Try Before You Buy Your Next New Hire
As the North American economy begins to improve, companies are starting to hire, albeit somewhat tentatively. With the true unemployment/underemployment rate estimated to be somewhere in the range of 15 to 20%, this suggests that there is a lot of good talent walking the streets at this time.
The dilemma for executives across North America is trying to increase the odds of making a good hire. Anyone who has been in business for any length of time and who has hired staff at any level knows how difficult it is to recruit good talent, particularly good leaders. Even companies such as General Electric that have worked diligently over many years to train leaders in-house have made mistakes.
There are unique challenges in recruiting strong leaders from outside the company. The successful candidate must have an excellent portfolio of management and decision-making skills, strong communication and interpersonal skills and must be able to adapt to the culture of the company. An in depth knowledge of the industry and the business is often desirable if not essential. This is a tall order and a great deal of time, money and energy can be wasted on ineffective leaders. According to Heidrick & Struggles International CEO L. Kevin Kelly, 40% of executives hired from the outside last only 18 months.
With the supply of available human resources being so large and with the need to make good hires so great, some companies are employing a new hiring strategy, trying before buying. These companies are utilizing the standard hiring processes including multiple interviews, psychological testing and extensive reference checks. But those approaches are not infallible. As a result, some companies are auditioning their new hires for weeks or even months. In Europe and Asia, “interim executives” have long been popular. Now this practice is being adopted by North American companies.
This approach has a number of benefits. Companies can mitigate their risks by not signing a contract and by not committing to fixed costs or severance payments. They can see the prospect perform before making a commitment. Another benefit is that a company seeking an outside leader can fill a vacancy in a matter of weeks as compared to the interval normally required for an extensive job search. There are a number of companies that are competing in this niche business that have compiled rosters of prospects.
This approach also has benefits to the job hunter. As an auditioning executive, the individual can make an informed assessment of whether or not the company is a good fit for them and obtain a better sense of the political environment and culture. He or she can continue to search the job market for permanent work. The job seeker can earn an income while maintaining the search. The auditioning leader also doesn’t have to change location or one’s LinkedIn status until a permanent commitment is made.
To make this work, a company must have a very good hiring process and make a significant commitment to the “trial executive.” The new person will almost certainly interact with other employees and leaders. He or she may also have some interaction with customers. This is not an approach where you can try Joe for a month, Harry for two months and Bill for six weeks. This would be very disruptive to the company’s operations and look badly on those performing the hiring. It would be hard to imagine a trucking company CEO hiring a “test market” VP of Sales, exposing that individual to the company’s sales team and customers on a test basis and then waving good bye. On the other hand, this approach could be employed for a new sales hire to see if they have what it takes to bring some revenue on board.
There are also other approaches that work well in some situations. A consultant can perform certain activities and then leave the company at the end of the project. Similarly, a project leader can be brought on board to complete a specific task (e.g. develop a business plan to open a new market) for a designated period of time and then leave at the completion of the assignment.
The “try before buy” approach is a new niche hiring approach that is right for the times. It remains to be seen if this hiring technique will retain its appeal as the economic recovery gathers momentum.