Internal Talent Markets: The Dual Challenge of Productivity and Preference
New Research Evaluates the Efficacy of Employee-Driven Assignment Selection
Internal talent markets, which allow employees to select their next assignments, projects, or roles, are being adopted by major organizations, including Walmart and the U.S. Army, to boost employee engagement and retention. However, a recent study sought to clarify whether granting workers more choice actually translates into improved organizational productivity.
Comparative Analysis of Assignment Models
A research team comprising academics from Columbia Business School, the University of Oregon, Emory University, and Yeshiva University compared two assignment approaches within a large organization:
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Firm-Dictated Assignments: Leaders place employees into roles based strictly on company priorities.
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Market-Based System: Employees and managers submit ranked preferences, and an algorithm determines the match.
The study’s findings revealed a notable difference between the two models when benchmarked against random assignments (the control group):
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Company Priority Matches: Were projected to be 33% more productive than random assignments.
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Employee Preference Matches: Were expected to be only 5% more productive than random ones, but were ranked 38% more valuable personally by the employees (job satisfaction).
In essence, manager-led assignments were found to maximize immediate productivity, while preference-based assignments maximized employee happiness.
The Paradox of Satisfaction and Output
The research indicated that the productivity shortfall, despite high employee satisfaction, stems from less-than-ideal matches between job requirements and worker skills. This mismatch occurs for several reasons:
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Insufficient Detail: Project descriptions often lack adequate detail, preventing employees from accurately assessing their skill-job fit.
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Choosing “Stretch” Roles: Employees may choose challenging roles to develop new, future-oriented skills, even if those assignments do not immediately enhance corporate productivity. Approximately 90% of the skills workers sought to develop were not firm-specific.
Implementing a Hybrid Selection System
To increase employee satisfaction through choice without substantially compromising productivity, researchers suggest a hybrid model. This model allows workers to express preferences while retaining the firm’s ability to influence or override assignment decisions. Recommended best practices for optimizing this hybrid system include:
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Enhance Information Quality: Companies must provide clear feedback to employees about their strengths and the specific needs of each assignment. Adequate information empowers workers to make more informed choices, thereby improving match quality and, in turn, productivity.
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Offer Incentives: Organizations should incentivize employees to apply for roles that align closely with both their skills and the company’s needs. Systems can automatically nudge high-performing candidates toward priority tasks, offering rewards—such as extra vacation days—only if they accept and complete a highly desirable, well-matched assignment.
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Coordinate Match Decisions: Mechanisms should be implemented to strategically distribute top talent across the organization rather than concentrating it in a single team. This could involve limiting the number of high performers who can apply for a role within one team or setting hiring limits for managers.
The Mastercard Example: Mastercard utilizes an internal talent marketplace called “Unlocked.” This employee-led platform matches individuals to opportunities (projects, mentorships, open roles) based on their existing and desired skills. Participation is voluntary and dependent on an employee’s capacity to handle additional work beyond their core duties. The platform has successfully tracked one million project hours, eliminating the need for external recruitment or consultants and fostering cross-functional collaboration.
Ultimately, the optimization of the talent-matching system must be aligned with prevailing market conditions. During periods like the “Great Resignation” (2021–2023), maximizing employee happiness was crucial for retention. However, in a weaker labor market with a greater focus on efficiency, granting managers more control over assignments may be necessary to optimize productivity.
Source: https://hbr.org/2026/01/a-better-way-to-manage-internal-talent-markets
