[Excerpt] Internal talent markets (ITMs) are making a comeback thanks to tight external labor markets and the well-documented shortcomings of the “fire and hire” approach to staffing. While specifics vary, ITMs share three common characteristics: the internal posting of vacant positions, proactive measures urging employees to apply for available spots, and extensive screening procedures to winnow applicant pools down those most qualified for the jobs at hand. Studies show that, in contrast to less open internal staffing procedures, ITMs consistently produce superior hires who are more likely to remain with their firms, be more productive in their new jobs, and receive additional promotions later on.
But ITMs have an inherent drawback: Each time they produce a “winner”, they simultaneously generate a number of “losers”; that is, a group of employees who applied for an available position but didn’t get it. Surprisingly, we know very little about how employees react to these rejections. This study aimed to correct this situation by analyzing data pertaining to 5,769 employees who lost out in one or more ITM competitions within a large U.S. based health services firm (hereafter HealthCo) between 2013 and 2017.