The talent conundrum: Managers may be tempted to hold onto their best employees, but that actually hurts the entire company

Given today’s strong labor market and longer hiring times, it makes sense that managers with a good team would want to hold onto their employees for as long as possible. More than half of all supervisors admit to hoarding talent, or preventing subordinates from pursuing jobs that would allow them to work with another manager, according to 2020 research from management consulting firm Gartner.

But supervisors who hoard talent are actually hurting their company by stunting internal mobility, according to a recent paper from researchers at Cornell and Pennsylvania State University, published in the Academy of Management Journal. They analyzed more than 96,700 internal applications submitted to more than 9,890 jobs posted within HealthCo, a large, U.S.-based health services company between 2014 and 2017. They found that managers who promoted members of their team at a higher rate the year prior to posting a job opening received an 8.91% increase in total internal applications, and a 11.58% increase in applications from high-performing employees.

“When you open up opportunities for people to find different jobs in the organization, it's super beneficial to the company, because then people move around to where their skills are most valuable,” says JR Keller, one of the paper’s co-authors.

“Most managers think it benefits them to hold on to their best talent,” he adds. “We actually show that it benefits them to let them go.”

Why managers hoard talent

It may seem nefarious to refuse to move or promote a great employee, but managers generally hold onto their workers for more practical reasons: they feel pressure to keep up with business demands, and fear that they won’t be able to do so with an understaffed team—even temporarily.

“Some managers might be like: 'Well, I don't want to lose my all-star employee, because in the end, they make me look good, I'm more productive, I'm meeting my metrics,'” says Leticia Corona, a human capital management expert who’s held consulting roles at Deloitte and Accenture.

But companies suffer when individual managers hold onto employees longer than they should, as workers will become demotivated and want to leave the organization altogether. More than three-quarters of large companies have identified talent hoarding as a serious HR issue. And a minority of workers surveyed by Gallup in November 2023 thought their managers and employers were actively fostering their career growth. Just 32% of employees strongly agreed that there was someone at work who encouraged their development, and 33% said they’d received opportunities to learn and grow at work in the last year. That may be why only 20% reported being extremely satisfied with working at their company, and 17% reported being actively disengaged at work.

Employees can tell if managers intentionally delay conversations about direct reports’ development or promotional opportunities until their performance review, and will become fed up with supervisors avoiding these conversations, according to Corona.

“People are probably more inclined to [think], ‘Well, if you're not going to take care of me, then I'm going to take care of myself and I'm going to start looking out elsewhere, where I can get that experience,” she says.

Aside from being detrimental to a company as a whole because of morale and attrition, talent hoarding also backfires on individual managers who hold onto employees for too long. Workers are likely to gossip and discuss their managers with each other, leading to some managers earning a reputation that they refuse to support their subordinates’ growth.

“Those managers get seen as people who hold on to their talent, and nobody really wants to work for them,” says Keller. “If you sponsor your employees and look out for their careers, everybody else in the company is gonna learn about that, and then you're always going to have a pipeline of people that want to work for you.”

How to set up managers and employees for success

There are several different ways that companies can fight talent hoarding and unleash the benefits of better internal mobility.

One is establishing a gig talent market within the company, where employees can work on projects or skills-building opportunities on a part-time basis, while still staying in their primary role. As a result, employees can pursue development opportunities, and managers don’t lose a key player.

“It's kind of a nice middle ground, between: I'm just going to hold on to this person [or] I'm gonna let them go. I can do a little bit of both of those,” says Keller.

Some companies already have internal gig work opportunities in place, including Workday, which saw 50% greater internal movement for employees who took on the gig work compared to those who did not. And one-third of employees who moved internally took on a higher-level role. Google has a similar “bungee” program where full-time employees can volunteer to pick up responsibilities for a colleague who is on leave.

Employers can also encourage managers to participate in talent calibration conversations with other supervisors, where managers at the same level meet to discuss their direct reports to ensure performances are measured the same way. But Keller also believes these conversations can serve as a good forum for managers to discuss new work employees can pursue internally.

“It allows them to then hear from other managers what opportunities are likely to come open in the organization, and then think about which of their employees might be a really good fit, so they can then connect,” he says.

Leaders should also ensure people managers understand that stewarding their subordinates’ career growth is a key responsibility of their role. That’s a different way to think about management than just hitting a certain metric each month.

“Embracing that idea of, ‘Yes, I'm a people manager, but I'm also coaching and developing my direct reports,’ that's a goal for them,” says Corona. “That might be something that managers are not really clear on.”

Lastly, employers can also rethink how jobs are posted internally, and remove certain roadblocks that hoarding talent creates within the company. For example, the company may require manager approval for a worker applying to an internal job posting, and managers can use that policy to block workers. Instead, employers can consider a policy where if the employee ascends to the final round of interviews, the hiring manager, the employee, and their current manager engage in a three-way conversation and establish a transition plan for the worker.

But focusing too much on structure can be beside the point, according to Keller, who says that the most important part of avoiding talent hoarding is creating a culture that makes them engaged and excited to grow within the organization.

“Unless you get managers on board [with] supporting their employees and encouraging them and helping them find the roles they should apply for—you can put all the great structures and processes in place, and they're just not going to deliver quite the level of value that they could,” he says.

This story was originally featured on Fortune.com