You already know internal hiring beats external recruiting on speed, cost, and performance. What you might not know is how to actually build a system that matches your existing engineers to new opportunities based on what they can do rather than what their resume says.
This guide is part of our comprehensive resource on how to transform your SMB engineering team with skills-based hiring, where we explore practical frameworks for moving beyond credential-based talent practices.
Most internal mobility guidance assumes you’re running a 500+ person operation with dedicated HR teams and six-figure budgets for talent platforms. This covers the reality for smaller tech companies: build it yourself using lightweight processes, spreadsheets, and governance rules that work.
Here’s what you need: a skills taxonomy, a skills inventory, leadership buy-in, and a governance framework. Internal hires reach productivity 30 days faster, cost 40-60% less to onboard, and stick around longer. Companies with structured development programs see 24% better retention. You’re keeping the people you already invested in.
What is Internal Mobility and Why Does it Matter for SMBs?
Internal mobility is matching existing employees to roles, projects, or opportunities based on skills alignment rather than defaulting to external hiring. There are three types: vertical moves (promotions), lateral moves (cross-functional transfers), and project-based assignments (temporary gigs).
For smaller tech companies, this matters more than it does for enterprises. You’ve got limited talent pools and budget constraints that favour developing talent over buying it. Your 80-person engineering team can’t afford to burn $15k on external recruiting fees and another 60 days waiting for someone to ramp up when you’ve got people already embedded in your codebase who could move into the role in half the time.
The skills-based approach is what makes this work. You’re matching what people can actually do rather than filtering on credentials or years of experience.
What Prerequisites Do I Need Before Starting an Internal Mobility Program?
You need three things: a skills taxonomy, a skills inventory, and leadership buy-in.
A skills taxonomy is a structured classification of all relevant skills in your organisation. Technical skills like Python or Kubernetes, soft skills like stakeholder management, domain knowledge like fintech or healthcare. The taxonomy includes proficiency levels so you can distinguish between someone who’s dabbled in React and someone who’s architected production systems with it. Building this foundation is a core component of any skills-based approach to talent management.
Here’s where most SMBs get intimidated. Enterprise frameworks have 500+ skills and feel overwhelming. Don’t use those frameworks.
Start with 30-50 core skills for your tech stack. Use plain language your engineers actually understand. For a 100-person engineering team, that might be 25 technical skills, 10 soft skills, and 5 domain areas. You can grow this organically.
The skills inventory is your database of each employee’s current skills and proficiency levels. Build this through self-assessment, manager validation, and project evidence. Run a two-hour skills assessment workshop where people rate themselves on your taxonomy, then have managers validate those ratings.
You need leadership buy-in. Your executives need to commit to policies that prevent talent hoarding, allocate budget, and measure success. This means changing how you evaluate managers—rewarding those who develop talent for the organisation, not just those who retain their team members.
You also need governance policies upfront. Who approves internal moves? What’s the required notice period? A simple framework: 30-day notice period, managers can delay but cannot block moves, competing requests get resolved by hiring manager plus HR plus an executive tiebreaker.
How Do I Create Skills-Based Job Descriptions That Enable Matching?
Traditional job descriptions exclude internal candidates by focusing on credentials. “5+ years of experience, computer science degree, prior AWS experience” filters people based on proxies for capability rather than actual skills.
Skills-based job descriptions list required skills, preferred skills, outcomes and deliverables, and proficiency levels needed. Instead of “5+ years of backend development,” you specify “Python L3, PostgreSQL L3, REST API design L2, system design L3.”
The transformation is straightforward. Extract the skills hiding behind the credential proxies. “Startup experience” translates to adaptability L2 and ambiguity tolerance L2. “CS degree” translates to data structures and algorithms L3, plus system design fundamentals L2.
Here’s a before and after:
Before:
- 5+ years of backend development experience
- Computer Science degree or equivalent
- Experience with AWS and microservices architecture
- Strong communication skills
After: Required Skills (L3+):
- Python or Go
- PostgreSQL or DynamoDB
- REST API design
- Microservices architecture
- AWS core services (EC2, S3, Lambda, RDS)
Required Skills (L2+):
- System design and scalability patterns
- Written technical communication
- Cross-team collaboration
Preferred Skills:
- Infrastructure as Code
- Event-driven architecture
Outcomes:
- Ship 2-3 features per quarter with minimal supervision
- Mentor junior engineers on architecture decisions
If someone on your team has 70%+ overlap on required skills, they’re a viable candidate even without a CS degree or “5+ years” on their resume.
