The war for talent in today’s job market is on, and while the search for high quality employees is on the rise, the supply of “active” candidates is quickly shrinking. Minnesota’s unemployment rate at the end of July of 2014 was 4.5% while the National rate is 6.2%. In 2009, these numbers peaked at 8.3% and 10% respectively. While the lower unemployment rate is good news for workers, it also means that companies have a smaller “pool” from which to find qualified candidates. This leads to the ultimate question for hiring managers needing to add talent to the team: “Do I hire for experience or potential?”
The Benefits of Hiring for Experience vs. Hiring for Potential
When hiring an experienced candidate, especially in sales, employers will not have to spend as much time training in the new employee. The candidate’s industry knowledge and contacts will lead to quicker sales and, as a result, an increase in revenue in a shorter period of time. Experienced candidates fall into the “plug-n-play” category which allows managers to simply point the new hire in the right direction and trust them to get results.
When hiring a candidate for their future potential, managers must make an effort to understand what the role will evolve into and look for a candidate that has the ability to grow along with it. This method of hiring requires a bigger time commitment during the on-boarding process due to the lack of industry-specific knowledge. That said, taking a chance on this type of employee could lead to significant benefits for the company down the road.
Both philosophies are valid hiring methods if they share one very important factor in common – the candidate and company must be on the same page when it comes to the levels of commitment and expectations for what the role is now and what it may become.
The Pitfalls of Each Hiring Method
These two philosophies also come with a few downsides, which hiring managers should consider.
When hiring a more experienced candidate, managers are not only getting someone who knows how to do the job, but also someone who has their own established methods that might not match company standards. They might be less flexible when the role begins to evolve and may even be restricted by non-compete agreements.
When hiring someone for their potential, managers get to mold the employee to fit organizational needs, but also have to spend quite a bit of time training the candidate, potentially the first 6-12 months of their employment. That means it will take slightly longer to realize the return on their investment. Along with these aspects of hiring less experienced candidates, they are an unproven entity that could end up being great or end up not being the right fit at all.
Which Will You Choose?
Each role should be evaluated independently to determine which hiring approach is right for your team and your company. Hiring managers should sit down with Talent Acquisition or a search partner to decide which approach is best for the company. Whichever approach you choose, you must understand that any new hire involves a certain level of commitment. For a more experienced candidate, that commitment often comes in the form of compensation, while for a high-potential candidate it often requires time and patience.
What has your experience been in using one or both of these hiring approaches? Do you have a preference?
To read more about the shift in the job market, check out this blog on Baby Boomers’ transition to retirement!
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