HR pros pivoting from outside hiring to developing internal talent

A talented workforce is the lifeblood of any successful business, especially as AI and other advances are rapidly changing the nature of work itself. Many HR professionals now realize that the best place to find the talent they need for the future may not be from outside their organization but from within it.

More than 6 in 10 HR leaders named leadership development as their top priority for this year, according to a survey by the talent management company SHL. Only 42% consider external hiring to be their top priority.

“We are witnessing a shift in what organizations consider important for their success,” said Karim Badr, a research scientist for SHL. “Organizations are starting to recognize the importance of talent management as a crucial component for prosperity and sustained growth and are shying away from relying only on external talent pools.”

In today’s dynamic business environment, organizations have come to realize the importance of nurturing, developing and optimizing their internal talent pools. This involves implementing strategies such as succession planning, high-potential talent identification and facilitating internal career mobility.

Although more than 8 in 10 respondents indicated that their organization is willing to invest in building talent, less than half are satisfied with how high-potential employees are being identified within their organization. This comes as no surprise, Badr said, because 87% of organizations still use subjective input when making internal selection decisions and only 56% use objective assessments for those purposes.

“The picture is not so grim, however, as more and more organizations are starting to realize the benefits that assessments can bring to the table,” he said. “Objective assessment is often considered fairer than subjective methods for several reasons, including greater reliability, transparency and reduced bias. It is thus very encouraging to hear that more organizations are planning to use assessments for internal recruitment decisions, a practice that has not been so common in the past and was more limited to external hiring or talent acquisition.”

SHL identified five areas in which businesses can improve their development of internal talent:

• Internal mobility opportunities. Opportunities for internal mobility exist at various organizational levels, but the majority of opportunities exist at the individual contribution level (27%) and at the first-line manager level (27%).
• Talent identification lacks objectivity. Internal selection and promotion decisions heavily rely on subjective input (87%) and past performance (78%), indicating the opportunity to realize the value of more objective inputs, such as assessments.

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• Assessments are only sparingly used for internal hiring. Although a small percentage currently uses assessments for internal hiring (7%) and career development (11%), a substantial portion plans to adopt assessments for these purposes in the future.
• Identifying high-potential employees is still a challenge. Despite the use of assessments to identify high-potential employees (55%), satisfaction levels with how they are defined and identified within organizations remain below 50%.
• Effective use of talent data still has many barriers. Organizations need to be aware of any barriers to data use and plan to overcome them. An integrated talent system can offer a big step in the right direction.