Stave off attrition with an internal talent marketplace

Is your best talent hiding in plain sight? An internal talent marketplace helps match existing employees to open roles—in novel and sometimes unexpected ways.

Leaders talk about a talent gap. And workers are on the lookout for more—not just more money but greater purpose, better career mobility, increased flexibility. In this episode of the McKinsey Talks Talent podcast, McKinsey leaders Bryan Hancock and Bill Schaninger speak with associate partner Emily Field about internal talent marketplaces: AI-enabled platforms that help match open roles with internal employees, many of whom might otherwise have been overlooked—and joined the Great Attrition as a consequence. An edited version of their conversation follows.

The McKinsey Talks Talent podcast is hosted by Lucia Rahilly.

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Stave off attrition with an internal talent marketplace

The widening talent gap

Lucia Rahilly: Bill, let’s start with some context. We’ve all seen the headlines about the global talent shortage.

Bill Schaninger: Right. It would appear there is a frothy market where some people are leaving for more money for the same kind of job at a competitor. You see that in a lot of technical and STEM [science, technology, engineering, and mathematics] type roles. But across the board, you see workers saying, I don’t like what I do, and if I’m going to go to work, it actually needs to matter.

Or maybe it’s as simple as flexibility. After many months of showing that jobs can be done remotely, we still see some companies saying that it’s a perk to work from home. I think the answer to that is no way. You’ve just had a large swath of the workforce show they can get a lot done without dragging themselves to the office.

How an internal talent marketplace can help

Lucia Rahilly: So an acute talent shortage may become worse. Emily, what is a digital talent marketplace, and how might it help employers meet this particular challenge?

Emily Field: At their core, talent marketplaces are about bridging talent supply and demand. A digital talent marketplace reveals who within your organization wants new opportunities—it’s about identifying talent, their skills, and their openness to take on new roles. Interestingly, while people are switching jobs right now, we’re hearing that upward of 80 percent of those people want growth and new opportunities.

Lucia Rahilly: So we’re talking about real-time visibility into the labor supply, giving managers and leaders access to a bigger talent pool—including employees who might not be visible and who might otherwise leave the organization. Is that right?

Emily Field: That’s exactly right. And the thing about digital talent marketplaces is that they democratize the process. A digital talent marketplace creates more transparency and visibility into open opportunities. Additionally, we know that it can reduce bias. As we think about this from the diversity, equity, and inclusion [DEI] lens, we know that women are much less likely to apply for jobs if they don’t meet the qualifications. We often hear that a man will apply for a job if he has 60 percent of the criteria—

Bill Schaninger: Are we going to cue up that men are horrible judges of their own talent?

Emily Field: That’s later.

[Laughter.]

Lucia Rahilly: Keep going.

Emily Field: So men are 60 percent qualified, whereas women want to be able to be 100 percent qualified and to hit every single skill required. A digital talent marketplace infers the skills you have and then matches you to jobs for which you have the relevant skills or are a near match. It takes the guesswork out, which is critical to making sure we’re creating opportunities in an equitable and inclusive way.

Lucia Rahilly: Are these skills subjectively described? Are the skills attached to the individual or to the individual’s current role?

Bill Schaninger: The company sets the knowledge, skills, attributes, and experiences that they assert are required for the role. The question becomes where can we change—but not lower—the bar to open up the funnel, so people can become aware that their qualifications are close to those required for open roles?

Lucia Rahilly: Bias can infiltrate any kind of subjectively described list of skills.

Bill Schaninger: Sure. For example, when requirements say the candidate has to have a certain degree—that lends itself to all sorts of bias. This also links to Bryan’s experience with insurance companies, where we saw that adjusters were really good at customer service, a skill that previously would not have lined up with the typical experience requirement.

Bryan Hancock: Absolutely. Understanding that opened up requirements from a need for people with sales experience to a need for people who understand claims. If we provide a little bit of supplemental skill, adjusters might be qualified to move into these other roles. What makes talent marketplaces work well is when somebody asks, what are the component parts of this role and where might I find those in the organization?

Bill Schaninger: There are things the company needs to do. Those things are activities. Those activities convert to tasks. Previously, those tasks probably were grouped together into a set of responsibilities. We called that a role and drew a box around it. Now, we’re questioning all the tasks and asking what skills we need to feel confident that a person can accomplish the task. That’s matching task to skill. That’s the first design choice.

Then, we ask questions: Are we being too conservative? Are we being thoughtful enough about alternative skills, adjacent skills? Can we train for those? What part do we have to bring in, and what part can they learn on the job? This exploration gives us the opportunity to really broaden out. We need to question our assumptions. Many organizations don’t do that.

