Hiring: If You Pay Peanuts, You Get Monkeys

During the economic slowdown last year, a manager had a choice between two consultants for a critical project to turnaround the prospects of his division. The first candidate was five years out of business school; his billing rate was $370 an hour. The second, more experienced candidate’s was $510 an hour. Without much deliberation, the manager hired the first candidate because he would fit in the manager’s budget. Things did not work out as well as the manager had expected. Three months later, after considerable delays and missed opportunities, the manager fired his consultant and recruited the second candidate anyway. This consultant had an earlier experience similar to the situation at hand and succeeded in his mission in due course.

The best don’t come cheap

Recruiting is the toughest responsibility of a manager. Prudent hiring processes start with a realization that talented professionals are the heart of successful organizational endeavors. Many managers simply do not take in this fact and signup those who cost the least instead.

Economic downturn or lower project budgets are no reasons for careless hiring decisions. It is exactly during though times that managers should recruit the best people. And, the best don’t come cheap.

Now, I am not saying that high-priced consultants and employees are necessarily good. The converse is not automatically true either. Market demand for talent often dictates billing rates and compensation of skilled professionals. There is often a strong reason for them being in demand and commanding premium fees. No manager dare overlook such considerations.