Why it’s not a good idea to make employees reapply for jobs

Recent news about layoffs at HSBC has sparked criticism in some HR circles about a tactic the bank is reportedly deploying: Making employees reapply for their jobs.

As a part of restructuring plan announced in October, “hundreds” of managers from HSBC’s commercial banking division and global banking and markets division have been asked to reapply and interview for jobs, competing to work in a newly formed corporate and institutional banking division as “several hundred” positions are eliminated, Bloomberg News reported. Interviews were underway last week, according to Bloomberg.

Generally, implementing a reapply-for-your-job technique during workforce reductions is counterproductive, says Elaine Varelas, managing partner at Keystone Partners, a Massachusetts-based HR and career services advisor. Even the employees who win their jobs back will feel rejected by their company and lose trust in their employer, she says.

“You’ve told them: ‘Your job is eliminated,’ so you’ve been rejected. And now we’re going to let you interview for whatever job it might be, with the chance of rejecting them again,” Varelas says. “The idea of ‘I’ve got to interview to stay at the company that I’m already at’ means they don’t know me, they don’t believe I’m qualified or they don’t think I can be trained to do this job.”

The employees who are hired back may not want to stick around for the long term, she says. “You’re going to say: ‘Great, I’m safe for now, but this is not where I want to be.'”

With competent succession planning, HR should already have all the information it needs about the employees and their talents to know what new positions they could be slotted into, without a reapply-and-interview process, she says. 

“Effective HR organizations would never need to do this because they would have really accurate performance reviews on all of their staff. They would have knowledge of what these people’s skills are and where else they want to go in the organization,” Varelas says.

It isn’t clear whether HSBC will also open up its reapply-and-interview process to outside job candidates, but Varelas would advise against it.

For a company facing such a situation, the first priority should be to move internal talent into the positions that will remain after the job cuts, she says, and managers should be incentivized to do so.

It may be tempting for a manager to want to hire a “powerhouse team” filled out with the perfectly qualified outside candidates, but the company could then lose organizational knowledge and damage employee morale. 

“They’re losing X years of knowledge of how things get done inside the company; they may not be a cultural match,” Varelas says. “If your current employee population has 90% of what the ideal candidate has, that’s pretty terrific.”

Varelas suggests financial incentives for managers to encourage their internal hiring, such as guaranteed bonuses, or minimizing quarterly goals until reassigned employees can get up to speed in their new positions. 

Also, it’s good PR to minimize outside hires and therefore keep on as many existing employees as possible, she says. 

“People trust the organization more and know that it is trying to retain employees,” Varelas says. “If you want to be an organization that wants to retain your talent—and every company says that—then that’s what they’ve got to put behind it.” 

Also, if existing employees are replaced by new hires, it shows a lack of confidence in their managers. The managers should have already replaced the existing employees through effective performance evaluations, she says.

As for the employee who is interviewing internally for their job, they should treat it like a job interview with an outside company, Varelas advises. 

“Be prepared. Don’t assume just because you’re internal that someone will give you this job,” she says. “You need to treat it seriously; you need to do your research on the organization and you need to build your supporters internally and network throughout the organization where you might find your own internal job.”