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How Internal Hiring Boosts Employee Retention

How Internal Hiring Boosts Employee Retention

Employers are beginning to see the importance of an internal hiring strategy. It can boost retention rates, aid in the recruitment process, and save you and your organization money. Read on to learn how you can set your organization up for success with a well-formulated internal hiring strategy. 


What are The Benefits of Internal Hiring?

While it’s important to balance hiring internally and externally for a variety of reasons, sometimes the perfect candidate for an open position already works at your organization. Benefits to hiring internally include the following:

  1. Internal candidates are already familiar with the company culture.
  2. Internal candidates are usually already onboarded and exist in an organization’s email accounts and HRIS.                                                                                                                            
  3. Hiring internally promotes retention efforts. If employees see growth opportunities at their workplace, they’re more likely to stay.


How Does Hiring Internally Aid in Retention?

Internal hiring is a practice many companies utilize in order to maintain high retention rates. But how, exactly, does this approach play such a large part in a strong retention strategy? 

It all comes down to opportunity. When an organization consistently seeks outside talent to fill internal roles, it can be discouraging to current employees. Many employees are looking to further their career, and if they are given the opportunity to do so at their current company, then they are much less likely to seek employment elsewhere. 

Hiring internally offers employees the opportunity to take on more responsibility and learn a new role. Generally, employees want to grow in their careers. According to a study by LinkedIn, employees stayed at companies 41% longer when the company hired internally. Employees often wish to change careers, be it a promotion or simply trying their hand at something different. Offering employees the opportunity for movement within your organization can boost your retention rate and even prove beneficial in the recruitment process as well. 

Not only does hiring internally promote retention, but it also saves companies money. Gartner has estimated that most regularly sized companies will lose an average of $49 million per year due to a lack of internal hiring. When you consider the cost of hiring, onboarding, and training replacements and making up for the inevitable drop in production, it isn't surprising to see that the numbers are so drastic. 


How to Hire Internal Candidates?

Many organizations face difficulties when moving toward an internal hiring strategy. According to Gartner, there are several key factors that make it a difficult transition. 


    1. Only a total of 27% of employees feel that their employer helps them to find suitable job opportunities. For this reason, many employees feel that they are unaware of what opportunities are even available to them. It is important for organizations to consider the accessibility of job opportunities when building out their strategy. 
    2. Consider sending a company-wide email with the details about the opportunity. It may also be a good idea to bring any openings to the attention of team leaders so that they may discuss them individually with their teams. 
    3. One strategy is to send jobs to designated employees who are a good fit, have expressed interest, or have similar experience. Treat your employees as if they were outside hires, and present them with fitting job opportunities. 

Cultural Norms

    1. Gartner also found that only 37% of management and employers encourage their employees to pursue internal openings. Beyond that, only 21% of employees find it easy to switch positions within their current company. 
    2. Established norms are not promoting a positive internal hiring experience. The lack of support is cause for difficulty transitioning to an internal hiring strategy.
    3. Focusing your strategy on a cultural change can have a big impact on moving toward internal hiring. The mindset needs to change for there to be consistent progress when shifting strategies. 
    4. Create methods and goals aimed at incentivizing employees to consider new internal roles. By easing the path for employees to find new internal opportunities, you solidify the foundation of your strategy. 


  1. Only 6% of employers feel that their current employees have the skills needed to fulfill the responsibilities of future roles. Many employees feel that they lack the skills needed to move up the company ladder, or even to make a lateral move. 
  2. One thing to keep in mind is that training is essential. It can save you money and improve retention rates if you are able to offer current employees training in specific areas to help them achieve goals in a new position. 
  3. Providing your employees with training and learning opportunities can open up the door for potential interest in new or higher positions within the company. Employers may wish to provide tools and resources to show employees what opportunities are available and what it takes to succeed in that role. This education can offer employees a chance to earn their way into a role they desire, despite not having the prior experience typically required. 

So how can you boost your internal hiring methods and actualize results? By taking a look at some of the factors hindering success, you can identify needs for deeply rooted change. Companies will need to develop new norms and procedures that become ingrained in the organization. This can take time and effort. However, according to Gartner, managers–at scale–claim that internal hires outperform those who are brought in externally. Here are a few key points that can boost your success in shifting toward an internal hiring strategy:


How to Interview Internal Candidates

  1. Treat Internal Candidates Like Any Other Candidate. To keep the hiring process fair, compliant, and less complicated, it’s best to treat internal candidates like you would any other candidate that applies for the position. Even if you are familiar with the internal candidate, you should focus on how they’d perform in a new role, not how you feel about them personally. Likewise, you want to make sure that the playing field is fair for other candidates, especially if there are external candidates you’re interviewing for the position. Maintaining the same interview process and asking the same question allows hiring managers to compare candidates equally as well.
  2. Notify the Right People Within the Organization. Make sure the candidate tells their current manager that they’ve applied for the job—or let the manager know yourself—so that they’re caught up to speed on all hiring decisions. This is also important in case the candidate is not currently eligible for the position due to performance issues.
  3. Stay Compliant. While some organizations may be able to post certain jobs only internally most of the time, HR teams are required to post the job opening both internally and externally to give outside candidates a chance to apply.
  4. Be Prepared for Difficult Hiring Decisions. Multiple internal applicants for a single position means that some current employees will not get the job. While rejecting internal candidates for a position is never easy, it’s important for hiring managers and HR to be as transparent as possible about the reason behind hiring decisions. By working to improve

    company culture

    , you can help to maintain a civil reaction to the internal hiring process as opposed to a combative one. This means that employees will likely be happy for their colleagues, trust hiring decisions, and continue to work for the organization.

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