In fact, internal hires tend to reach a higher level of productivity more quickly, as nearly half rapidly reach 75% productivity, versus only 20% of external hires. Speaking to the bottom line, this learning curve could cut into revenues anywhere between 1.0% to 2.5%, according to the results of the “Mellon Learning Curve Research Study” by Mellon’s Human Resources & Investor Solutions.
“By looking at both the length and the shape of the learning curve we were able to calculate an average number of unproductive days for a typical employee in each job category,” said Edward Mactas, a Mellon principal and consulting actuary. This “Internal Hire Advantage” yields the number of unproductive days (UPDs) for new hires across the organization. Overall, the Internal Hire Advantage was in the 50% range for most job categories, with internal managers rating the highest (52%) and internal sales representatives the lowest (39%).
The 67 respondents to the Mellon survey were asked to estimate the time to full productivity for both internal and external hires in eight standard job categories – Executives, Managers, Professionals, Sales Representatives, Customer Service Representatives, Technicians, Office/Clerical, and Operatives. Not surprisingly, Mellon found that job complexity has a direct correlation with learning curve times. The median time to full productivity for externally hired executives was 26 weeks, versus only 4 weeks for externally hired operatives. Other learning curve times included:
- Executive internal – 16 weeks
- Manager external – 25 weeks
- Manager internal – 14 weeks
- Professional external – 20 weeks
- Professional internal – 12 weeks
Overall, the three groups with the longest time to full productivity are all externally hired positions, Mellon found.
For those companies that see the potential for struggle in the longer learning curves, Mellon offers two tips. First, focus on the new hire population, by adopting measures aimed at either reducing turnover or increasing the number of internal versus external hires. Second, focus on the learning curve by implementing policies aimed at either shortening it or changing its shape so that it resembles the “frontloaded” curve more typical of internal hires. Some suggestions that get these results include streamlining the onboarding process, teaming new hires with knowledgeable mentors, and codifying the insights of experts are all examples of this approach.
The “Mellon Learning Curve Research Study” is to interested parties by contacting Ruth Williams at (312) 846-3672.