Many large, global firms invest a lot in mobility because they believe it’s essential to the development of their managers and a vital driver of global growth. They build a significant infrastructure around mobility—particularly global mobility—to facilitate the transactional side of such moves.
Yet, few actually know if, where and how their investments in mobility are paying off.
At best, they rely on survey responses or informed opinion to gauge how they are doing—but relying on opinion alone is insufficient and risks a distorted valuation of mobility policies and practices.
Twenty-five years spent modeling the internal labor market (ILM) dynamics of organizations—specifically, the drivers of hiring, retention, advancement, performance, and pay—has led to a sobering view about how mobility is playing out in organizations and what kind of return it is actually generating for employers and employees.
This observation is not to throw cold water on mobility. It is rather to recognize that managing mobility effectively is hard and organizations that pursue it as part of their talent strategy—or for operational reasons alone—need to be far more deliberate about the way they structure their programs.
Strategic Mobility Is Hard
Purely opportunistic, nonstrategic mobility can work in organizations and may not require heavy-duty analytics to execute successfully. But using mobility as part of a talent or leadership development strategy is a very different challenge. It requires careful planning, management and regular tracking if it is to succeed.
The ILM modeling work makes that clear and suggests that, at present, corporate functions responsible for mobility are simply not equipped to deliver on this charge. Strategic mobility seems to fail more often than not. The modeling also demonstrates the remarkable power of good analytics to inform such strategic decisions and help secure greater ROI.
Case Study: How To Lose Your Talent
As an example, in one of Mercer’s client organizations, an ILM analysis demonstrated serious problems in the use and management of internal talent mobility, whether across functions, geographies or business segments.
Specifically, those experiencing lateral moves of these kinds didn’t fare well. All else being equal, they were less likely to receive high ratings and often less likely to advance in their careers—certainly no more likely than their less-mobile counterparts. And they were significantly more likely to leave.
Frankly, this is a very common finding in Mercer’s ILM work with client organizations. But for this company, the problems observed with mobility were particularly noteworthy because enhanced mobility was a central component of the company’s expressed talent strategy. Leadership had hard evidence that breadth of experience in client teams was a top driver of year-to-year revenue growth.
Given that a lynchpin of the company’s business strategy was to capitalize on synergies across business segments—for example, creating cross-segment client sales and delivery teams—having more employees with direct experience in multiple service lines would be particularly useful for achieving their strategic goals.
In one test case, mobility was failing both the employees and the employer because the wrong talent was being moved and accountability was lacking.
Similarly, to support global growth, having more employees with experience working in different geographic regions was especially important. Yet, the diagnostics suggested the company was failing to achieve either of these outcomes. Moreover, given the hard costs associated with the company’s investment in talent mobility, the failure to nurture and secure its mobile talent indicated a low or even negative ROI.
Additional diagnostic work revealed that mobility was failing both the employees and the employer because the wrong talent was being moved and because clear accountability for mobile talent was lacking.
Those on the move were falling through the cracks. No one “owned” this talent. The units and leaders “exporting” such talent no longer had a vested interest in their success; those “importing” such talent had less incentive to nurture them as well, as compared to their incumbent employees who were likely to remain with them longer term.
Wrong Incentive Structure
The structure of incentive compensation also worked against the interests of mobile talent. The company had increased its reliance on variable pay over base pay, with significant short-term incentive payoffs keyed directly to individual and unit results.
Operating under that pay structure, unit leaders had every incentive to hoard their best talent. And those receiving such talent had little incentive to invest in colleagues whose duration on their teams was limited at best. In effect, the very structure of performance accountability in rewards conflicted with accountability for the firm’s mobile workforce.
Company leadership understood the argument and determined to act on the evidence that the current approach to mobility simply was not working. First, they determined to reorient mobility decisions from their current reactive or “opportunistic” orientation to a more strategic approach focused on planned talent development.
Second, and pursuant to that shift in orientation, they introduced a formal talent rotation program, where a select group of up-and-coming talent was intentionally rotated through different parts of the business and geographies to meet specific corporate objectives. This talent serves as a corporate or regional asset.
Though used locally for different types of project or sales activity, they are not charged to the local business or geography. As such, there are incentives not only to accept them but to use them in a way that optimizes development and use of their skills and experience.
Subsequent ILM modeling showed significant changes in outcomes associated with mobility. First, the composition of the mobile workforce was changing as more early-career employees were moving as part of their planned development. This did not preclude opportunities for more-experienced employees to make moves later in their career as fit their needs and company requirements. It just meant that there was more organizational focus on using mobility for development and strategic business purposes.
Secondly, there was no longer a “success deficit” associated with being mobile. Employees making such moves were at least as likely as their nonmobile colleagues to receive high ratings or be promoted. And, importantly, they were no longer more likely to turn over. The bleeding of the company’s mobile talent ceased. That, in itself, has helped improve the ROI and encouraged the leadership to double down on its mobility strategy.
As our example shows, applying a holistic ILM lens, backed by advanced workforce analytics, can help an organization move beyond subjective evaluation to objectively assess the actual outcomes associated with mobility and how well-aligned the program is with the broader system of talent management and rewards in which mobility will play out. By transforming raw data into real workforce intelligence, such analytics can reliably inform decisions about program design—and enable a truly strategic approach to talent mobility.