Transcript: Your best new hire may already be on staff

This is an audio transcript of the Working It podcast episode: ‘Your best new hire may already be on staff’

Josh Bersin
The only way to build a successful company in this kind of environment, where things are changing so fast, is to develop people as part of your business strategy, not just a little nice thing to do for HR, but really part of the growth strategy of the company. And that just naturally results in a lot of opportunity for internal mobility, internal career pathways, internal development.

Isabel Berwick
Hello and welcome to Working It from the Financial Times. I’m Isabel Berwick.

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When managers need to fill a vacancy, their first instinct is usually to put up an ad and wait for external applicants to apply. Is that really the best way to hire people? Might it be better to look at existing staff members and give them a chance to excel in new roles? The voice you heard at the top of the show was Josh Bersin. He runs a company that offers research, advisory services and professional development for HR teams. He’s been working in the field for 20 years. Josh makes a great case for promoting internal talent rather than hiring externally. We’ll hear more from him in just a few minutes. But first, I’d like to introduce the FT’s deputy work and careers editor, Bethan Staton. I asked her why is the knee-jerk reaction in most organisations to look for talent externally?

Bethan Staton
So I think a lot of employers, I would say, incorrectly think that they’ll get the ready-made skills that they need from outside hires rather than the people in the organisation. The assumption when you need to fill a role, when you need to fill a gap, is that that’s not in the organisation and that’s why you can’t find it. So almost this sort of knee-jerk instinct is to look externally.

Isabel Berwick
Our desire for novelty is sort of baked into us. And I think that plays out in the talent wars. How can we overcome our bias towards the new?

Bethan Staton
I think one of the answers to that is it’s also part of the answer to the question as to why it feels more attractive to look outside. Filling the gaps that a workforce has from within the organisation requires a bit more kind of creative thinking from employers. If, for example, you know, you need a particular role in data science, say, filling, you will need to look within the skill sets of the people you have on the books. A lot of employers just don’t have that information. So kind of historically, it’s not really super-common practice for employers to have lists and databases of the kind of skills that they have in their workforce.

And in the absence of that, it seems easier to basically get other people to sell themselves to the hiring managers rather than think about, you know, what have we actually got, doing a bit of work, asking existing employees what they can offer, thinking about the skills that might be hidden within the roles that they’re doing at the moment. So, for example, if you’re looking for someone to do some much kind of crunchier data analysis, they might already be working in a sort of adjacent role, not directly doing the skills that are needed, but they can be trained up to do it. And that also requires a bit more effort and requires investment and so on.

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Isabel Berwick
I think Bethan’s dead right that companies hire externally because it’s the easiest option. According to a survey of recruiters in the UK carried out last year by the recruitment software company Eploy, in-house recruiters are still likelier to advertise a job externally before they do so internally. And there’s a good case to be made that it isn’t the best way. Josh Bersin looks into hiring and retention practices for a living. So I went to him to find out more. I started by asking him if this focus on external hiring was down to managers’ lack of imagination.

Josh Bersin
It is. And we’ve actually looked at the financial performance of companies that are good at moving people around inside versus those that aren’t, and they are outperformers by far. And what they basically have is a mentality and a philosophy that every employee is capable of doing more under the right conditions. I talked to a large telecommunications company a few years ago who also was part of a conglomerate that owned an oil company, and they were really short people in the telecommunications business, and they had a huge amount of, you know, too many staff in the oil and gas business. You know, I said to the CEO, you know, why don’t you just move some people around? And he goes, well, we would never do that. It would never work. I said, why wouldn’t it work? He said, because we’ve never done it. (Isabel laughs) You know, that’s the problem, is if you don’t do it, you don’t realise that actually, it is possible.

Isabel Berwick
Have you seen examples of companies that use funds that they might have put towards external hires towards paying people to stay or paying for training? You know, are there pots of money for this sort of thing?

Josh Bersin
Yeah. In fact, that’s a massive part of this. If you look at Unilever or MetLife or Schneider Electric, companies that are really, you know, pioneering in this area, they take their learning and development budgets and they allocate a significant amount of them to internal development career pathways. There’s many examples of companies that have done this and they, you know, have this money in the training department. It’s not really a bunch of new investment. It’s really reallocating a lot of spending they already have towards these internal career pathways.

Isabel Berwick
And developing your workers leads to an overall improvement in the performance of the company.

Josh Bersin
What it does is it builds general managers, because people that move around inside the company understand the dynamics of the whole organisation. So even Microsoft has come up with this new management philosophy. And what they say to their high-potential people is if you wanna be a senior leader at Microsoft, you’re not gonna get promoted in place. You’re going to have to take a job rotation, because we want you to know how Microsoft works as a company, not just your one area. And they’ve made that kind of directive to encourage people to look around inside the company and to encourage managers to source internal candidates, because that’s the philosophy of management they wanna build.

