LinkedIn wants to help companies start hiring internally again

March 19, 2014
March 19, 2014

LinkedIn is best known as a place to find talent but it’s now addressing a problem most companies struggle with—retaining the best employees.  

Dan Shapero, who leads LinkedIn’s Talent Solutions group, the company’s most profitable division, sees employee retention as a potential growth area for a business that booked $245 million in revenue last quarter.

“We’re excited about the idea that many companies struggle to create a marketplace for people to move around,” Shapero told Quartz. “Many people leave their employer because they’re not sure they can advance their career, even though they’d like to stay. That’s a problem that’s solvable with the right technology and cultural mindset.”

According to a recent LinkedIn survey, employees most often think they’ll leave for better salary and benefits. Those who have recently switched, in contrast, say that the primary reason for their move was an inability to advance. For every 100 internal moves, LinkedIn estimates US companies retain 38 people who would have left otherwise.

In the US, there’s been a long term trend in the toward more external hiring, which comes, in part, from the decline of unions, Wharton professor Matthew Bidwell says. Once companies had more freedom to hire externally, they began to do so.

His research has found that external hires get paid significantly more, have lower performance evaluations, and a higher exit rate than internally promoted candidates.

“Part of it is the dismantling of the HR function,” Bidwell says. “Front line managers don’t care about internal mobility as much, doing it right requires some kind of planning, working on having people in place who can move into new positions, investing in training. The great advantage of external hiring is the perception that you can do it today.”

But often, HR divisions are so busy finding outside hires that they don’t devote resources toward finding internal candidates, publicizing jobs, and dealing with the difficult internal politics of lateral and upward moves.

If difficulty is a potential barrier, more data will help.

“If you ask most employers, they don’t have a digitized profile of their employee’s experience, there’s a lack of data to bring to the problem,” Shapero says. “There’s no mechanism to promote opportunities in a targeted way and people don’t know opportunities around them.”

LinkedIn, with a massive user base and data set, wants to become a detailed roster of internal talent. A company could, for example, consistently search internally for high performers who have the right skill profile for an open job.

The company found that 69% of HR managers in the US believe that their internal mobility efforts are well known by employees. But only one quarter of employees said they were aware of such programs in an exit survey. 

If you’re angling for an internal promotion or lateral move, consider updating your LinkedIn profile. The job might come to you.

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