Corporate residency policy: to have or not to have a residency requirement

Corporations are trying to increase employee satisfaction to reduce the negative impact of the ongoing war for talent. Providing employees with internal job opportunities is a means of demonstrating that they can realize their career goals inside rather than outside of the company. This requires employees to be free to apply and move to new positions as vacancies occur. Many corporations have different restrictions on employee internal mobility, of which residency is one. The present article examines the relevance of the residency policy in modern corporations. It concludes that the residency policy neither facilitates internal labor allocation nor contributes to employee retention. Line managers and some groups of employees resist the elimination of residency due to fears of conflicts of interest, which are inevitable in internal labor markets. The policy can be effectively eliminated if the proper internal labor market processes are instituted, and if employees are educated in them.