Internal talent marketplaces (ITMs), which organizations use to match workers and roles, can increase job satisfaction and engagement, reduce turnover, and allow executives to access diverse perspectives about key assignments. Users have an incentive and an opportunity to share information about their skills, interests, and ambitions, including valuable personal information that is usually omitted from résumés. ITMs take a variety of forms. Some function like social networks, where workers and managers interact to find matches. Others allow employees to rank their preferred assignments and use an algorithm to find optimal placements. But matching talent to opportunities requires balancing business objectives, agility, workers’ desires for certain jobs, and the need to avoid disrupting existing work. Those challenges confound organizations from every sector. The authors have designed, implemented, and evaluated ITMs for more than a decade in the private, nonprofit, and public sectors, with partners across the globe. In this article they review the pros and cons of using an ITM, explain how to build and optimize one, and recommend ways to align employee preferences and the company’s needs.close
In 2012 the U.S. Army faced a humanitarian crisis in Southeast Asia. It needed an engineer to lead an urgent relief mission in the region—someone with relevant linguistic, cultural, and professional experience. Neither a review of army officers previously deployed to the region nor a simple résumé search yielded many good options. But the army also looked at its internal talent marketplace (ITM), Green Pages, where soldiers create profiles listing relevant personal and professional information and may apply for vacancies, and where units post open job descriptions and evaluate available officers. Like a dating app, Green Pages notifies both parties if a match exists.
When the army posted the position on Green Pages, the ideal candidate happened to be searching the platform for a new job. His résumé didn’t mention his previous experience working in the hot spot, nor did it disclose that his culture shared many aspects with that of the region’s population. But his Green Pages profile included both details. He applied for the position, the two sides agreed to the match, and the army deployed him to lead the crisis response.
Companies use internal talent marketplaces to delegate job assignments and match employees with supervisors. ITMs increase job satisfaction and engagement, reduce turnover, and allow executives to access diverse perspectives about key assignments. They simplify the matchmaking process and give workers and managers some control over whom they work with and what they work on. Thus users have an incentive to share skills, interests, and ambitions, along with valuable personal information that people tend to omit from résumés.
that fare the best with internal talent marketplaces are in industries with high worker-replacement costs and have employees who tend to be generalists.
ITMs can take two main forms. One functions like the job board of a social network. Think of LinkedIn, but for internal candidates only. Employees browse job listings and managers browse profiles. If the selections match, the two parties can go on to discuss next steps. The other form is automated and less personal. Candidates create profiles, browse openings, and rank their preferred assignments. An algorithm analyzes the profiles and rankings to find optimal matches for the employees and the company. The matches are then communicated to the candidates and the relevant supervisors.
Not every company is ready to adopt an ITM. Matching talent to opportunities requires balancing several factors: business objectives, the need for agility, workers’ preferences, and continuity in existing work. Achieving that balance confounds organizations in every sector. Our research team has designed, implemented, and evaluated ITMs for more than a decade in the private, nonprofit, and public sectors with partners across the globe. We’ve worked with Google (Disclosure: Bo is a former Google employee), Teach For America, and the army on its updated version of Green Pages (ATAP, launched in 2020), and we’ve shared our findings with students and researchers at the world’s leading business and policy schools.
In this article we describe the pros and cons of ITMs and explain how to build and optimize one. We connect their successful adoption to best practices and recommend ways to align employees’ preferences with the company’s needs.
The Four Prime Benefits of ITMs
Most companies can succeed with ITMs. But those that fare the best are in industries with high worker-replacement costs; have large eligible workforces; have employees who tend to be generalists; and struggle to aggregate insights from around the company. They can benefit in four ways.
Reduced replacement costs. The retention benefits of an ITM translate into significant savings. For talented employees, a lack of growth opportunities can be a deal breaker. A Gallup poll shows that 48% of U.S. workers would leave their jobs for access to better upskilling opportunities. ITMs address that by creating new avenues for career growth. They reveal new means of internal mobility and lateral transfers. They provide access to new skills and experiences. They give employees opportunities to grow within the company.
Teach For America recruits high-achieving college graduates to teach disadvantaged youths. In 2014 it used an ITM to match high school teachers with schools in Chicago. Whereas the army’s Green Pages informally delegated decision-making to managers and workers, Teach For America used an algorithm to match teachers with schools on the basis of preferences submitted by principals and teachers. Eighty-eight percent of participants preferred the algorithm’s matches to previous placement mechanisms. Retention increased by as much as 12%.
