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According to a recent article in Inc. by Sarahd Lynch, one of the leading workplace trends for 2025 will be a greater emphasis on hiring from within. Even though the 2024 labor market is cooling, job openings are slowing in some sectors, and with a decrease in quit rates, some companies find themselves in an unusual position.
Labor Hoarding
With the anticipation of a recession, many companies engaged in “labor hoarding” rather than hiring new employees. One of the results of this strategy is that many companies have an ample, experienced labor force under their roof.
These factors create an environment that encourages companies to hire from within. Having purposely stockpiled talent, managers are now tasked with using it. Jeanne MacDonald, CEO of recruitment process outsourcing at Korn Ferry, says that 2024 saw “internal mobility or internal recruiting, more so than external, than we’ve ever seen.” She says that companies “were turning toward their current workforce, evaluating what skills already existed internally, and discovering how to leverage them in a new way.”
Andrew McCaskill, a career expert at Linkedin, predicts that even if hiring opportunities do accelerate again, …companies realize that their “next best employee may be my current employee, just moved to another team.”
Advantages of In-House Promotion
As Laura Spawn writes in business.com, there are many rewards for harvesting your existing talent.
In-house candidates are low-risk
Managers already feel comfortable with the quality of the employees. The manager has direct access to the applicants’ work histories, personnel files and references, and personal knowledge of their work. Therefore, the recruiting focus can be on finding the right fit for the opening.
Trust
An existing employee will already have the trust of their managers and fellow employees. This allows them to step into a new role with a high level of autonomy and confidence.
Expense
According to the Society for Human Resource Management (SHRM), the average cost to recruit a new employee in the U.S. is around $4,700. By eliminating recruitment costs, the company realizes a significant reduction in hiring costs.
Cyclical investment
As explained by Ms. Spawn, “Imagine internal hiring as an investment circle that promotes employee loyalty and reduces turnover. When you hire someone new, you spend time onboarding and training them — a form of investment that will hopefully lead to high productivity and quality workflow returns.
Suppose the investment is booming, and the employee earns a promotion. In that case, you will build on the knowledge, skills and training already imparted to the employee while inspiring them to reinvest in the company and not seek another employer.”
Learning curve
Transitioning an in-house employee can be an efficient resource-saving strategy. Knowing the responsibilities and having existing relationships with the other workers will help prevent any interruptions in productivity.
Cultural
No matter how diligent the screening process is, bringing in an external hire can be a gamble. Whether they will fit well within your company culture takes time and can be a fiasco if they don’t.
Employee retention
If employees know there is an opportunity for promotion, they will be less likely to consider jumping into an out-of-house position due to the inherent risks. Your business will be recognized as one that values its employees.
Disadvantages of In-House Hiring
Diversification
If you need specific technical or business skills, you have little choice but to look outside your existing workforce. Additionally, creating a more diverse workforce can bring unexpected dividends. External hires can also bring unique talents and perspectives to help other employees.
Indifference
Although no one wants to admit being in this situation, through attrition and business vicissitudes, you may not have the talent pool you need. If you see any leadership qualities, productivity, and other measures stagnating, bringing in outside talent can reinvigorate your workforce and bring in fresh perspectives.
ASN can help
Companies must consider how to create internal systems and programs that facilitate internal mobility. By having transparent, established promotional and advancement systems, you will minimize resentment among fellow employees.
Our professionals at ASN can help you develop the programs you need. Just give us a call – we would love to talk.
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