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Why you should look inside the company when hiring

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Look inside the company when hiring

Fed up with finding good external candidates, a lot of organizations today invest a tidy sum of time, energy and money into the caliber of internal talent. There’s a good reason why these investments will pay off. According to a research by WartonMangement professor Matthew Bidwell, external hires are routinely outperformed by internal hires who’re paid much less.

Howsoever, internal hiring is not that sure-fire. In a study by CED, it was found that 40 percent of internal moves involving high potential employees end up in failure.

The thing about external hiring is that it’s very easy to research for advice, tips on how to do it efficiently. The same cannot be said about internal hiring. Hence,

Posting: A job posting is a formal process in which the hiring manager posts an open job on an internal job board. Sometimes, internal hires are made that way.

A lot of companies today, have adopted policies that encourage managers top post open jobs, very few actually require it. Moreover, no state or federal law requires firms to post jobs internally.

Managers, thus, have the option of simply sidestepping the posting process in favor of sponsorship, an informal, relationship oriented process in which a hiring manager fills an open job with a candidate known through personal connection. In that event, posting and sponsorship operates alongside as practical approaches to identify internal candidates.

So, which one would yield,quality hires? Studies have shown that people usually have better information with colleagues, they know well, than those they don’t, making internal hiring via sponsorship a practical approach. Shockingly, it’s the opposite. Candidates that are hired through internal postings outperform sponsored internal hires in every aspect of quality. Not just that, according to a study, internal hires via postings received high competency as well as contribution ratings, the two most important metrics of performance.

Additionally, internal candidates hired via internal postings are 20% less likely to be fired or quit during their first 24 months on the job in contrast to sponsored internal candidates.

How exactly does posting help hiring managers make better internal hiring decisions? To put the record straight, even the most connected managers in a firm cannot be expected to know every inch of a potential candidate. When an employee is allowed to present his/her qualifications and not just the relationship with the hiring manager, the likelihood of that candidate being overlooked reduces.

Moreover, personal information is not just enough to make a good hiring decision. Managers are still responsible to hire someone who is worthy of the job in its true sense. According “bounded awareness” (Bazerman&Chugh, 2005), there are two most common decision making mistakes connected to a hiring managers’ use of data.

The first, managers every so often gloss over important information that could improve their decision making. A job posting requires a manager to evaluate potential candidates by sticking to the established set of criteria. While, a sponsorship enables managers to play around the job requirements to select their preferred candidate.

Naturally, a candidate hired via a formal set of evaluation criteria is more likely to excel in the job, than the one hired via preferential treatment.

Other things, managers sometimes allows unrelated information influence their decision making. For example, the candidate shares similar interests to that of the hiring manager. The hiring manager is likely to bias the hiring decision, even though the candidate’s ability to perform the job satisfactorily is questionable.

A job posting reduces the changes of any external, unrelated information influence the hiring managers’ decision. It compels the manager to make a decision by sticking to objective information. As a matter of fact, postings can also help abate any sense of unfairness that could play with employees’ motivation.

In addition to this, the job posting process is found to enable moves across divisions and functions and cities and states. Employees are also found to be more empowered to negotiate their salaries, thus reducing the chances of salary discrepancies linked to different genders.

In early 2000s, Cisco developed an in-house job posting system called Pathfinder. Many managers complained that they would lose their most promising employees due to this. The company responded saying that if a manager didn’t want to lose their best talent, they should may consider getting better at managing them. Organizations should start considering a more thorough use of the job posting to increase the chances if internal mobility.

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