their strengths and weaknesses. For example, perhaps a worker is in an entry-level position but really wants to be in HR. So, when an HR position opens up, that person can apply and get into their desired career path. Then, they're more likely to succeed, meaning the business thrives. 

  • Lower Costs - While a big part of onboarding is training a new employee in job-specific tasks, another element is getting the person acclimated to the company culture. When recruiting internally, you don't need to reiterate the cultural aspect of the position. The employee already knows what's expected of them and how to succeed within the company. So, you can spend less time and resources bringing them up to speed and focus solely on training. 

  • Better Job Satisfaction - Overall, employee retention soars when workers are happy with their jobs. If they're struggling to pay bills or feeling overworked, they're more likely to search for positions elsewhere. Internal recruitment allows you to shift workers where they're the most satisfied. In this case, the person is far less motivated to search for jobs outside the company. Also, remember that working in a different position within the same company is efficient for both you and the employee. Just as you don't have to teach your corporate culture to a new person, the existing worker doesn't have to go through the same process at a different company. 

  • Better Employees - Who do you think would be better at a specific job? Someone fresh to the position or someone with a decade of experience? You'd choose the latter person, even though they're likely more expensive. Internal recruitment empowers your employees to learn new skills and develop themselves into a highly-qualified asset. Over time, you'll accumulate more high-value assets that will strengthen your bottom line and lead to better quality products and customer satisfaction. 


The ROI of Internal Recruitment

If you're still not convinced that internal recruitment is the best way to retain your employees, let's break down the process into some numbers. When you focus on recruiting internally, you can expect to get these returns: 

  • Save $3,000 to $5,000 Per Hire - On average, an internal hire costs about $1,000 for hiring and training. By comparison, a new hire costs between $4,000 and $6,000 when all is said and done. For executive-level positions, these costs can be even higher. So, you can already keep more money in your pocket by recruiting internally. 

  • Save Months of Effort - Typically, it can take between two and six months to find a new hire for a specific position. Executive-level openings can take even longer to fill. With internal recruitment, you can expect to fill the position within two to three weeks. That kind of turnaround is valuable because less money is spent on interviews and job postings. Also, it means less disruption to your business until you find someone to fill the void. 

  • Reduce Your Turnover Rate - Churn rates vary by company and industry, but about 20 percent of new hires will leave the position within two months. Since you're hiring someone from within the organization, you don't have to worry about turnover. In most cases, you can expect nominal churn, if any at all. 


How to Develop a Recruiting and Retention Plan for Your Workplace

As we mentioned, the best way to recruit internally is to build a talent marketplace within your company. This marketplace allows employees at all levels to see and apply for openings as they come up. In this case, everyone has a personal account to access the marketplace, and they can communicate directly with other people in the company. 

This kind of network is hugely valuable because it streamlines the recruiting process and enables communication about other things, such as employee mentoring, executive training, and more. This one marketplace could become a one-stop shop for employees to discover everything they need to know about various opportunities. 

Beyond the software involved, you must also develop an internal recruitment strategy. Here are some tips on what to consider: 

  • Avoid Favoritism - In many companies, the ones who get promoted are those closest to the executives and higher-ups. So, many other employees get neglected, even if they would be a better fit. When posting new jobs, make sure they're open to everyone, not just those within the inner circle. 

  • Maintain the Same Hiring Process - Just because someone is getting recruited internally doesn't mean you should skip steps. Employees should still apply for openings and undergo an interview and training process as a new hire would. By following the same steps, you can avoid potential errors or setbacks. For example, if you rush someone through, they may change their minds afterward, forcing you to start over from scratch. 

  • Get Feedback - Workers feel valued when they're included in the decision-making process. So, as you develop your internal recruitment strategy, ask workers what they want and how they feel about it. Gathering this feedback helps ensure everyone will use the marketplace, not just a select few. 


The Structural Difference

Building an internal recruitment marketplace is easy when you have the right software on hand. Structural is already built around this concept and allows you to deploy your network in less time without building it from scratch. If you're interested in recruiting internally, contact us today to find out more. 

Want to learn how to build an agile & empowered workplace?

Explore Structural