It may be tempting to think that when hiring for a junior position you can take a less rigorous approach than when hiring for a senior position, but is that really the case? Would you think differently about the junior hire if you viewed the position as looking for somebody to be the CEO in 25 years versus finding somebody to perform an entry-level set of tasks?
Hiring is an exercise in risk management. There are many risks to be managed when hiring people:
- Risks to business activities (e.g. revenue) by having an open position
- Cost to the business if the hired candidate underperforms or leaves soon after being hired
- Risks that a competitor will hire them instead and benefit from the candidate’s talents when you could have
- Opportunity costs of hiring one person when another would have done a better job
And while these (and other) risks exist for all levels in the business, the profile changes a bit by seniority:
- High seniority hires: High risk, High reward, Low Upside
- Low seniority hires: Low risk, Low reward, High Upside
The benefits to the company of hiring a particular person manifest both as:
- Reward – the immediate (or at least near term) impact to the business
- Upside – the potential to compound impact over time for future reward to the business
While the details of risk, reward, and upside change by industry, function and position, this relative profile is generally applicable preventing the question of taking a different approach to hiring based on the seniority level from having an obvious answer.
Hiring at Senior Levels
Few companies approach hiring at leadership levels flippantly. Most have rigorous processes often involving many steps and opinions which constrain the risk of making a sub-standard hire. Afterall, these individuals can do significant good or bad for a company based the level of authority they wield, and the costs incurred by hiring them.
Most companies hire with high expectations for people they place at senior levels. The plan is not for them to do a mediocre job, but for them to do a great job. This is especially true if the individual is tasked with turning around underperformance. There’s hardly ever the mindset of “let’s hire 10 senior leaders and hope at least 5 work out,” a common mindset some companies have towards junior hires. Each hire is made expecting them to succeed and succeed in a significant way. This leaves little room for them to overperform and generate upside beyond what was originally expected of them.
Hiring at Junior Levels
In contrast, many junior hires are hired only with the expectation of delivering the status quo. While their tasks are generally important, the potential for their contributions to directly impact the bottom line is often low and even if they do underperform, the company is protected from damage by more senior people who oversee those contributions. Most companies view their junior hires as involving little risk and low reward.
However, companies with that mindset often overlook the potential for a great junior hire to excel and grow in the company. Such a person becomes inherently less risky later in their career when placed in a senior position than an outside hire who would enter that same position without first hand proof of performance and cultural fit. Furthermore, that outside hire carries an acquisition cost not incurred to fill the spot by the internal promotion. Aggregate the reduced risk and cost over time including multiple promotions and the upside for junior hires becomes substantial despite the initially low reward.
Recognizing the hidden costs of bad decisions
There are two types of costs that result from reducing the quality of junior hires:
- Direct costs – company burdens born quickly and explicitly
- Indirect costs – costs born in the future which the company will never be able to knowingly attribute to early poor hiring decisions
Direct costs are easy to see in retrospect and easy to ignore at the time of making hiring decisions. They include the incremental management time required to address and make up for underperformance, exit costs (e.g. severance) and the costs to hire a replacement. For large companies, these costs may be simple to absorb, but for small companies, these can be much more detrimental -especially to time burden on management.
Indirect costs rarely get accounted for by leadership when making decisions about hiring processes. These include the costs associated with filling senior roles with people from outside the organization such as management time (usually more significant than involved in hiring junior roles), recruiting costs (also usually more significant than at junior levels) and reduced performance during the integration period as the hires build a network of relationships and cultural alignment that an internal promotes would have on day 1.
Add to that the costs associated with exiting people who don’t fit and then rehiring for the position, costs less likely to be incurred with an internal promotion whose capabilities are well demonstrated by past performance and getting junior hires right can seem as important as senior positions.
So, what should you do?
Unfortunately, there is no universal answer to whether you should have a different process for junior hires than senior hires and the right answer will differ between companies, but all companies should make decisions with a clear intention to assume certain risks and mitigate others.
When junior hiring gets a different streamlined process, it is usually to conserve management time. While this could be a sensible trade off, it is often an indication that the senior hiring process is inherently inefficient. Often improving that process will improve the outcomes it generates for senior hires AND make it applicable to junior hires.
Remember that your biggest value trade-off if you underperform on your junior recruiting process is not an increased risk of a bad hire, but the increased risk of missing out on a great one.