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How to balance achieving your hiring goals while extending your financial runway

It’s tough seeing the ongoing news of more and more organizations laying off folks on masse each week, but this isn’t the first time we’ve all seen challenges in the market, and things will turn around soon as they always do.

If you find yourself in a hiring scenario, and you either already have, or soon find yourself having a conversation with your finance team about tightening up your belt, here are a handful of easily actionable tips you should consider to help you in achieving your hiring goals while extending your organization’s financial runway.

1. Revisit your open headcount and make two lists – “absolute must hires” and “nice to have hires”.

I realize that every hiring authority wants to feel that their open headcount is critical to the success of the business, but the reality is not every open headcount is created equal and some hires are truly more important to prioritize over others.

When looking at your team’s business objectives for the remainder of the fiscal year, your average time to hire, time to onboard, and time until a new employee reaches full productivity, you’re likely looking at a sum of at least 4 months or so, and that means you’re running out of time.

Now is likely the time to focus your hiring efforts where they will make the biggest impact to your fiscal business objectives, so it may be a wise idea to filter your open headcount into the two categories above – absolute must-hires and nice-to-have hires.

If it’s a nice-to-have hire, it’s safe to push the hire to the back burner and focus your time, money and attention elsewhere.

If it’s an absolute must-hire, proceed to Step 2 below.

2. Stop shopping for a Ferrari when a Ford will do (and is actually what you need and can afford). (For a Scorecarding resource, leverage this template!)

Although it seems like a new armchair quarterback, with no actual knowledge or expertise of organizational compensation strategy, pops up every 10 minutes on social media and shouts “just pay more!”. The reality is, compensation is wildly complicated, and it’s easy to fall into the same trap that many professional sports franchises fall into during free agency – over paying for talent because of poor scouting and/or a false sense of urgency.

Time is the one thing we can never get back, so operating with urgency is important, but I’ve found that objective urgency yields far better results than subjective urgency, and the difference between the two requires planning your work and working your plan.

Here’s an easy example that I run into with hiring authorities all the time that should help paint a picture.

 

Hiring Authority – “I need someone with 10 years of experience doing X”.

Me – “Why 10 years? Why not 9 years?”

Hiring Authority – “9 years, 10 years, whatever…”

Me – “What about someone with 7 or 8 years?”

Hiring Authority – “Sure whatever, I just need them to be fully competent and be able to hit the ground running.”

Me – “Let’s pull on that thread a little. How are you going to know your hire has hit the ground running? Objectively what will they have delivered (X) within what timeframe (Y) and with what resources (Z) to make you feel that way?”

 

This is typically the moment where I get a blank stare from the hiring authority as they realize they’ve taken a subjective approach to what success in their next hire “looks like”.

The reality is that no one really needs someone with X years of experience in a specific role or function in order to be successful, however, everyone needs someone that has the capability of delivering X outcomes within Y timeline with Z resources.

At Pivot + Edge, we call this exercise with hiring authorities “scorecarding”, and when done right, it simplifies the hiring process 10-fold as it forces hiring authorities to approach hiring objectively and not subjectively.

How does this all come back to stop shopping for a Ferrari when a Ford will do?

Simple.

Generally speaking, if you take an objective approach to understand exactly what you are looking for in a hire and have a plan to evaluate said talent against your scorecard (more on this in point 4), things like years of experience, degrees, fancy titles and big company logos on resumes mean less, and you open yourself up to hiring folks on the upswing in their career without the risk of overpaying for subjective nonsense.

So… how can I get the attention of people that fit my scorecard?

Easy.

3. Get involved with how your organization promotes your open headcount.

Regardless of if you are introverted or extroverted, have a fully functional talent acquisition department that takes care of hiring for you, or have a recruitment marketing budget, there is one core tenet that will always ring true in hiring.

It’s always about a human-to-human connection, and it’s a lot easier to hire great people if great people want to work for you.

Whether you are active on ABC social media site or not isn’t the point here.  The point is to share that YOU are hiring, and why someone that has the objective capability you are looking for should care to at least consider having a conversation with you.

For the introverts, maybe this means something as simple as giving your HR team a quote that they can include in the job posting, or the marketing team can include in a social media post with a link back to your LinkedIn profile.  The objective is to give an inside view of what it’s like to work for you.

For the extroverts, maybe this means something as awesome as a short 30-second video of yourself giving the exact same information, but in a more dynamic format for your team to leverage.

Either way, potential hires always want to know WHO they would potentially be working with when considering new employment. By giving this information proactively as you commence your search and attract candidates, you’ll give yourself a leg up on your competition, as long as you…

4. Set yourself up to win and have a simple hiring process that allows you to make a yes/no hire decision within 5 business days of engaging with a potential hire for the first time.

This may sound like a big ask, but it’s really not.

If you’re new to making hiring decisions, it’s natural to want to hire by committee and get feedback from as many data points as you possibly can, but the reality is if you have objective means to evaluate talent there really is no valid excuse for putting a potential hire through 7 rounds of interviews just so you can cover your ass if and when your selected hire doesn’t perform as expected.

Also, highly skilled and sought-after people are not ready and willing to be picked up like a carton of milk at your convenience, and every step you add to your interview process decreases your likelihood of winning said potential hire.

