When I speak to some of the largest employers in the world, they unanimously agree that their biggest challenge is retention.
Many employees, especially Millennials, are unable to see a career path at their current company, so they look outside of their company for other opportunities to advance. I believe the solution to a high attrition rate is career mobility, which is the movement of employees across different roles, either vertically or horizontally, within an organization.
In a study by Futurestep, 87 percent of companies believe that internal mobility programs would definitely help with retention, yet only one third have these programs. Even the companies that have mobility programs aren't good at effectively communicating their talent needs and fail to keep updated records of employee skills.
Some managers worry about letting one of their employees move into a new role on a different team. Managers who try to block these employees frustrate workers. So, instead of looking at new roles within their company, workers search outside of it and leave when the next opportunity presents itself.
As a result, the manager has to replace good, ambitious workers, which is costly and time intensive and affects productivity.
Why not work with employees instead?
The topic of career mobility is more important today than in years past because the competition for top talent is increasing as our economy has recovered. The BLS reports that the unemployment rate today is five percent, which is down from 9.5 percent back in 2009. 76 percent of employees are looking for or open to a new job.
Companies that want to increase their retention rate need to become more fluid, help employees build internal career paths and create cultures where managers are supportive, not restrictive.
A new study by Future Workplace and Cisco links career mobility to organizational success. The study found that companies that embrace internal career mobility increase employee engagement (49%) improve employee productivity (39%) and improve employee teamwork (39%). Companies that have mobility programs are also more likely to be considered a "best place to work" by their employees.
In order to create an effective talent mobility program, you need to focus on three improvements: Internal hiring, flexibility and training by project.
First, companies need to develop a culture that embraces internal hiring, where employees are given the first opportunity to apply for roles over external candidates. When employees feel that they are empowered to apply for other roles and advance within your company, they are more likely to choose that option.
A study by Future Workplace and Saba found that 66 percent of employees would first look at open positions at their current company before looking elsewhere. By hiring internal candidates first, it boosts moral and gives talent a chance to grow, while saving you money from finding and training an external candidate.
Second, it's essential to promote flexibility at your company in order to remain competitive as an employer. In a recent global study with Randstad, we found that the top benefit that Gen Z workers and Millennials want is flexibility. Employees are expected to be reachable outside of the office by phone or email and the 9-to-5 workday no longer exists.
Aside from telecommuting and flexible schedules, more companies should allow employees to do work outside of their job description. An example of this is Google's 20% program, which prevents employees from having to do the same projects everyday and allows them to be more creative.
Third, companies should focus on training employees by assigning them new projects so they are challenged and more engaged in their work. For instance, Intel boasts an employee development tool called DOT, which connects talent to short-term needs to match development goals. If you're in the accounting department but are interested in taking on a marketing project, you can apply for it without giving up your current job.
This way, you can learn, and grow your network, in a different department with little risk to your manager.
In the Randstad study, we found that both Gen Z workers and Millennials agree that the most effective training program is cross-functional projects.
Career mobility will continue to become more relevant as the war for talent heats up in 2017 and beyond. Companies that create programs around it will increase their retention and employee satisfaction rates, while those that don't will suffer productivity and financial losses.
Dan Schawbel is the New York Times bestselling author of Promote Yourself and Me 2.0 and the Research Director at Future Workplace.