An internal transfer policy lays out how an employee can transfer or be promoted to a new role within the same organization. Aside from laying out a process for internal transfers, an internal transfer policy clarifies that the business values employee growth opportunities.  Establishing a clear internal transfer policy incentivizes high-performing employees to stay with the comapny as well as strengthens employee engagement and trust.

Benefits Of Internal Transfers

Allowing and encouraging internal transfers can benefit organizations by keeping current employees part of the team. Not every role can be filled with an internal hire, but when you can, the benefits include:

Encourages employee growth and dedication

When you have a top employee who is ready for a new challenge, you don’t want them to leave for a competitor company. Encouraging internal transfer and promotion opportunities can help reduce employee turnover and match your top talent with new areas of your business.  Internal employees who have grown within a company and have experience are more likely to refer others to join the company. Therefore, encouraging internal growth can actually help with your external recruitment.  

Retains institutional knowledge

Employees who transfer or who are promoted within the organization are likely to learn how to perform their new role more quickly than new hires because they’re already acclimated to the business. Internal transfers within a business help retain vital institutional knowledge, ensuring that valuable insights and experiences remain within the organization. This continuity not only preserves the company’s cultural but also reduces the learning curve for new roles, enhancing overall productivity.

Internal hires perform better and cost less

Recruiting external hires is expensive. Aside from the standard expenses related to the recruiting process itself, one study found that new external hires were initially paid 18% more than promoted employees. The same study found that the promoted employees had significantly better performance than new hires for the first two years in a new role, and had lower rates of voluntary and involuntary turnover. 

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Why Do You Need an Internal Transfer Policy?

If you want to encourage internal transfers, you should create an internal transfer policy. This benefits your business in the following ways:

  • Consistency and fairness: An internal transfer policy ensures that all employees are treated consistently and fairly when considering movement within the organization, reducing potential biases or favoritism.

  • Talent retention: A clear policy can help retain top talent by providing employees with pathways for growth and development within the company, rather than seeking opportunities externally.

  • Cost efficiency: Internal transfers can be more cost-effective than hiring externally. Having a policy in place streamlines this process, saving on recruitment, onboarding, and training costs.

  • Clear expectations: A well-defined internal transfer policy sets clear expectations for both employees and managers, outlining the criteria, process, and potential outcomes of a transfer, leading to smoother transitions and reduced misunderstandings. 

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What to Include in an Internal Transfer Policy

Your internal transfer policy needs to outline three key elements:

  • Purpose of the policy
  • Who is eligible for transfer
  • The transfer process

You can add more information if it suits your business—such as a list of factors you will use when evaluating internal transfer applications.

Purpose statement

This is the reason behind your policy. Explain why the organization is adopting this policy and what it hopes to achieve with the policy. For instance, you could state that your organization wants to encourage career growth for all employees and is establishing this process to help guide employees to their next challenge.

Eligibility requirements

Eligibility requirements explain what an employee must demonstrate in order to be considered for internal transfer. Use this to lay out any targets that must be met before applying for a transfer, and anything that would prevent a transfer from being approved.  Target requirements usually involve showing a good performance track record.

For example, you might want to require a minimum result on the employee’s most recent performance appraisal. You may also want to set a minimum amount of time that an employee needs to be in their current role before they apply to transfer.

Most policies also include a requirement that the employee meet the skills and education criteria for the open role in order to be considered for a transfer. They may also need to have been at the company for a minimum amount of time

Reasons why an employee may be ineligible for transfer usually focus on discouraging employees who aren’t performing well. The most common examples of a block to eligibility would be prohibiting transfer for an employee who has received a recent negative performance appraisal or who has been disciplined for their performance or conduct. 

Process outline

The process outline should tell employees exactly how they can apply for an internal transfer. Consider these questions when developing your process:

    • Who should they contact to express interest? This is usually HR or their manager. 
    • Do they need to fill out an application form to be considered? Some companies have streamlined applications for internal candidates, or they might be asked to apply in the same manner as an external candidate. 
  • Will they be guaranteed an interview? Many companies make a practice of interviewing all internal candidates who meet the eligibility requirements.
    • Do they have to tell their manager that they’re applying? Most companies do require that employees be candid with their manager about their application at some stage in the process.
  • When will they know whether they are approved for the transfer? It’s best to be as clear as possible about timelines for decisions and the method that will be used to notify the employee of the result. 

How to Communicate an Internal Transfer Policy

Having an internal transfer policy in place is only effective if employees are aware of it and know how to access it. Like most policies, it should be in writing, easy to find, and easy to understand. 

To ensure clear communication of the policy, you can store it in an online Knowledge Base, send it out via email, or post it on a company-wide chat channel. You can also improve the policy’s visibility by posting it on the company job board, celebrating notable internal transfers at meetings, and including the policy in the employee handbook and on the company intranet. 

💡 Pro Tip:

Consider adding a separate process guide or FAQ at the end of the internal transfer policy document to address common questions on how the process works, too. Then, upload your policy to a mobile Knowledge Base so employee can access it from anywhere.


Benefits can benefit from internal transfers and promotions. Developing a clear internal transfer policy will encourage talented employees to stay with the organization longer and can improve employee engagement. Focus on providing a clear policy, outlining the purpose, eligibility requirements, and process for internal transfer applicants, and make sure to share the policy with the entire company.