Hire for cost or hire for skills?

by Adina Luca, February 15, 2017

In the world of professional services, some entrepreneurs in charge of small businesses are in the habit of hiring young and inexperienced people as part of their growth strategy. They always envisage finding someone who’s talented, eager, bursting with potential – and also very cheap.

If you ask why they don’t prefer to hire a more senior person, with relevant experience, their answer might go something like: “We don’t want someone who’s set in their ways. We need someone who’ll be able to learn our way of doing things.” It’s as if experienced people were indelibly tainted by the habits of their past and unable to comprehend new methods. In fact, what often lies behind this argument is a lack of resources: the entrepreneur simply can’t afford to hire someone with expertise. But there might also be other factors involved…

Many entrepreneurs will tell stories about how they hired a senior person in the past and it didn’t work out. Maybe the person’s face didn’t fit; or, for the value they added, they were too expensive; or they ruffled too many feathers by trying to change things. Maybe – horror of horrors – they brought with them working methods that weren’t applicable to “our way”.

Many entrepreneurs can also tell stories about a junior recruit who didn’t work out. The young person in question was talented and eager – and cheap, of course – but in the end they didn’t realise their potential.

But what choice do those same entrepreneurs make when they next want to hire someone? Well, because the fact of having limited resources weighs so heavily on most small businesses, they might well plump for a junior person again. We call this dilemma “Hiring for Cost v Hiring for Skills”.

To make an informed decision, first you need to look at yourself. The outcome of hiring a junior or a senior may have nothing to do with their abilities or talents, but with the stage your company is at.

Here are a few things to consider when you’re making a decision about who’ll fit your team:

Hire someone junior when:

  • your company has been around for a very long time
  • to deliver your service you need routine activities performed at low cost
  • you already have, say, 20 experienced specialists
  • you already have a senior member of staff who’s responsible for integrating the juniors, and he or she does their job very well (having already trained those other 20 members of staff).

If you meet the above conditions, congratulations. In hiring a junior member of staff you’d be helping them into their first job and probably teaching them a lot.

Hire someone senior when:

  • your business is four to five years old and you want to grow fast
  • to deliver your service you need people with at least a couple of years’ experience
  • you employ, say, six people, three of whom are themselves senior and have been with the company right since the beginning
  • your other three employees are less experienced
  • none of your senior people has the time to train junior colleagues.

If your company meets the above conditions, get yourself an experienced senior person in an area where you feel you need improvements. Maybe head-hunt on your competitors’ territory.

If your company fits the second category but you’re in the habit of hiring juniors because they’re cheap, you’re building up problems for the future. Your senior people probably resent you because they can see that the new people you hire aren’t there to help them. They know their workload will increase when each new junior person arrives, because they’ll have to spend time showing them the ropes. Or perhaps they’ll opt for passive resistance and largely ignore their junior colleague – who’ll deal with their isolation by spending most of the day on Facebook, until you get rid of them when you have your next cash-flow crisis.

In this situation, you’re not helping anyone. As far as the junior person’s concerned, you’ve given them a bad experience in their first job that they may remember for the rest of their working life. They’d have been better off joining a bigger company with a tailored training programme for young recruits.

Where I come from, one of our popular sayings is “I’m too poor to buy cheap clothes”. Translation: if you have limited resources, go for high quality, because the return on your investment will be higher in the long run.

Hire for skills. A senior person in a specialised services company brings double benefits: they hit the ground running and they have a lot of experience to share. Yes, they may be more expensive at first, and perhaps not too keen to be “managed” – but then again they probably don’t need to be supervised in the same way a junior person would. And maybe – brace yourself – the way you’ve always done things isn’t necessarily the best way. Someone who arrives with good habits acquired elsewhere might actually prove to be a breath of fresh air.

There might be another, unspoken reason you avoid hiring for skills. Maybe you’re afraid of recruiting someone who’s smarter than you are. Your senior team might secretly share the same anxiety. Imagine you bring in someone who’s one of the most talented people in your industry and they end up showing you new and better ways of working. Everyone wants to avoid that, right?