A Successful Hiring Strategy During CoronaVirus
Includes a Focus on Hiring Star Performers
COVID-19 has upended many companies’ talent strategies. Some are looking at deep cuts to project revenue. Others are merely waiting to see how things play out. Meanwhile, on the supply side of the talent equation, many candidates have grown risk-averse. Yet companies still need great people to achieve their growth goals. Perhaps now, more than ever.
Winning talent strategies, then, are those that adjust to our new reality, minimize the risk of individual hires, and maximize their potential by focusing on star performers. Here are a few practical suggestions on how to do just that:
1. Accept that we are a remote work culture for the foreseeable future.
COVID-19 has forced companies to adopt the remote model. Most probably see this as temporary, but the reality is that we just don’t know when employees will be able to return to the office en masse. Nor do we know whether they should. Recent studies have shown that remote workers stay in their jobs longer and are more productive than their office-bound brethren.
Meanwhile, advances in cloud and communications technology now make remote work much more feasible than it was even a few years ago. Given these factors, hiring managers should revisit their work-from-home policies, which many candidates see as a benefit or perk to begin with.
Another effect of COVID-19 has been a drastic reduction in our ability to travel. This may lead businesses to reassess what forms of travel are worth spending money on. But it may also lead candidates to question how much travel they are willing to do for a prospective new job.
Candidates in high-travel industries, like management consulting, often leave precisely to “get off the road.” We suspect this will only grow more prevalent so long as the virus remains untreatable and without a vaccine. To attract top talent, hiring managers can consider converting required travel to voluntary.
This may not be practical for all industries, functions or individual circumstances, and the truth is that some candidates enjoy being on the road. But if the age of Zoom is teaching us anything, it’s that a lot of business travel isn’t essential – and it’s expensive too.
2. Maximize each hire by focusing on star performers
Hiring strategies should concentrate on star performers. This is well supported in management literature. Economists estimate those star performers are between two and five times as productive as average performers. A McKinsey study suggests it can be as high as eight times. And though star performers will undoubtedly cost more than average performers, the difference in cost is minimal in comparison to what you stand to gain in productivity. Put another way; star performers are just good value.
This observation is not specific to a bear market. Indeed, identifying star performers in your hiring process should be a priority, even in the most robust economy. But it’s even more critical when you have a limited budget for hires. After all, your company may now need to do more with fewer hands on deck. Star performers are essential to successfully navigating a downturn.
In order to identify and land star performers, hiring managers should develop systematic, evidence-based methods for evaluating candidates. We recommend standardized evaluation systems like general mental ability tests or GMAT scores. Combine with structured interview questions and using multiple interviewers to assess each candidate. Taken together, these methods help identify a candidate’s aptitude, work ethic, interest level, and culture fit.
When in doubt, bring in an agency. This may not be a top priority for hiring managers on a tight budget, but a good agency is worth its cost many times over. Not only can they bring you strong candidates, but they can also raise the chances that you will hire the right person.
In the end, less truly can be more if your talent-evaluation system is top-notch.
3. Minimize your risk by reformulating the compensation package on offer
Star performers still command a top salary, even in a recession. While we argue that this cost is small compared to what you gain by bringing a real rock star on board, there may be areas where you can adjust your offer to lower the risk of an expensive hire. For one, try offering less in base and more in performance-based bonus, tying the payout to reaching predetermined benchmarks or value created if possible.
Consider this example: One former client of ours faced a problem. Their top candidate for a CEO role came in with a higher base than they could afford to pay. Their solution was to offer a 50 percent target bonus that would increase to 100 percent if the company met predetermined EBITDA targets. While the payout would undoubtedly cost the company, in this case, the value created would far outstrip the increase in compensation. The candidate believed in his ability to create value, so he took this as an opportunity to exceed his previous compensation.
Companies can also consider offering more in stock or equity, then sell the candidates on the upside. After all, the market always rises over time. If the company has strong fundamentals, savvy candidates will recognize the opportunity to obtain shares with substantial long-term upside. At the same time, a stock- or equity-heavy package simultaneously lowers the company’s cash outlay.
Finally, we suggest that companies supplement a smaller number of permanent hires with contract or “gig workers.” In the end, things still need to be done, and while contract workers often come with a high daily price tag, they don’t require costly benefits. Plus, their work is by nature time or project delimited. This not only saves money within the annual budget, but also minimizes the risk of a bad hire. In cases where projects are stopgap solutions to a long-term need, hiring managers can approach these contracts as “try it before you buy it.” In other words, a great way to ensure your hiring process is evidence-based.