Companies can either surpass all expectations or fail miserably depending on how they hire. And let's get one thing straight - the hiring process is complicated. Who do you hire? Do you need to hire someone to begin with? How much do you pay them? Where do you look to find that perfect fit for the job?
With so many tough questions to answer, businesses often don't think things through. They usually just hedge their bets and go with the obvious option. The safe option. Unfortunately for these companies, that type of haphazard decision-making won't land them the top-of-the-line talent they were probably hoping for. The hiring game can be quite complicated, and in order to understand its intricacies, you have to approach it like you would the stock market. Future value vs present value. Risk vs reward. Expected return vs required return. To truly identify and hire top talent, here's why you must think about the process the same way an investor thinks about stock picking.
1. It's about the future, not the present
Similar to how stock investors care more about the future price of a stock than its value the day it was bought, businesses should avoid the trap of caring too much about what a job candidate can do on day one. Whether or not new hires are equipped to handle whatever tasks you throw at them now isn't nearly as important as what they can do a year or two down the line. You want your new employees to be able to learn quickly and blossom into superstars who can truly pay dividends once fully integrated into your firm.
To find employees who have the highest chance of excelling in the future, look for candidates who are fast learners with impressive problem-solving abilities. These traits aren't always easy to identify just by reviewing a resume or giving an interview. Assessing these abilities might require incorporating tests into the screening process that measure learning speed and analytical prowess. At the same time, when reviewing resumes, de-emphasize skills that can be easily picked up by most people given an adequate amount of time.
2. It's about finding that diamond in the rough
Think about what it means to make a good hire. Let's say you hired an MIT Noble Prize-winning professor who met all your job requirements and then some. Was this a good hiring decision? While I suspect that most people would say yes, it really all depends. Quite frankly, almost anyone would be willing to work for you if you're ready to fork up enough money. Offer a job that pays $500,000 annually and I'm sure you'll have plenty of top talent eager to get started right away.
The lesson here is that good hiring decisions are defined by how much bang for the buck you're getting from your new employee, as opposed to simply who you've hired. Just as is the case with stock picking, you're trying to find that diamond in the rough to invest in. It's all about identifying job candidates who are willing to do more for less, the same way you want to buy stocks that are priced far less than they are actually worth in reality.
3. It's about looking beyond the obvious
Beating the stock market requires investors to take a novel perspective on things. It's about peeling off layers of information in order to discover an investment opportunity that others have overlooked. You should approach your hiring process in much the same way.
There are a lot of creative hiring methods that businesses can utilize in order to save money and make better hires. For instance, if a business needs so-and-so done, oftentimes the immediate conclusion is to look for a new employee when instead a freelancer could be hired to do the job for half the cost. Or, instead of hiring an employee for $100,000 annually, you could consider hiring two employees and pay them just $50,000 each, knowing that these two employees will likely be able to accomplish far more than just the one.
At the end of the day, both stock selection and employee recruitment are investment processes. In both cases, you're essentially investing a certain amount of money with the hope that you'll eventually make a profit. Both activities require you to look beyond the surface in order to make good decisions. And finally, while they both can end up being disastrous, they both also have the potential to pay off in a huge way.
By approaching your hiring the way a savvy investor would approach stock selection, you'll find yourself making much wiser decisions that can take your company to new heights.