What Outperformers Do Differently to Tap Internal Talent

In a tight labor market, companies are in trouble when career growth opportunities within the organization are misaligned with the needs of employees.

According to Pew Center Research data, more than 60% of U.S. employees who quit their jobs in the past year cited a lack of career advancement opportunities as a leading reason for leaving, and a recent study by researchers at the MIT Sloan School of Management, New York University’s Stern School of Business, and Revelio Labs found that lateral career opportunities are more than twice as important as compensation in predicting employee retention. Additionally, lateral moves and promotions allow employees to experience professional growth and develop new skills. Yet our research finds that only 10% of job opportunities today are filled with internal lateral hires.

While often overlooked as a lever for talent, offering employees lateral moves can be an untapped gold mine for companies. By adopting leading practices for internal mobility, companies can better deploy existing worker capacity and benefit from more successful hires who hit the ground running in new roles with greater institutional knowledge, higher levels of engagement and retention, and even improved gender equity. At the same time, employees benefit from meaningful skill and career development opportunities that better align with their goals, making this a win-win for employers and employees alike.

In our research, we have identified companies that are leading the way as talent mobility outperformers. These organizations have higher internal lateral mobility rates and higher employee satisfaction. In this article, we explore four practical insights based on best practices of outperformers, offering ways for companies that are currently underutilizing internal talent to learn from those at the leading edge of this trend.

What Talent Mobility Outperformers Do Differently

We identified internal and external hires at the 750 largest U.S. public and private companies by analyzing the employment histories described in their professional online resumes (See “Identifying Internal Lateral Mobility Outperformers”). We define an internal lateral career move as a new position of an employee within the same company, where the occupation changes but the level of seniority remains the same. We found that the median lateral mobility rate for large U.S. companies is 8%, and only about a quarter of companies in the data set boasted rates above 15%.