How Do I Actually Match Skills to Opportunities?
Skills matching compares employee skills inventory against opportunity requirements to identify viable candidates. You’ve got two approaches: AI-powered algorithmic matching or manual matching using spreadsheets.
AI platforms are worth it at 300+ employees with high opportunity volume. Manual matching works fine for companies under 100 people processing fewer than 20 internal opportunities per year.
For manual matching, create a skills matrix spreadsheet. Rows are employees, columns are skills, cells contain proficiency levels 1-4. When a role opens, filter for employees who meet at least 70% of required skills. Rank candidates by percentage match.
You can identify candidates with 60-80% overlap and pair them with 2-3 month reskilling programmes to close the gap. Backend developer with 75% skill overlap for a DevOps role? Send them through an AWS certification programme and you’ve got your candidate.
Make matches visible. Run an internal opportunity board—this can be a simple shared document listing open roles with required skills. Send weekly announcements. Notify managers when their team members match open opportunities.
What Technology Do I Need: Platforms vs DIY?
The technology spectrum runs from enterprise platforms like Gloat and Workday at $50k+/year down to DIY spreadsheets that cost nothing but maintenance time.
Enterprise platforms give you AI matching, career pathing visualisations, and analytics dashboards. This is overkill for companies under 500 people.
Mid-market platforms like Fuel50 offer SMB-friendly pricing around $10-30k/year. If you’ve got 200+ employees and 30+ internal opportunities annually, this tier makes sense.
Check what you already own. Many applicant tracking systems—Greenhouse, Lever, others—include internal candidate flagging and basic matching features.
DIY spreadsheet systems work for companies under 100 people processing fewer than 20 internal opportunities per year. You need four tabs: skills matrix, opportunity listings, matching calculations, and application tracking.
Start DIY for 6-12 months to prove the concept. Migrate to a platform when your manual matching effort exceeds 5 hours per week or you cross 100 employees.
How Do I Get Manager Buy-In and Prevent Talent Hoarding?
Talent hoarding is when managers prevent high-performers from pursuing internal opportunities to protect team performance. This will block your programme’s success.
Managers block moves because they’re measured on team output, losing their best engineer hurts short-term metrics, and they fear delays getting a replacement.
The fix requires three changes: restructure performance metrics, create development incentives, and establish governance guardrails.
Change how you measure manager performance. Add “talent developed for organisation” as a metric alongside team output. Track internal placements from their team as a positive indicator, not a loss.
Create development incentives. Bonus multipliers for managers who develop employees into successful internal moves. Recognition programmes highlighting managers who build talent pipelines.
Governance policies put boundaries on hoarding behaviour. Managers can delay moves with a 30-day notice period but cannot block them outright. When two managers want the same candidate: hiring manager, current manager, and HR discuss the candidate’s preference and business priorities. If there’s no consensus, an executive makes the call.
Run manager training on having career conversations without feeling threatened. Internal mobility programs operationalise the career pathways you designed to support role fluidity and lateral development.
How Do I Implement a Pilot Programme to Prove Value?
Choose one department or one role type—all engineering roles, for example—for a 6-month pilot rather than rolling this out across the entire company.
Project-based mobility works well as a pilot format. Temporary assignments lasting 3-6 months are less risky than permanent transfers and give both employees and managers a trial run.
Your success metrics: internal fill rate for scoped roles, time-to-fill comparison, post-move performance ratings, manager satisfaction, and employee satisfaction. Target filling 20-30% of scoped opportunities internally, reducing time-to-fill by 15+ days, and achieving 80%+ satisfaction ratings.
Structure the pilot in phases. Month 1: transform job descriptions into skills-based format. Month 2: build skills inventory for the target department. Months 3-6: actively match people to opportunities and track outcomes.
If your pilot fills 25% of opportunities internally, cuts time-to-fill by 20 days, and gets positive feedback, expand to additional departments with your improved process.
What Metrics Should I Track to Measure Success?
Internal fill rate is your primary metric. This is the percentage of opportunities filled by internal candidates: (internal placements ÷ total placements) × 100. Target 20-30% for healthy programmes in tech SMBs.
Time-to-fill comparison is your secondary metric. You should see internal fills happening 20-30 days faster than external hiring processes.
Quality metrics tell you if matches are actually working. Post-move performance ratings at 90 days and 1 year, manager satisfaction, employee satisfaction, and retention rates of internal hires versus external hires.
Cost metrics show ROI. Track cost per internal hire versus external hire, including recruiting fees, onboarding time, and productivity ramp.
