Table of contents
  1. Benefits Of Internal Transfers
  2. Why Do You Need an Internal Transfer Policy?
  3. What to Include in an Internal Transfer Policy
  4. How to Communicate an Internal Transfer Policy
  5. Conclusion

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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