The best way for companies to build their talent pool: Embrace employee mobility

In fact, change is one of the few constants in the labor market. We recently published a large-scale study of how people acquire skills throughout their working life, adding to the value of their human capital. One of the key findings is that skills acquired on the job, as opposed to through formal education or outside-of-work vocational training, are linked to half of the average person’s lifetime earnings, which makes the process of continuous learning critical to raising incomes and achieving prosperity. 

People grow and add skills by varying their work experience—in other words, by moving. Looking at the occupations held by millions of people across four major economies, we saw that the average worker switched roles every two to four years. Even more telling, 80% of all the moves made over a decade involved people moving from one employer to another—and that was before the pandemic. 

Companies can’t singlehandedly beat back the tide of movement. What they can do is position themselves in the flow and learn to ride it gracefully. 

A huge talent pool is always out there searching, and companies need to build a reputation for career development to attract the best and brightest out of this restless group. One surefire way to do this is to become known as an “academy”—that is, a learning organization that teaches people new skills, helps them develop through excellent coaching, and gives them a leg up for the remainder of their careers. 

But external talent is only part of the equation. Employers can also benefit from making job movement within the boundaries of their organizations more fluid. Few companies have an accurate and detailed inventory of their current employees’ skills and capabilities that could inform their development and career paths. 

It may feel more comfortable to let someone competent continue doing the same thing year after year rather than giving them runway to grow. But it’s actually riskier to hire someone from the outside, particularly when people with aspirations and untapped potential are probably sitting right down the hall. Filling roles from within has upside for employers and employees alike: Our research found that people who worked for employers offering more internal opportunities were more likely to be upwardly mobile for the rest of their careers. 

Internal opportunities don’t have to involve handing out promotions to everyone. The most important element is helping people gain more varied experience. Lateral moves can enable people to recharge, expand their skills, or find a position that is a better fit. Yet most organizations undervalue lateral movement or make it difficult. Companies can streamline any bureaucracy that’s standing in the way of transfers and measure managers on whether their team members advance rather than solely on what they achieve by staying in place.

It’s time to retire the myth of the 30-year employee getting a gold watch—and not to make it emotionally fraught for people to come and go. Having a superstar circulate through an organization is a good thing, even if that person doesn’t become a fixture. There’s value in celebrating people who go on to bigger and better things. Companies and individual managers should take pride in having played a role in their development. Alumni could become valued business partners in the future—and the day might come when there’s an opportunity to welcome them back in a different role, enriched with new experience gained elsewhere.

Worker mobility is like a circulatory system within the economy, and it can serve the same function for organizations as well. When that system is healthy and fluid, it provides benefits across the board. Our research finds that mobility is the main mechanism for workers—and especially those without college degrees—to increase their earnings and advance their careers. It also ensures that businesses can quickly find the new employees they need to respond to growth opportunities. Organizations can continuously renew themselves by adding people with fresh energy, different perspectives, and a broader range of past experience.

Companies don’t have to view the Great Attrition as a threat. But they can’t be passive about rising to the occasion, either. Workers have become more selective. They are increasingly moving to companies that give them both fair terms today and the chance to add experience that will better their prospects in the future. The way for employers to attract a flow of new talent and stem the drain of attrition is to deliver on both fronts. 

Bill Schaninger is a senior partner and leader in McKinsey & Co.’s People & Operational Performance practice. Anu Madgavkar is a partner at the McKinsey Global Institute, McKinsey’s business and economics research arm. They are authors of Human capital at work: The value of experience.