Latest / Hiring & Firing with Fexingo: Recruitment, Performance, and Workforce Decisions / How Internal Mobility Cuts Hiring Costs in Half
Transcript
- Lucas: So here's a number that stopped me this week. A 900-person logistics firm in the Midwest found that forty percent of their open roles were being filled internally by the end of 2025. That doesn't sound crazy, right? But two years earlier, that number was barely eight percent. Luna: Wait, so they tripled their internal fill rate in two years? What changed? Lucas: It wasn't one big initiative. It was a combination of a few things. They built an internal talent marketplace, they created a skills taxonomy that mapped every employee's capabilities, and they changed how managers were incentivized. That last part turned out to be the real unlock. Luna: Managers are usually the biggest obstacle to internal mobility, aren't they? They don't want to lose their good people. Lucas: Exactly. This company realized that managers were hoarding talent. So they changed the bonus structure. Managers got a small payout when one of their people moved to another department, and they also got credit for the person's replacement performance over the next year. That flipped the incentive from 'keep my best people' to 'develop people who are wanted elsewhere.' Luna: Clever. So the manager benefits from being a talent feeder. That's a pretty different culture than most places. Lucas: It is. And it's why most internal mobility programs fail. They build the software, they post the jobs, but they don't fix the manager incentive problem. So the marketplace sits empty. Luna: Right. I've seen that. The internal job board is a ghost town because nobody wants to be the one to tell their boss they're leaving. Lucas: And that's the core tension. You can't just open the doors and expect people to walk through. You have to make it psychologically safe to say 'I want to grow' without it being seen as disloyalty. Luna: So how did they make it safe? Was it just the incentive change? Lucas: Not just that. They also introduced what they called a 'stay interview' — a conversation every six months where the manager asks, 'What are your career goals? How can we help you get there, even if it's not in this department?' That opened the door for honest conversations without the employee having to initiate. Luna: That's a really good practice. It normalizes the idea that you might move on, but internally. Lucas: And it works. They saw a 33 percent drop in time to fill for roles filled internally compared to external hires. And the cost savings were massive. They estimated they saved almost two million dollars in external recruiting fees and agency costs over the year. Luna: Wow. And what about retention? Did internal movers stay longer? Lucas: That's the kicker. Their internal movers had a 91 percent retention rate after 18 months, compared to 78 percent for external hires. And they measured performance — internal hires reached full productivity about six weeks faster than external ones. Luna: So it's not just cheaper, it's better. I mean, that's a no-brainer, but why isn't every company doing this? Lucas: Because it requires a real cultural shift. You have to be willing to lose someone from your team to gain someone elsewhere. And the leadership has to model it. This company's CEO actually moved two of her direct reports to other divisions in the first year. That sent a message. Luna: That's leadership by example. If the CEO is willing to lose talent to another part of the business, then everyone else can. Lucas: And they also invested in the infrastructure. They built a simple internal job board that wasn't just a list of postings. It let employees create a profile with their skills, their interests, and their desired growth areas. The system would then suggest matches, and employees could apply anonymously until they were sure they wanted to move. Luna: Anonymous applications intern. That's a smart way to get people to test the waters without committing. Lucas: It removes that fear of your boss finding out too early. And the skills taxonomy was key — they mapped out what each role actually required and what each person could do, not just their current title. That allowed for non-linear moves. A warehouse supervisor could move into a logistics analyst role if they had the data skills. Luna: So it's skills-based, not titles. That opens up a much bigger talent pool. Lucas: Exactly. And this is where the cost savings really came from. They were filling roles that had historically been hard to fill externally — like supply chain analysts and IT support — with people who already knew the company's systems and culture. Luna: So what would you say to a company that wants to try this but isn't ready for a full-blown talent marketplace? What's the first step? Lucas: Start with the data. Look at your last fifty hires — how many came from inside? If it's under ten percent, you have a mobility problem, not a recruiting problem. Then do a simple skills inventory of your current employees. You might be surprised at what your ops person used to do in marketing. Luna: That's a good point. People's skills aren't always reflected in their current job title. Lucas: And then pilot it with one department. Let HR work with a single business unit to identify internal candidates for their next two or three openings. Measure the time to fill, the cost, and the retention. When the numbers come back better, you have the evidence to roll it out wider. Luna: I love that. It's a low-risk way to prove the concept. And the data will speak for itself. Lucas: Yeah, and I think that's the thing — everyone talks about internal mobility as a nice to have, but the numbers show it's actually the highest-leverage hiring channel you have. And it's sitting right under your nose. Luna: And on that note, if these kinds of conversations have helped you think about your own hiring practices, maybe in a small way, it's worth mentioning that listener support is what keeps this show ad-free. If you've ever gotten value from an episode, you can buy me a coffee at buy me a coffee dot com slash fexingo. It helps us keep doing this. Lucas: Yeah, and it genuinely makes a difference. So — back to the logistics firm. They also found that internal hires were 20 percent more likely to be promoted again within two years. So it compounds. Luna: So you're not just filling a role, you're building a pipeline for future leaders. Lucas: Exactly. That's the real return on investment. It's not just about saving money on recruiting — it's about developing the people you already have into the leaders you'll need tomorrow. Luna: Well, that's a pretty compelling case for making internal mobility a priority in 2026. Lucas: I think so. And if you're a listener wondering where to start, just look at your own organization first. The answer might already be in your headcount.