Why companies are relying on internal hiring now

It can be advantageous, provided there is a robust talent programme in place

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Back in January 2020, a LinkedIn report revealed that 96 per cent HR professionals in India prefer internal recruitment as compared to 81 per cent globally. Cut to post COVID-19 days, and yet another LinkedIn report informs that internal hiring rate has been nearly 20 per cent higher than the same time last year. The reason cited is that the pandemic has put a strain on the finances and with building uncertainty, organisations have gone for a rapid internal movement to fill its vacant roles.

It is a usual trend to see a recruitment uptick in January, which falls in the later months. This year, however, March saw lockdowns, which led to a drastic fall in external hirings, while internal movements stayed stable. One of the biggest benefits of this move is that it ensures employee retention. It has been seen that companies with higher internal mobility rate manage to retain more employees and for longer period of time.

“One of the key learnings during the pandemic was that internal hiring optimised workforce utilisation and also cost.”

Rajeev Singh, CHRO, ATG Tires, Yokohoma

In the COVID-19 world, it definitely sits well with many organisations as it is an effective medium to reduce costs. The whole idea is to achieve more from less resources. Many companies even managed to save the jobs of surplus resources, by deploying them to various streams within their groups amidst all the uncertainty. Ravi Mishra, senior vice president, HR, global epoxy business, Aditya Birla Group, reveals that as a rule the Group first posts the job requirements on its internal website and only if a suitable hire is not found within the company, does it look elsewhere. During the pandemic, 90 per cent of its hires were internal, compared to 70 per cent every year. “During the pandemic, we almost had a ban on hiring talent from outside without the permission of the CHROs. Therefore, we pushed for internal hirings, even if there was a 60 per cent match and the role is not so critical. The person will learn and develop the other 30 per cent on the job. The reason being, in some places, there may be surplus employees, who can be utilised without them having to lose their jobs for any reason.”

Mishra points out another advantage of an internal hire. The person is well versed with the company’s culture. Even if an external person matches the job criteria to the hilt, alignment and grooming takes time. That is not an issue with someone moving from one stream to another within the company. “Out of 10 positions, eight were filled internally. The remaining two are from manufacturing and R&D, a sector we do not cater to. So, we hired from outside. For an organisation it is beneficial, because there is no recruitment cost and every other employee benefit will continue. Delay in onboarding can be minimised. For an outside talent, onboarding takes two to three months. Also, it ensures career growth of subordinates. When a person’s reporting manager moves to another position, she/he gets the opportunity to get promoted and take on more responsibilities.”

“A constant dialogue with the internal talent is required to know about their aspirations, guide them with multiple career streams and make them aware of competencies required for the next role.”

Nihar Ranjan Ghosh, president – HR, Emami

The pandemic led to a hiring freeze in several organisations. Many filled up critical positions through internal hirings because the cost and manpower remained undisturbed. It was also the time to rationalise the workforce. Rajeev Singh, CHRO, ATG Tires, Yokohama, says that it serves two purposes. One, if the role is perhaps more critical than what the person is occupying currently, the shift is useful and two, there’s no increase in the number or cost of manpower, thus rationalising the workforce utilisation and effectiveness. “This was one of the key learnings during the pandemic. It optimised workforce utilisation and also cost. We tried to focus on engaging and retaining so that they don’t panic and leave the company. We continued hiring from outside for positions which were open and meant to be filled by external hiring, such as graduate hiring on campus, optimally staffed bench strength that is not enough for internal movement, etc. It will be a company’s call to maintain the same bench strength as pre-COVID or increase or reduce it.”

Singh also believes that since the workplace is becoming more flexible now, it doesn’t matter whether a talent is internal or external. “All processes have been experimented in these nine months of COVID and all have worked. When there is an uptick on flexibility, I don’t think it matters whether the hiring is internal or external. I believe the concept of job sharing will pick up from hereon,” Singh asserts.

The advantage an internal recruit has over an external hire is that the person knows the Company’s ethics, laws, visions, principles and code of conduct. Therefore, even if a person from outside is 100 per cent right for a job profile, the existing employee gets an edge. However, that can only happen if organisations have a robust succession plan. Nihar Ghosh, president, human resources, Emami, strongly dismisses that it has anything to do with COVID-19. “If one does not have such a talent pool, how will one perform internal recruitment? This can’t be a COVID response. A talent programme can identify individuals for succeeding into emerging roles in the future. I don’t think one can do that without necessary groundwork and a talent pool which is ready to move to the next job. For this, one needs a robust and stable talent-management programme”.

“Through internal hiring, delay in onboarding can be minimised. For an outside talent, onboarding takes two to three months.”

Ravi Mishra, senior vice president, HR, global epoxy business, Aditya Birla Group 

Many people will self-qualify and apply for these roles because they want to grow, but they may not necessarily be ready to move to the next job. The prerequisite for this movement is that one needs to create a structured talent programme where one has incubated and kept ready a few people who can be deployed to these emerging roles. That can sometimes be done through normal channels, such as succession planning or by identifying a person in the ecosystem who would have the skillsets to take up the role, Ghosh adds.

He firmly believes that if an organisation has a strong talent-management programme, which creates a succession plan, one doesn’t need an internal job posting. “That’s because one has already identified positions which are vulnerable or likely to lose people. One has also identified a successor who has been groomed and kept ready in case of vacancy, either through a planned or unplanned transition. So, if one posts a job internally, it means there is somebody who exists in the organisation possessing the capability to fill that position but one hasn’t been able to identify that person, as she or he is not part of one’s succession programme. Therefore, excessive internal job postings are indicative of the fact that one doesn’t know the level of readiness of the talent inside the organisation.”

One other fact such frequent internal job postings bare is that the organisation isn’t clued-in to the employees’ ambitions and aspirations from a future job. “If this awareness was there, I would have already identified the talent and pegged the person for the relevant roles. A talent programme needs to have a constant dialogue with the internal talent to know about their aspirations, guide them with multiple career streams and make them aware of competencies required for the next role. When one doesn’t have all that, there’s a blind spot,” Ghosh explains. A talent from outside may have the domain knowledge required for a particular position. An organisation is willing to make a concession for its internal talent but it cannot be zero. To ensure that, proper domain knowledge through L&D needs to be imparted, Ghosh asserts.

While an internal mobility plan is a good move, organisations need to have a robust talent programme to ensure that the internal hire is good enough for the role. The need for that escalates manifold during a crisis, such as COVID-19, when organisations are on a hiring freeze but have crucial positions lying vacant.