Calculate ROI: retention savings (reduced turnover × replacement cost) plus recruiting cost savings (internal fill rate × external recruiting cost) plus productivity gains minus programme costs. A 100-person company saving $75k annually through retaining 3 employees at $25k replacement cost each makes a $15k annual programme investment straightforward.
How Do I Make the Employee Experience Attractive and Accessible?
Internal opportunities often stay hidden and require insider networks to discover. Fix this with multiple visibility mechanisms: internal job board, weekly email digest of open roles, manager 1-on-1 discussion prompts, and all-hands announcements.
Make the application process as simple as applying externally. Submit interest plus current skills assessment. No backdoor deals or requiring manager permission to apply. Transparent timelines.
Candidate experience matters. Acknowledge applications within 48 hours. Share clear evaluation criteria. Provide feedback whether the candidate gets selected or not.
Support employee exploration before they commit. Informational interviews with hiring managers. Job shadowing opportunities. Trial projects—2 week assignments before making a permanent move decision.
Ensure all employees can access opportunities regardless of manager support or network. Governance policies enforce this—require all opportunities posted to the central board, send company-wide announcements, and protect employees from retaliation for exploring opportunities.
How Do Internal Mobility and Reskilling Programmes Work Together?
Reskilled employees become candidates for the opportunities their developed skills unlock.
When you run a product management fundamentals course for senior engineers, those engineers should become candidates for technical product manager roles. 67% of employees stay with companies offering upskilling opportunities. But that retention only happens if the new skills lead to actual opportunities.
Skills gap analysis drives development priorities. Compare your current skills inventory against anticipated opportunities over the next 12-18 months. Where are the gaps? Target reskilling programmes to fill those specific gaps.
When planning reskilling initiatives, simultaneously create skills-based job descriptions for roles those skills target. Don’t reskill people without having internal opportunities to apply new skills. That creates frustration and turnover.
Track post-reskilling internal placement rate. Target 60%+ of reskilled employees finding internal opportunities within 12 months.
FAQ Section
Can I build an internal mobility programme without expensive HR software?
Yes. Spreadsheet-based systems work well for companies under 100 people processing fewer than 20 internal opportunities per year. Use a skills matrix spreadsheet, opportunity listing doc, manual matching via filtering, and governance workflow document.
How long should employees stay in a role before being eligible for internal moves?
Most SMBs set 12-18 month minimums balancing team stability with growth opportunities. Include exceptions for genuine skill mismatches discovered in the first 6 months.
What if two managers want the same internal candidate?
Hiring manager, current manager, and HR or executive discuss candidate’s preference, business priorities, and development goals. Candidate’s choice weighs heavily. If there’s no consensus, executive makes the call. Losing manager gets priority backfill support.
How do I handle managers who resist letting go of high performers?
Three tactics: change performance metrics to reward talent development not just retention, institute notice periods (30 days) where managers can delay but not block moves, create backfill prioritisation so managers don’t fear being understaffed.
Should I build a skills taxonomy from scratch or licence one?
For SMB tech companies, build a lightweight custom taxonomy starting with 30-50 skills specific to your stack. Industry frameworks include 500+ skills covering irrelevant roles. Start small, grow organically.
How do skills-based job descriptions differ from traditional ones?
Traditional descriptions focus on credentials—degree, years of experience. Skills-based descriptions list required and preferred skills with proficiency levels, define outcomes, and describe what success looks like.
What internal fill rate should I target?
20-30% is healthy for tech SMBs. Below 10% suggests the programme isn’t functioning. Above 40% risks insularity. Track quarterly to identify trends.
How do I measure the ROI of internal mobility programmes?
Calculate retention savings plus recruiting cost savings plus productivity gains minus programme costs. Most SMB programmes break even within 12 months.
When should I upgrade from DIY spreadsheets to a platform?
Trigger points: growing beyond 100 employees, processing 20+ internal opportunities annually, or manual matching effort exceeds 5 hours per week. Pilot DIY for 6-12 months first.
How do I make opportunities visible to employees without supportive managers?
Require all opportunities posted to central board, send company-wide announcements, establish direct application processes bypassing manager approval, and protect employees from retaliation.
What’s the difference between internal mobility and succession planning?
Succession planning targets specific individuals for specific roles, usually leadership positions. Internal mobility is broad opportunity matching across all roles and levels based on skills alignment.
Can I do internal mobility without a complete skills inventory?
Start with an opportunity-driven approach. When a role opens, identify required skills, then survey employees matching 60%+ of skills. Build inventory incrementally as opportunities arise.
