How to Reduce the Risk When Hiring An Industry Outsider

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Aug 16, 2017

The purpose of this article is to deconstruct the risk associated with hiring those from another industry.

In order to set a risk baseline, I’d like to start with a low-risk hire. The reason companies are interested in hiring from a direct competitor is not only that it hurts their competition, it’s that the market has validated the quality of the hire (lowering the risk). If the new potential employee has worked at Competitor Corporation for the last five years we know that: 1) they know how to do what they do; 2) they’ve done it well enough to keep their job, and; 3) we have a reasonable understanding of the market’s perception of that employee’s value (salary).

The two groups mainly involved with hiring are human resources (to find) and hiring managers (to hire). Let’s start with the latter and work backward.

Hiring managers

I frequently joke with people that “The more the hiring manager has to think, the less likely you’ll get the job.” As much as I joke, there’s a bit of truth in the statement. The last thing the manager wants to do is add an employee with “transferable skills” because training someone adds more complexity to their already complex day. Hiring managers aren’t bad people or lazy. They have tons on their plate and there is very little, if any, incentive to teach an outsider something new. They’re juggling their own work and their team’s work in a never-ending cycle of firefighting; they simply don’t have the time.

Human resources

HR is not necessarily there to find the best candidate possible, just the best of those that meet the general criteria of the manager and who offer the least risk to the company. As previously stated, the obvious fit is likely from a direct competitor, doing the exact same work they’ve been doing. HR professionals, like hiring managers, are using the market as a validator, i.e. Competitor Corporation hired this person and she worked there for five years, so she must be pretty good. All that needs to be done at this point is to identify if our company remedies her reason for wanting to leave Competitor Corporation and then make her an acceptable offer. It’s a low-risk hiring decision. Remember, human resources has a limited amount of time and 20 jobs to do.

Hiring from outside

Yet, it’s not always possible to hire an “insider” from a competitor. There are also some very good reasons to hire someone new to your particular industry: different perspective, special skills, diversity, expanding into new areas. These are just a few good reasons to look outside.

When you do decide to broaden your hiring, you obviously can’t look for all the same background you would if you were hiring for industry experience. Here are three tips for hiring industry outsiders and making them feel welcome:

  1. Try not to focus as much on the specific codes of your industry. Most codes are based on some principle, i.e. calculations, regulations, or guidelines and the principles don’t change (often). Instead, look for the essence of a high achiever. Look for education/career focus, quick career progression, and a background of adaptability. Those who understand and continue to study the principles of their trade will easily jump from code-to-code or industry-to-industry without much trouble.
  2. Create an “out of the industry” onboarding process, i.e. code transfer (from Oil & Gas to Automotive), industry literature, past/current/future competitive advantage, company purpose, etc. The more the new employee understands the impact of their work, the more likely they’ll stick around.
  3. Cut the feedback loop in half (to reduce the risk of a frustrated employee) but make sure you tell the new employee why you’re asking “how’s it going?” so often.
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