Schneider Electric was concerned about retention among its 135,000 employees. Jean Pelletier, its vice president of digital talent transformation, says, “The number one reason people left is that they didn’t see a career path forward.” Indeed, almost 50% of defectors said they’d left because of few growth opportunities. There was cruel irony in this: Schneider’s global footprint is enormous, spanning multiple industries across 113 offices and more than 100 countries. Workers could probably pursue whatever they aspired to somewhere within one of its many lines of business.
Better placement within a large workforce. The U.S. Department of Defense (DoD) is one of the world’s largest employers, with 1.34 million active-duty service members, about 743,000 civilians, and roughly 773,000 reservists. Within the DoD, the army, the navy, the air force, the coast guard, and even the newly formed Space Force all use ITMs. The army has matched more than 50,000 active-duty officers since the launch of its latest system. Roughly half of them were matched with their first choice, and roughly 80% were matched within the top 10% of their choices. (Other branches of the government are also implementing ITMs. The State Department announced a pilot program in 2021.)
The DoD’s success with ITMs makes sense: The larger the participating workforce, the more benefit the ITM delivers, for two reasons. First, talent marketplaces exhibit network effects. Larger markets provide more job options for participants, increasing the likelihood that they’ll find a match. And as more workers join, the market becomes more valuable to managers who post openings. Each new worker or manager increases the benefits of participation.
More opportunities for generalists. ITMs benefit companies that tend to hire generalists more than those with specialized workforces. The reason is simple: Without specialties, workers are somewhat interchangeable. They can select tasks they enjoy without fear of failure. Everyone can (theoretically) do everyone else’s job. But when a specialist leaves, the company has lost an asset. An engineer can be hired to write blog content, and a blogger can be persuaded to write code. But they would be more productive within their respective areas of expertise.
Talent marketplaces exhibit network effects. Larger markets provide more job options for participants and are more valuable to managers who post openings.
The divisions’ leaders pooled everyone in a single internal marketplace, but they partitioned the engineers off from the nonengineers and restricted cross-market transfers. Workers still had control over the jobs to which they could apply, but their options were limited. And Google’s leaders had confidence that anyone applying to an open position within the ITM had the minimal prerequisite skills to do the job.
A year after its introduction, in a survey of Google employees and managers, 80% reported being satisfied or very satisfied. That was particularly true for recent participants. Internal mobility was up. Google’s director of technical services, Brad Wetherall, says the market seems to have improved retention: “There’s less attrition on the team because people know they have some flexibility.”
Better aggregation of insights. Workers often understand better than the C-suite does what makes their teams productive, and they know which colleagues they work well with. Collecting such information is critical when information gaps exist between executives and employees. At Google greater internal mobility also improved knowledge flow. “There was gold in the transfers,” Wetherall explains. “When someone transfers, knowledge is spread. We discovered a much better way of doing things—opportunities just jumped off the page when someone moved teams.”
Optimizing Your ITM
Employees and managers who make their own matches are more motivated and engaged by their work. That results in higher retention rates and lower replacement costs. In addition, they know the work and their colleagues’ abilities better than anyone in the C-suite does, meaning that they can make better matches than HR would by sifting through résumés.
But allowing workers to choose assignments can be risky. Some employees may look for opportunities that demand the least amount of effort. Some will choose roles that have the least-challenging managers. Some will select assignments in order to develop skills they don’t yet have. That can be great for someone’s career, but the employee may be unable to succeed in the role without those skills.
The following techniques can help prevent misalignment between workers’ and companies’ goals.
Nudges. Many companies provide workers with tips or nudges within the ITM user interface. At Google workers are free to apply for any role, but “recommended” icons for certain roles indicate company-preferred matches. Workers may find that kind of intervention helpful. Although they appreciate having options, “choice overload” may overwhelm them. The icons could conceivably narrow down more than 100 potential projects to a manageable 10 while encouraging employees to focus on roles for which they are qualified.
Incentives. Some organizations provide incentives to select roles the company is eager to fill. They can be as significant as bonuses or vacation days or as minor as praise in a companywide email. Incentivizing employees to choose specific roles helps managers fill high-priority vacancies. At one company we studied, executives made a simple statement at a big organizational meeting: The company’s future leaders would need experience in core business areas, and promotions would begin to reflect that. The message to the internal labor market was clear.
Executive and HR oversight. Most companies let direct supervisors approve anyone who chooses to join their teams. But supervisors’ oversight is no guarantee against misalignment. Managers’ own agendas may not dovetail with the organization’s overarching goals.
