As employers grapple with labour shortages and the Great Resignation, they are turning to a growing trend: sourcing human capital from within the organisation. Quiet hiring has the potential to build a more engaged, productive and loyal workforce, but there are plenty of risks that organisations need to mitigate if they are to realize these benefits.
To provide some guidance, we spoke to ESCP professor Kerstin Alfes.
Professor of Managementat ESCP Business School
Human resources professionals will have grown accustomed to the term “quiet quitting” this past year, when employees do their job but just the bare minimum, putting life ahead of work. Now comes a new term in the HR lexicon: “quiet hiring”. The concept means filling vacant positions with existing employees, instead of going to the labour market to source talent.
The trend is not new, but it is gaining momentum, as the war for talent enters a new phase. Despite higher interest rates and inflation, unemployment is at record lows in many economies. Even as the technology and banking sectors announce layoffs, many companies continue to hire as vacancies remain high.
They are also grappling with the “Great Resignation”, when millions of people quit their jobs during the pandemic in search of better pay or conditions elsewhere. However, companies cannot find enough qualified staff, owing to an under-investment in skills development, and technology leading to rapid changes in the demand for specific occupations.
These challenges are pushing employers to look inwards instead of outwards for human capital, tapping people who they already employ. Quiet hiring enables businesses to plug holes in their workforce, far more quickly and cheaply. It can also benefit workers, boosting retention, engagement and productivity levels.
However, there is a dark side to quiet hiring, with some employers using it to exploit hard-working staff for additional labour, without offering extra compensation.
So, we sat down with Kerstin Alfes, professor of organisation and human resource management, to explore how organisations can make quiet hiring work for everyone.
Redistributing the division of labour
The simplest definition of quiet hiring is when an organisation acquires new skills without actually hiring anyone, saving substantially on costs. However, as Prof. Alfes explains, “it can mean taking on new tasks, not necessarily entire roles, as employers redistribute the division of activities”.
Multiple factors, including the rise of occupations that are cognitively more challenging and a labour market that has bounced back faster than expected from the impact of the pandemic, have contributed to the growth of internal mobility inside organisations.
And the trend is not simply a fad; it is here to stay, given the shortfall of workplace training in the past, Prof. Alfes predicts. “From a macro perspective, it will take years to fill the skill gap in the workforce,” she explains. One alternative is to increase the mobility of labour between different economies, but immigration remains a sensitive political subject in many countries.
In this context, employers are turning to quiet hiring as an alternative , Prof. Alfes points out.
Tangible benefits for the business world
That’s not to say the practice is without merit. Some companies are exploring quiet hiring with exciting results, Prof. Alfes tells us. “There are huge benefits. If we hire from within the organisation, employees already know the culture, processes and policies. So onboarding is a lot quicker, and the employee can reach full productivity much faster, delivering a return for the company. It’s also faster to find someone because you have a ready-made talent pool that has already been vetted and, in some cases, trained.”
In contrast, hiring a new employee can cost nearly $4,700 on average, according to the Society for Human Resource Management.
However, Prof. Alfes urges employers not to see quiet hiring as merely a cheap alternative to going to the labour market. “It’s lower cost, but also if it’s done well, it can be a strong motivational driver. Moving into different roles increases task variety and expands professional networks, while also giving the employee an opportunity to acquire new skills. So, it can also be part of your wider talent management strategy that positions you as an attractive employer, one that doesn’t lose staff to the Great Resignation.”
What’s in it for me?
Yet quiet hiring can also frustrate employees, who may be moving into roles they are not interested in; Prof. Alfes reminds us. “To make quiet hiring work for them, employees need to communicate what they want out of the transition. They should be asking: what’s in it for me?”
The biggest risk is that employees feel like they are being exploited, she adds, so companies need to make sure they are fairly compensating staff for taking on additional tasks and responsibilities.
In addition, Prof. Alfes advises employers to think carefully about the long-term development of their staff, rather than dumping extra work on them just to fill an immediate hiring need. “It should not be an ad-hoc approach; it should be part of a wider strategic plan for human capital management.”
Finally, she says the starting point is investing in training and development for the existing workforce, so they have the capabilities that are needed to fill vacant positions, and can hit the ground running when they begin new roles. “Having invested in training before is a key success factor, so that people have adequate knowledge, skills and abilities to move fluidly between tasks and jobs, as the workplace becomes a more flexible space.”