One of the nice things about data derived from AI is the transparency. It allows us to see patterns. We can see skills on the rise and on the wane. The search still has a human interface, but by being able to look across many more roles, skills, and people, you start getting a sense of what skills are trending.

One of the nice things about data derived from AI is the transparency. It allows us to see patterns. We can see skills on the rise and on the wane.

Bill Schaninger

Lucia Rahilly: By refocusing on skills, can we also mitigate organizations’ inclination to rely heavily on, for example, college graduates to fill critical gaps?

Bryan Hancock: It is an achievement to complete college, but it’s not a great proxy for the actual things you need to do on the job. In addition to using AI to determine skills and then make suggestions for matches, there are also ways to infer skills. You can certify the skills that somebody has—take a test or develop a credential to certify ability.

Making an internal talent marketplace work for everyone

Lucia Rahilly: Emily, what else is helpful about an internal marketplace?

Emily Field: From the individual’s perspective, the benefit is massive. Employees are able to stay at the organization they’ve chosen to be at. They’re able to transition to a role that they’re a match for already, or perhaps that requires them to learn a couple of skills. Their organization can help diagnose gaps and provide targeted training to prepare them for that new role.

From the employer’s perspective, there’s the ability to move talent dynamically. We know that organizations that are able to do that outperform and are more able to retain people who are already a culture fit. These employees are able to add more value from day one of a new job, because they don’t come with the same start-up costs.

Finally, from a societal-impact perspective, employers are helping their employees create the skills to thrive in a new part of the organization, instead of the alternative—watching them exit.

Lucia Rahilly: Bryan, are you starting to see any examples of greater retention and greater engagement deriving from these talent marketplaces?

Bryan Hancock: It’s still early days. But if companies don’t pursue this internally, via their own internal marketplace, external marketplaces can access their talent and start to entice these employees with interesting opportunities.

Emily Field: One statistic to bring to life why this matters: a survey from last year suggested that 26 percent of workers said they planned to look for a new job after the pandemic. 1 Put that in context—we have more jobs than people looking for work—and this becomes an even bigger threat to the employer. So the question becomes, how might the employer create opportunity to retain those people who we know are looking for a different job?

Lucia Rahilly: Bryan, have you seen increased uptake of talent-marketplace technology as the skills shortage has become more palpable during the pandemic?

Bryan Hancock: I have, and the market has too. What I’ve seen from organizations deploying these types of tools is that investors have a rational hypothesis as the skill shortage continues.

A leader’s first steps

Lucia Rahilly: Suppose you’re a leader—you’re looking at a shortage and you decide to set up an internal talent marketplace to try to make the most of in-house talent. Where do you start?

Bill Schaninger: Start where you need it the most. That may sound obvious, but some skill pools matter more than others. Some roles matter more than others. If you say, we’re investing in these roles and the people in them, you might just find that you get a little more flow than you would expect. We invest so much in employees, from an asset standpoint. But we collect job titles. We’re not actually deeply understanding what employees can do currently—and what they might be able to do with a little bit of upskilling.

It’s a double benefit: when an organization actually knows its employees, and the employees experience management investing in them. I would encourage management to push hard in that direction. They don’t have to do it for every role and every skill pool. Some are going to wind down. But for the ones that matter, double down and be super overt about it. Get caught doing it.

Lucia Rahilly: Are there particular kinds of work and particular kinds of talent that are most appropriate for this kind of market?

Bryan Hancock: One can be project-based work, where you understand the skills required and you’re matching talent to a short-term project.

Or if you’ve got a particular group of underrepresented folks from a DEI standpoint, and you really want to understand what skills they have so you can better match and promote them, you can use these marketplaces to pull those folks through the organization.

Lucia Rahilly: That might help provide managerial incentive. You can see a situation where you might be loath to open up your best folks to projects beyond your team, unless you were in a preexisting project-work situation.

Emily Field: If 26 percent of employees intend to look for a new job once the threat of the pandemic has lifted, there’s a real need for employers to say, how can we wrap our arms around these employees? How can we create opportunities that would make them want to stay within the organization? Where are we decreasing our needs, and where are our needs increasing? Where are there skill adjacencies, and how can we transition people from the jobs that are decreasing to the jobs that are hiring, so we can avoid transitioning people out of the workforce?

If COVID-19 has taught us anything, it’s really about the role of the organization in economic growth, inclusive growth, and this idea that employers can keep their people and create new opportunities for them, instead of having them exit. It’s a real win–win for the employer and the individual.

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