Why Hire for Potential, Not Experience

TalentRISE partner Jim O’Malley discusses why reliance on homegrown talent can be short-sighted and recruiting from non-traditional channels can bring fresh ideas and an escape from group think. Let’s take a closer look.

November 1, 2017 – Hiring experienced talent has always been a challenge. Luring talent away from rivals, and then onboarding and training them to work successfully within an organization’s parameters, can be difficult. That’s why retention rates for experienced hires at many concerns are abysmal, according to Jim O’Malley, partner and executive search practice leader at TalentRISE.

These issues illuminate why some organizations have eased efforts to hire experienced managers and partners, relying more and more on homegrown talent. “But that doesn’t make any sense if you want to grow your company,” said Mr. O’Malley. “Over-reliance on internal talent is a problem in and of itself. In today’s tight labor market and within virtually every sector of professional services, no one can afford to ignore the need to hire managers and partners from the outside.” Demand often outstrips supply, he said, “making hiring from the outside an imperative, not a choice.”

Finding Potential

“The way I see it, the solution is to revamp your approach to hiring by trading experience for potential,” said Mr. O’Malley. Organizations need to expand their perspective. They should take the risk and hire executives who may lack direct experience but exhibit potential from outside of normal channels, he said.

What exactly is meant by “potential”? It describes individuals who, in their current workplace, consistently and significantly outperform their peer groups in a variety of settings and circumstances. They also “show a strong capacity to grow and succeed throughout their careers within an organization — more quickly and effectively than their peer groups do,” according to the Harvard Business Review.

It’s a tradeoff but the benefits can be far-reaching. In addition to filling seats on your bench, there are several other compelling reasons to hire for potential as opposed to experience.

By hiring talent via non-traditional channels, everyone can benefit from fresh thinking, ideas and skills, he said. If your team is wallowing in bad habits or a “group think” mentality, new players with new perspectives may be just what is needed to shake things up.

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Companies might also consider broadening the reach of their employment brand, said Mr. O’Malley. Many are struggling to hire and retain specific groups of employees, be it women, minorities and/or millennials. Hiring talent with potential from those groups will only grow stronger as one’s company become known for hiring outside of the typical “box.”

Outside Talent

Expand your organization’s customer base, said Mr. O’Malley. People hired from the outside will bring their contacts “inside,” thereby expanding your company’s networks to do business with an even larger audience.

“The main objection to hiring for potential, which I hear often, is that it’s fraught with risk,” said Mr. O’Malley. “That’s really not true. Hiring for potential – when done correctly – is not any more risky than hiring an executive from your competitor down the street. I advocate careful assessment of any hire and especially when hiring people from outside of the usual channels. This will require a shift from the usual way we screen candidates using behavioral interviews with multiple colleagues to implementing more front end assessment tools and technology like artificial intelligence and machine learning,” he added.


“I’m also a fan of onboarding and assimilation coaching for the first 90 days, particularly for the more senior level experienced hires,” said Mr. O’Malley. “The reality is that any organization that does campus hiring is already hiring for potential, despite the fact that hiring untested recent grads is a great deal riskier than betting on the potential of a candidate who’s already been in the labor market for a few years.”

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Maybe it’s time to start hiring for potential and stop exclusively hiring laterally from direct competitors. “Let’s put an end to trading staff back and forth,” said Mr. O’Malley. “This is a bad practice for several reasons, including the fact that the individuals willing to jump ship for a lateral move may represent less-than-stellar talent.” Plus, the net result tends to be salary creep “with, frankly, little impact on the caliber of talent that we offer up to our clients,” he said.

Trade-offs are unavoidable. But faced with an imperative to grow, Mr. O’Malley said, we need to turn to the benefits of hiring for potential. Many already recognize this. A recent TalentRISE poll, in fact, showed that more businesses have started to hire for potential over credentials. When asked what steps they were taking to become more effective in finding qualified candidates, 18.5 percent of respondents selected “hiring people with potential” the top response.

Talent Acquisition Veteran

For more than 25 years, Mr. O’Malley has been developing talent acquisition solutions to help leadership talent align with changing business needs. He joined TalentRISE in 2012 to focus on clients’ executive leadership challenges by leveraging his passions for executive search, workforce planning and analytics, and executive coaching. His clients include professional service firms such as Accretive Healthcare, the Claro Group, Duff & Phelps, Deloitte, Healthscape Advisors, Huron, McKinnis Consulting Group and West Monroe Partners. He has also served financial services clients like Discover, Fifth Third Bank, First National Bank of Sioux Falls and Santander.

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media

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