Isabel Berwick
You’ve made a pretty strong case for internal hiring and its benefits. If some of our listeners want to act on what you’ve said, what kind of pitfalls should they avoid?

Josh Bersin
If the company doesn’t believe they’re in the business of developing their workforce and that that is part of their mission, then this kind of stuff tends to look good but not work. So what will happen is a lot of companies will say all the jobs we go recruit for externally are available on an internal job board, so just go apply. Well, you know, an employee who just applies for a job to the external job board probably doesn’t even get through the screening tool. They may not even make it into the job opportunity. So if the company doesn’t fundamentally believe that this is part of their mission, and then we can prove to them that that is something you should do, then a lot of these ideas tend to sort of not work out.

So we think one of the big parts of this is just fundamentally understanding — I wouldn’t say it’s believing, but understanding that the only way to build a successful company in this kind of environment, where things are changing so fast, is to develop people as part of your business strategy, not just a little nice thing to do for HR, but really part of the growth strategy of the company. And that just naturally results in a lot of opportunity for internal mobility, internal career pathways and internal development. 

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Isabel Berwick
Hiring for roles internally can keep employees engaged, give them a greater sense of how their company works, and it saves a lot of money. But it’s not without its drawbacks. If you hire internally, you may leave a vacancy elsewhere in your company. You may miss out on skills and new perspectives that an external hire would bring. And there’s no guarantee that an internal candidate, even one who excelled in their old role, will be a success in a new one. Managers should think really carefully about what their team needs, and be as rigorous with internal candidates as they would with external ones. That’s something for bosses to think about. But what about employees who want to test themselves in new roles? How can they give themselves the best possible chance of progress within their company? And should they ask their employers for help? I asked Bethan, is it up to workers to improve their own skills?

Bethan Staton
Yeah, it’s a really interesting question, and certainly in the UK, a lot of the government ideas around reskilling have tended a little bit towards encouraging individuals to reskill themselves. So one of the big ideas of the current government has been a more flexible student loan system that can be applied to short courses. So if you decide you want to reskill yourself to be a more attractive potential employee, you can take a course in coding. I mean, there’s all sorts of things that you can do.

I think one of the problems with those systems which put the responsibility on the individual for reskilling is it’s very difficult to know what is going to make you more marketable in the workplace, what’s really going to help you get a job and what’s going to be attractive to employers. And those things are changing all the time. So I use the coding example and I think it’s interesting. Still an incredibly useful skill. But when ChatGPT came out last year, one of the sort of slightly unsettling shocks was that, you know, this is technology which is really good at coding. And a lot of people had been told for years and years and years that if you want to get ahead in the workplace, like this is what you need to do. This is something that could be sort of eclipsed a little bit by AI very quickly.

So in a system where individuals are more responsible for reskilling, it does become quite difficult to really plan skills needs with workplace needs. And I would also say to employees who are thinking about developing their skills, it’s always worth speaking to your employer about it, because we’re still, for now, in a pretty favourable economic environment for workers.

Employers who are savvy will be thinking about how to retain their staff and how to develop them. And as an employee, if you can engage in that process with your workplace, maybe think about how you can get support for funding and so on, it shouldn’t be assumed that the responsibility will fall to you.

Isabel Berwick
Are there any hiring trends you’re seeing, particularly at the moment?

Bethan Staton
In a tight labour market, what we’re seeing much more of is employers recruiting people who already have jobs. So rather than looking in a pool of unemployed people and reducing the number of unemployed people when they fill roles, they recruit people with expertise from other companies. And I think that also does speak to what you were saying earlier about the kind of appeal of the new, wanting to get kind of buzzy big names, hoping to bring expertise in rather than doing the perhaps more difficult work of developing people within the company or taking people with less experience and building up their skills. And that has kind of economic consequences, too.

Isabel Berwick
Bethan, thank you so much.

Bethan Staton
Thanks very much, Isabel.

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Isabel Berwick
Internal recruitment might not be the go-to strategy for hiring managers or recruiters. But as Josh and Bethan say, there are good reasons to think hard about it. Be open-minded about what candidates might be able to do, but apply the same rigour and diligence to an internal applicant as you would to a new face. Hiring the right person can transform a team and it’s well worth doing it properly. 

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Thanks to Josh Bersin and Bethan Staton. This episode of Working It was produced by Mischa Frankl-Duval and mixed by Simon Panayi. Manuela Saragosa is the executive producer and Cheryl Brumley is the FT’s global head of audio. Thanks for listening.