Would you rather have an employee move internally or move out of the organization?
Unless the employee is a bottom performer or a troublemaker, I think we all know the answer to that question. Yet, when you look at how internal transfers work in an organization, one cannot help but wonder if the leadership’s opinion on the question differs. Many years ago, Credit Suisse spent a considerable amount of time investigating the ‘stickiness’ of an employee in the organization. In an attempt to cut down unwanted attrition and save up to $100 million a year, the organization wanted to figure which factors encourage an employee to stay longer. One major takeaway from the three-year-long study was that changing jobs internally led to an increase in the stickiness factor. Credit Suisse immediately pulled levers and increased internal job posting from less than 50% to over 80%. Needless to say, the move resulted in many positives. What was relevant then, is still relevant today. Internal transfers still hold an immense influence over revenue.
There are multiple advantages of a successful internal transfer process apart from retention. First, it a great opportunity for an employee to grow within the organization by exploring multiple teams and work streams. It is likely that an employee is bored and disengaged with similar kind of work year on year. While moving up the ladder may not always be feasible, moving across provides a fresh set of opportunities and learning avenues. If an employee can fulfil their career aspirations internally, why would they look outside of the organization? Some organizations do this very well by encouraging employees to look internally for opportunities and making a transition between teams a frustration free process. Research has also demonstrated that those who move internally are more successful in similar roles filled by external hires. The same research also goes to say that it takes close to three years for an external hire to acquire similar performance as those promoted internally (Bidwell, 2011). A major reason for this could be that an internal candidate is familiar with the organizational culture and likely the role too. This helps close the gap on the time to ramp up. All of this put together can justify the benefits of a strong internal transfer process based on drastic reduction in the cost of turnover alone – an internal candidate is cheaper (most often), hits peak performance faster and stays engaged. What more could one ask for?
Why is it then that internal transfers are a highly cumbersome process in most organizations? To begin with, it isn’t easy to find roles open within the organization. Some organizations don’t put in the requisite investment it takes to promote open roles internally. I’ve seen organizations that post internal openings on a site and think it’s enough. On the other hand, I’ve also seen organizations that go all out; not only do they post it in the internal jobs page, they send emails, put up posters, announce them on the intranet and hold job fairs.
The second barrier is the process in itself. The process of application and acceptance needs to be simple and free from bureaucracy. It isn’t the easiest thing to do but taking out the unnecessary and damaging step of current managers approving transfers goes a long way. I am yet to wrap my head around why current managers should have any say on whether an employee gets to transfer internally or not. They are free to share feedback with hiring managers when there are performance concerns and should trust them to take the right call. However, apart from that, they should hold no power to restrict transfers. What would they do if the employee resigned instead?
The third is transparency and fairness of transfer eligibility. Restrictive transfer policies in today’s day and age spell doom for your company’s reputation. While tenure based eligibility may be valid at certain levels within the organization, they shouldn’t demand ambitious targets. Asking someone to stay in the same role for a minimum of two years before they can move might not be the best idea. Review the current policy and debate on the minimum required duration someone needs to wait before they can apply to transfer. A good rule of thumb is – the lesser the better. All other restrictions, unless based on performance, should be thrown out the door.
Internal transfers are not without drawbacks but none of them is big enough to justify discouraging internal movement. Most successful new teams in organizations are seeded from within. If done right, a strong internal transfer mechanism might be your best tool for career growth and top talent retention.
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