Why planning is the key to internal recruitment

By Abigail Murison

It is not much fun being a hiring manager right now. With unemployment sitting at 3.5 per cent in Australia, 3.4 per cent in New Zealand, 3.3 per cent in Hong Kong and just 1.9 per cent in Singapore, if you are looking to recruit a new team member or manager, the pickings are slim.

The good news is that the talent they need might be right under their nose.

Cushla Moore, HR specialist at MooreHR in Hamilton, New Zealand, is a huge advocate for promoting from within. “Too often you see good people miss out on a promotion, and, not long after that, they end up going elsewhere into a bigger role, where they do amazingly well.

“Sometimes hiring managers or employers can think the grass is greener on the other side and recruit externally, when they actually have some pretty good capability right in front of them,” Moore says.

Succession planning

Travis Steel CPA, co-founder and director of advisory and consultancy service Cadence Connect, says good managers know the key motivations of their team members, and which key staff members they cannot afford to lose.

“If they cannot answer that, it is a serious red flag that your communication and your relationships with staff need work,” Steel says.

“If someone has resigned, it should not have caught you by surprise. Right now, the reality is that people are getting tapped on the shoulder from a variety of sources. Have you been proactive in grooming and developing your internal talent? Are they ready to step into the role?” 

Managers should work to develop a good understanding of each team member’s aspirations and abilities, and draft a succession plan that outlines who will be ready to be promoted and when.

Promotion as retention

Steel says internal promotions can form part of a retention strategy. While many companies may talk about offering their employees opportunities to grow and climb the career ladder, seeing your colleagues promoted shows that a company “walks the talk”.

Recruitment Expert founder Michael Edelstein CPA explains that “firms want to hire someone who can do the job, who ideally already has experience in a similar role”.

“However, candidates are asking for a challenge and learning opportunities,” he adds. “If you hire someone to do exactly what they have done before, why would they stay except for the money?

“If you focus on reskilling and upskilling existing staff to take on new roles, you have the perfect engagement and retention strategy, and employee value proposition,” Edelstein says.

The flip side is the risk businesses run if there are no clear progression pathways available.

 

"You need to bring someone in who is highly engaged and has the people skills to bring others on board with them. That is difficult to build in somebody, unless it has been developed over years and years. You are either an engaging leader or you’re not."

 

“When your people are performing consistently well and are already operating at the next level, then they need to be recognised and promoted – otherwise you risk losing them,” Edelstein says.

They are also more likely to negotiate the salary when offered a promotion.

In a tight labour market, it is also important not to try and lowball an internal candidate. People are much savvier about their market value now, says Steel.

An internal promotion is still a cost-effective choice. Apart from not paying external recruitment fees, companies also have the advantage of the newly promoted employee being familiar with the company culture and systems, so they can get up to speed faster in their new role. You also know what other non-monetary perks are important to them, so you can make a compelling offer.

Promoting from within may be a great option, but it cannot come at the expense of business priorities. If the company or department is going through transformation or a restructure, they may still need to look externally for the key skills and qualities needed for that new direction. On the other hand, there may simply not be a succession plan in place.

“Many baby boomer partners of small firms are in this position – where they have a good practice, but no one wants to step up and take the responsibility, financial or otherwise, of buying the practice,” says Edelstein.

“If you want to go through an IPO [initial public offering] or make big changes to systems and processes, you might need someone who has related experience to guide the team through that,” adds Steel. “Or someone from a competitor or other entity may bring some fresh ideas.”

 

"Firms want to hire someone who can do the job, who ideally already has experience in a similar role. However, candidates are asking for a challenge and learning opportunities."

 

Edelstein agrees. “You should never promote people purely due to tenure or loyalty. Promotions should be based on merit and business needs,” he says.

Another watchpoint is company culture. A team member may be technically capable of taking on a role, says Moore, but they might not have the natural behaviours you are trying to foster in the organisation.

“You need to bring someone in who is highly engaged and has the people skills to bring others on board with them.

That is difficult to build in somebody, unless it has been developed over years and years. You are either an engaging leader or you’re not,” Moore says.

Best of the best

What is the way forward if you are unsure about whether your internal candidates are ready to step up into a new role? It is not uncommon for businesses to have a policy of advertising all positions internally and externally, especially for senior and C-suite roles.

“Some organisations pay really good money to external recruitment agencies. I have still seen them land on internal candidates, but they know they have explored the options,” Moore says.

“Even if you think you have somebody who could step up to the mark, you want to have that confidence that you are not just filling a role with the best you have currently in your business: you’re filling it with the best person available in the market at that time.”

When internal applicants miss out

Sometimes a team member might apply for a role they ultimately do not get. Disappointment is natural, and the business needs thoughtful feedback.

An internal candidate’s response to an unsuccessful application partly depends on feedback given after the recruitment process, as well as conversations they had about their performance with their manager previously.

Edelstein says that already having clear and objective KPIs in place can help, because it will be self-explanatory to everyone when the right person is hired.

Having open, frank discussions throughout a team member’s tenure about their progress, goals and the company’s expectations helps with this.

“It is just as important to afford candidate care to your internal applicants as it is to your external applicants,” adds Moore. “You have to provide them with open, honest feedback on where they came up short compared with the successful candidate.”

From there, Moore says you can develop a plan to help the individual fill those skills gaps, so they are prepared when another opportunity comes up.

“It is a much harder conversation when the person is just not cut out for a particular role but does not realise it themselves, despite your hints,” Edelstein says. “In that case, you should either guide them to a role that’s more suitable, or they will eventually move on in pursuit of their incompatible goals.”