Two enduring hiring fallacies

"Proven track record in a similar role"

I met an enlightened CEO of a SaaS business the other day. He's looking to hire a new Head of Sales and not only recognises the need for diversity in the senior team, but is also not fixated on hiring "someone who has done it before." He wants someone with fresh perspective, hunger to succeed and who can grow into a bigger role within the organisation. Admittedly, this is partly driven by budget - he would need to find another ￡30-50k of base salary to bring on a proven sales director. But, fundamentally, he recognises the benefit of hiring for attitude and potential, rather than delving into the existing, limited pool of sales leaders with a relevant track record.

I've hired for private equity and VC investors for most of my recruitment career, and they have always espoused the "proven track record" mantra. And often justifiably so - if they are building an executive team to rapidly deliver on a business plan and investment strategy, the candidate who has successfully been on a very similar journey in their previous role is obviously a lower risk. They can pick up the reins and replicate their experience with minimal adjustment. This works particularly well for a CFO, for example, where the fundamentals don't vary greatly. It also simplifies the search and hiring process when time is of the essence and you have a narrow view of the profile that the business needs.

That said, I was hiring for a SaaS scale up in Vancouver last year. The CEO has his eyes on a transaction in the next 2-3 years, so really wanted a "done it before" CFO who could hit the ground running and draw from his/her experience in a similar business that had sold or listed. Unfortunately, the talent pool of proven CFOs in Vancouver is relatively thin, and they'd poor experience with relocating execs from further afield. I introduced 4 proven CFOs who met the requirements and who all initially professed to be keen to take on their next challenge. But, to a man, when they saw the hard yards on the road ahead, the "done it before" CFOs decided they didn't have the appetite to do it again.

So, instead, we hired an unproven industry outsider - because this opportunity would be pivotal in his career, and for his positive personal chemistry with the team and business. Very strong professional references were critical to the final decision. I should add that the predecessor CFO had failed, despite an exemplary 'proven track record', largely because of a misalignment of values.

This is a version of the "hire for attitude, train for skill" mantra, which has been argued equally strongly in reverse. But if an employer genuinely wants to breathe life into a role and encourage innovation, there is a strong case for investing in potential - provided you have the recruitment process to support you. Inevitably, candidates will need to be sourced from a broader spectrum of the market and interviewed more thoroughly to properly understand what they have achieved to date, and what potential they have to achieve in the future. So a standard 'box-ticking/face-fitting' screening process isn't going to be enough.

"Sector experience [always] preferred"

This is an extension of the same "de-risking" hiring policy - but worthy of separate mention.

I was chatting to a friend of mine recently, who recently left his job as General Counsel at a top tier investment bank. Rob has been interviewing for his next role and, understandably, would ideally like to develop his career outside investment banking. One of the 'SHREK' global exec search firms approached him for an equivalent role at a large global insurance company. He went through an extensive interview process and found himself on the final shortlist of two candidates. The other candidate came from the insurance industry. And so guess what? The other candidate was chosen, because of Rob's "lack of insurance sector experience"(which of course was more than evident from Rob's CV). My reaction was: "Hasn't [said global insurance company] already got a huge amount of insurance expertise in-house?!"!

At the outset of a search, clients will always claim to be open to hiring someone from outside their sector. They prefer to keep an open mind, and have the opportunity to consider candidates from different backgrounds - in case an outside candidate has the clear edge in other areas. But, given an apparently (hypothetically) equal shortlist of two, they will ALWAYS play safe and go for industry experience.

Now, insurance is a complex sector, and an outsider is always going to have to spend time getting up the curve on the nuances of a new industry. A candidate from the industry will invariably be able to 'talk the talk' more convincingly from personal experience in the sector.

But, in my view, not enough weight is given to the benefits of fresh perspective, breadth of knowledge and the ability to draw from experience of different business models and ways of doing things. Provided a candidate is adaptable, not complacent and has the drive and appetite to learn the challenges of a new industry, there should be no bar to hiring from outside sector. Cross-pollination between sectors - especially when they already have some context and synergies in common - is vital to stimulate innovation at all levels.

Conclusion

In fact they are not recruitment fallacies - simply pervasive beliefs that are necessary for employers and stakeholders to maintain in some contexts. But by taking a more balanced view, and recognising the advantages of a broader, more flexible approach to 'ideal candidate background', the talent universe is expanded. With a more diverse candidate population, comes a more diverse employee population, and a more creative, dynamic corporate culture.

Matt Venning @ HRInvent

8/3/2020