Wall Street Journal (05/30/12) Rachel Emma Silverman; Lauren Weber

Responding to research indicating that hiring outsiders can lead to costly missteps, firms are ramping up internal hiring efforts and investing in new career sites to boost intra-office movement. Companies say those efforts are helping to cut recruiting costs and retain high performers. A recent study from the University of Pennsylvania’s Wharton School found that external hires were paid some 18% more than internal employees in equivalent roles, but fared worse in performance reviews during their first two years on the job. Hiring managers often “underestimate how hard it is to integrate new people,” says Matthew Bidwell, a Wharton assistant professor whose study examined six years of employee data at a financial services company’s U.S. investment banking unit.

Cisco Systems Inc. has developed an internal career program, called Talent Connection, that seeks to identify “passive candidates,” qualified employees who aren’t necessarily looking for a job. The system is designed to help recruiters approach internal candidates the way they do external ones, says Mark Hamberlin, a Cisco vice-president of global staffing. Talent Connection has saved the company “several million dollars” in search-firm fees and other recruiting costs, according to Hamberlin, while employee surveys show workers’ satisfaction with career development has risen by nearly 20 percentage points.