As External Hiring Becomes an Imperative, Broaden Your Perspective So Potential Takes Precedence Over Experience
by James O’Malley
Ask yourself the following questions:
If you answered one or more of the above questions affirmatively, there is perhaps some comfort in knowing that you are not alone. In my twenty-plus years of experience in recruiting within (and on behalf of) professional services firms, I have rarely encountered any that consistently excel at hiring and retaining capable, high caliber experienced talent.
Luring talent away from competitors, and then onboarding and training those individuals to work successfully within your firm’s parameters isn’t easy. Additionally, really great individuals are difficult to extract from their current jobs which makes hiring them expensive and will increase your risk if they subsequently jump ship to the next firm that offers them a better deal. On the flip side, disgruntled or non-promotable talent is often passed along, from firm to firm, in what essentially amounts to trading low performers back and forth.
This is a bad practice and the net result tends to be salary creep with, frankly, little impact on the caliber of talent that we offer up to our clients. Compounding all of this, cultural fit is often elusive for “outsiders” joining a firm where colleagues have worked alongside each other since college. That’s why retention rates for experienced hires at many firms are so abysmal; as much as two to three times higher than overall industry rates with average annual turnover ranging between 15 to 25 percent.
All of these issues explain why some firms have eased efforts to hire experienced managers and partners, relying more and more on homegrown talent. But that doesn’t make any sense if you want to grow your firm. Over-reliance on internal talent is a problem in and of itself. In today’s tight labor market within virtually every sector of consulting, firms cannot afford to ignore the need to hire managers and partners from the outside. Demand outstrips supply, so hiring from the outside an imperative, not a choice.
The solution is to change your hiring strategy to one where potential takes precedence over experience. This means that firms must broaden their perspectives; take calculated risks and hire executives who may fall short of direct experience but demonstrate potential. What do I mean by “potential”? To me, in a recruitment context, “potential” describes individuals who consistently and significantly outperform their peer groups in a variety of settings and circumstances in their current workplace. They also “show a strong capacity to grow and succeed throughout their careers within an organization—more quickly and effectively than their peer groups do.”
Those of us inside the recruitment industry are definitely seeing this trend evolve and gain momentum. While not solely focused on the consulting industry, a live poll being conducted by my firm TalentRISE finds that the majority of respondents to date are hiring “people with potential, as opposed to credentials” as they work to become more effective in finding qualified candidates to fill open positions.
Like many things in life, weighing potential against experience is a tradeoff but the benefits are far-reaching. While filling seats on your bench, here are a few other compelling reasons to hire for potential, as opposed to experience:
Despite all of this, some firms are reluctant to cast aside experience and hire for potential, mainly because they assume that it is risky. However, hiring for potential—when done in a disciplined and measured way—is not any more risk-laden than hiring an executive from your competitor down the street. Step one is to create a “success profile” of the attributes of your top talent and then use it to identify similar characteristics in job candidates. Mitigating risk also means carefully sourcing candidates utilizing more front end assessment tools and technology like Artificial Intelligence and Machine Learning.
I’m also a fan of onboarding and assimilation coaching for the first 90 days, particularly for experienced hires at the most senior levels. The reality is that any firm that does campus hiring is already hiring for potential, despite the fact that hiring untested recent grads is a great deal riskier than betting on the potential of a candidate who’s already been in the labor market for a few years.
Sure, there are always trade-offs. But faced with an imperative to grow, we need to turn to the benefits of hiring for potential. It’s well worth taking a closer look at this strategy, already being adopted by some of the more forward-thinking firms in the consulting industry. Ignore it at your own peril and you may be left behind the hiring curve.
J. James O’Malley, Partner and Professional Services at TalentRISE LLC, has been developing HR and talent acquisition solutions for global consulting firms (including Huron Consulting Group, Arthur Andersen, Deloitte and Lante) since the mid-1990s. He can be reached at firstname.lastname@example.org