Deliberate Mistakes, Part 2 – Hiring Decisions
Today I’d like to follow up on my earlier posting about “Deliberate Mistakes”, and think about one specific example in which you could deliberately make a mistake in order to possibly reap a benefit, and that is hiring decisions.
In a market where there are fewer applicants than jobs, the pressure is on department managers to fill jobs with “lesser qualified” resources. (Note: this does not necessarily imply lesser capabilities.) What are the risks/rewards for hiring those that don’t quite fit the profile? Is the reward substantial if they turn out to be a good hire? Is it enough to offset the cost of a mistake?
It seems to me, at least on the surface, the potential rewards seem to outweigh the potential risks. And, there could be other benefits as well (such as bringing in fresh viewpoints).
I’ll cite an example from my own industry. At the moment, there is a shortage of Project Management resources in the industrial facility engineering field. At the same time, there is a surplus of IT personnel. Some of those IT resources have considerable project management experience, albiet in a different field. Granted, IT and industrial engineering are vastly different fields, but surely it’s obvious that project management across industries is relatively similar in knowledge, skills, and application. Why not take the risk and hire a willing IT PM to fill the need?
Think about it – if the worth of an employee is generally considered to be 3x annual salary (I read that somewhere), then a $90K/yr employee’s worth is $270,000 in billings. How much does it cost to hire an employee – perhaps $20,000? Add the cost of hiring, salary and benefits and see where you end up.
Worth = $270K
Salary = -90K
Hiring = -20K
Benefits = -90K
——————
Profit = $ 70K
Now, suppose the new PM doesn’t work out. If you have to let him or her go, what did it cost? Don’t forget, good or bad, they are still worth 3x annual salary in billings the entire time they are employed. If the hiring decision is for just one or a few employees, your risk may be too high. But what if you have to hire 30-50 PM’s?
The numbers above are guesses, but I will try to validate them over the next few weeks. Nevertheless, if they turn out to be fairly close, then as a hiring manager, can you afford NOT to consider “making a mistake”?
Tell me what you think!
5 responses so far
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You bring up a great point.
A difficulty for hiring managers will be that they will nave to think hard about what the job entails and then match requirements to a candidate. For instance, what if there are no objective standards? Hiring managers will have to spend more time thinking and comparing to fill positions than they do now. They will have to see the benefits of making such efforts, which are considerable, in order work that hard on something that used to be much simpler. I think that there will need to be a paradigm shift, which will probably come from great need (significant shortages of qualified people across an organization) and through people willing to help educate an organization. Those people will doubtless need active and visible support from the highest levels of management.
The support mentioned above will probably not come easily — someone will have to stick their neck out. It may be one reason why this has not already happened.
Seems like the real challenge might be getting hiring managers to look beyond their “precisely-defined” qualifications list, and to start looking at “similarly-defined” qualifications instead. In other words, looking for cross-industry congruencies in resources.
For instance, regarding Project Managers, one way to fairly compare them would be to use some common standard, such as PMI (Project Management Institute) certification. It should be faily easy to come up with other standards just as useful.
Bob, the idea is very useful when there is a shortage of people that would normally fit into the open slots. It may not be as useful when there is an abundance of “traditional” candidates.
Another thought: there is often an advantage to having someone with a dual background in a slot. An example is an engineer with an MBA or PhD.
Wonderfully stated. This is the perfect scenario where hiring a good recruiter can make you money. A good recruiter will bring you candidates, therefore the ROI is huge.
Of course in a down economy such as today, the ROI is smaller thus it is more critical to find the right candidate. If you have a good recruiter and he/she finds you a producer, you can sometimes improve the 3x multiple and even improve on the ROI of that hire.
Well, congratulations, Tom, on reading – and commenting – on a post that’s over two years old!
Interesting to hear from you that this post still makes sense – considering I had no idea what I was talking about at the time. Well… I had an idea; I just didn’t know I was, y’know, right!
I’m gonna have to mark that day on my calendar: The Day I Was Right!
Cheers!
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