You may want to operate on your timeline, but to assume that working for you is a prize and feel that everyone should clamour for the opportunity to join you is foolish. Ultimately you will risk losing your ideal candidate to another company with a simpler hiring process who has already scooped them up.

One other note to consider on this topic; if part of your process is to run potential hires through some sort of job specific, functional assessment – (think a coding assessment for technical folks, a sales presentation for sales folks, etc.) – if you’re asking a potential hire to invest any more than a few hours of their personal time to complete your assessment, you should consider compensating them for their time, regardless if you make them an offer.

Why?

Not only will it set your organization apart from many of the other places your potential hire is being courted by, but it also reinforces your objective hiring process and encourages you to only commit time and energy into interviewing the folks that you should be interviewing.

It doesn’t have to be a big financial investment on your side, especially considering you get to see how your potential hire would perform in a real, on-the-job task.  I typically recommend compensating potential hires whatever hourly rate you would end up offering them as an employee multiplied by the number of hours you expect a successful hire would need to complete the task.

This typically means less than a $250 investment per potential hire.

Considering the true cost of hiring the wrong person (a shockingly high number), paying potential hires to complete an assessment is one of the best investments any hiring authority can make.

Speaking of making an offer to your ideal hire…

Make a fair offer based on objective facts, not a silly offer you’re going to regret based on subjective nonsense.

I mentioned the armchair quarterbacks already, and I’ll be the first person to disclose that I am not a compensation expert, but I do understand how business and budgeting works and am fully supportive of pay equality and pay transparency.

If your organization hasn’t evaluated its compensation philosophy in the past few years (or doesn’t really have one yet), chances are you’re already underpaying your existing staff ­­– a bigger issue you’ll need to face at the company level ­– but adjusting a company’s philosophy on compensation is not an issue that should be taken lightly, and requires a lot of time and planning to roll out.

I realize that the market is in turmoil at present, inflation is high, and life is getting more expensive for everyone, but the reality is your employees talk, they talk about money, and if you offer a new employee 20% more than you are paying everyone else in the same or similar role, with the same or similar level of experience/expertise, you’re creating a much bigger problem for yourself that you’re going to have to face sooner than later.

If you know that you’re working within a budget of between X and Y for a role, I’d highly recommend you include that range of pay in the job posting in the first place (as well as communicate this with your team prior to launching your job posting) and include an application question as simple as “What are your financial expectations?” for all potential hires to answer at the front end of your process.

If someone A) has access to your stated budget because it’s visible in your job posting and B) self-discloses that they fall well outside of your budget, move on from them and don’t engage them in your hiring process. If they do fall within your budget, know that intuitively they are going to think they are worth the top end of your range.  If your job specific, functional assessment shows that your potential hire is good, but not great, DO NOT OFFER THEM THE TOP OF YOUR RANGE. It’s just going to cause you and your existing team problems in the short-medium term.

I absolutely recommend being open and transparent with your potential hire during the offer process, and that includes providing them with specific and objective reasons as to why you are offering what you are offering.

Will you lose some average performing, yet expensive folks?

Yes, for sure.

Do you really want to build your team with average performing, expensive folks?

Didn’t think so.

One last bonus tip on how to balance achieving your hiring goals while extending your financial runway that may come across as counter-intuitive for me to share, but to me, it’s important to share.

6. Avoid unnecessarily expensive recruitment agencies like the plague.

I realize I’m likely going to catch a lot of heat from recruitment agency types for sharing this, but the traditional recruitment game is truly a sales game, and agencies don’t typically have your best interest at heart.

What they do, however, is focus on maximizing their hiring fees, and getting your money as fast as possible.

I’m sure you’ve all received the pitch (as they all sound the exact same) …

 

“We focus on ____ and have a database of ____ people that would be perfect for you.  Our service is free unless you hire someone from us, and if you do, our fee is a one-time fee of 20-25% of your year one cash compensation.”

 

So basically, for a standard engineer earning $100K, you’re looking at a service fee of $20,000-$25,000 per hire, and know that 99% of recruitment agencies do everything they can to drive candidate salary requests (and subsequently their hiring fee) up, and most will do everything they can to avoid any of the objective, scalable processes listed above to ensure you make a good hiring decision.

I can’t blame them, I like earning money too.

But if your goal is to achieve your hiring goals while extending your financial runway, burning a pile of cash on recruitment agency pirates is just not a fiscally responsible, or scalable solution.

If you’re still reading this, don’t fret because you’re not alone.

There are lots of other folks trying to figure out how to balance achieving their hiring and business goals while concurrently trying to do more with less.

I’m right there with you.

When the pandemic first hit a few years back, I wasn’t confident that Pivot + Edge would still exist today.

Not only do we still exist, but we’re going to be wrapping up our fiscal shortly, have experienced just shy of 300 % growth YoY, and just celebrated our first-ever Canada-wide team retreat.

My lesson learned through all of this?

No matter if you’re booming, or busting, it’s your people that make it all worth it and choosing the right people from day one is paramount.

If you need a hand adding a few cornerstones to your team without disrupting your financial runway, feel free to reach out.

We’re happy to help.

– J

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