By: Polina Hanin
You just got funded, your customers are eagerly awaiting implementations and results – your company is finally at a place where you get to hire the people that you’ve always dreamed of hiring. You create your list of requirements for the one individual who will propel your company forward. They. Will. Be. Awesome.
As excited as you are for the future, you know that you needed that person yesterday. The problem is that the person may not exist. Or if they do, it will take you a long time to find them, and then you may not be able to afford them. So you cut your list back, with every item that drops from the “need to have” to the “nice to have” bucket leaving you feeling like you’ve settled for a lesser version of what your company and your team deserve.
Your advisors tell you to hire for potential rather than the ideal candidate. And so the amorphous hunt begins that seeks to answer, “can they hit the ground running” and “can they figure it out?”
Before you go down the path of hiring for potential, let us agree on two basic principles:
- Perfect candidates don’t exist. Sounds weird coming from an executive search firm, right? Wrong. Every one of our searches starts out with a job description and a scorecard that tops out with a perfect score of 15. Across the dozens and dozens of searches we’ve run, there has yet to be a single candidate that has received a 15.
- When you’re hiring at a startup, every person you hire is being hired for potential. You’re running a company that is in an ever-changing market, doing things that have never been done before, so even if the individual has held the same role at another organization successfully, by the time they join you, everything is different.
Coming to grips with these two principles will enable you to get out of your own way when evaluating candidates for the role.
What is Potential Anyway?
Potential is “possibility.” In the context of hiring, it’s typically connoted as the unrealized ability to deliver future success.
Want vs. Need
“You can’t always get what you want
But if you try sometime you find
You get what you need” – The Rolling Stones
Mick must have been clairvoyant because this literally happens more often than you’d think, and most recently on a Chief Growth Officer search we completed. The requirements for the role were all outlined, the goals that the individual would need to hit were set, and we went to market. We found a number of great candidates along the way, and one of them had everything except the #1 criteria necessary for the role. So, after one interview, the client and the candidate mutually parted ways. Fast-forward three months, and that person was hired for the job. So what happened?
We talked about “want” versus “need.” One of the first questions we ask is about the goals for the role, and we make sure they aren’t just numbers and deadlines – that they have context. While many goals are intertwined where one will beget the other (i.e. more customers will get you to an improved product and a better product will lead to more customers), there is usually an order of operations. So before you set out on your next executive search, take the time to understand your true needs versus your wants. That will help you look for what truly matters and therefore bring in someone who will be transformational to your business in ways you didn’t think were possible. In this case, our client landed an incredibly impressive executive, who just happened to be an outside-the-box candidate against some of the initial needs.
Uncertainty vs. Risk
In all its forms, potential is a calculated risk to hire someone who does not have every last drop of past experience to demonstrate their ability to perform a certain role. Given that no perfect candidate exists, every time an individual takes on a new opportunity, there are going to be unknowns. Those unknowns, where the results, outcomes and/or probabilities are unclear to you cause uncertainties. Your role as a leader is to turn uncertainty into a risk – where you know potential outcomes, and the probabilities of those outcomes. A calculated risk.
Let’s look at an example where you’re trying to hire your first VP of Sales into your company that currently has $2M in revenue from health systems. You have 2 sales people you’ve just hired, but all the revenue to date has come from you. You need someone to establish processes, train people and shepherd the entire deal from start to finish.
- Noel: Worked at a large organization selling to hospitals, generating $10M in revenue for the Midwest region, growing at a 20% rate and having 5 individual contributors report up to him. While Noel has had a lot of success, he did not have to set up the process from scratch and has a variety of resources available to him.
- Suzette: Worked at a small organization selling to payers and led the start and close of the company’s first three enterprise deals. Suzette was the first sales employee in the organization, does not have anyone reporting to her, and largely has had to figure things out on her own. She is just now preparing to make a few additions to her team.
So which is better for your company? This is a common scenario that entrepreneurs will find themselves in; will past experience dictate future success? Noel is steady, having success at a mid-stage organization. He is where you will be in a year or two, but he didn’t help his current employer get there. Is that risk or uncertainty? Suzette on the other hand has grown her current business, though with a customer that doesn’t mirror yours. But if she can do it for one organization, can she do it for another? How do you differentiate between the risk and uncertainty of hiring Suzette?
How Do You Screen For Potential?
When you’re interviewing candidates, you’re trying to remove as much uncertainty as possible. When the future of the company you’ve built is on the line, that becomes exceedingly difficult.
Before you can go anywhere, you’ve got to figure out your table stakes (i.e. if you’re hiring someone to fly a plane, it’s not going to be someone who is unlicensed). Once you have that, the fun conversations begin that help you narrow in your field of vision.
Look for growth at the same company. Title jumping between companies is easy – you leave one organization for the promise of a fancy title at the next. Getting increases in responsibility within one company demonstrates a few things: they are trusted, they earned it, and they are being given good work that reflects what they are capable of.
Look for risk taking. People who are high achievers never rest on their laurels. They go all-in and take calculated risks on things that can pay off in a big way. When you’re in an interview setting and you happen upon this scenario, dig in: What information did they have? What did they need to learn? What did the market look like? Who was on the team? Who did they need to convince? How did they do it? What actions did they take? What was the result?
Look for the “so what?” It seems quite simple, but look for results. How many times have you interviewed someone who only talks in verbs? What they led, managed, created, launched, reconfigured, and on and on only to break from the conversation and not really know what you learned. It’s really easy to be enamored by verbs, so have the discipline to ask “so what?” There’s a difference between a VP of Sales who generated $5M of revenue at a 10% growth rate versus $1M at a 100% growth rate. Depending on your own goals, one of these individuals would be better suited for your company than the other.
Look for trust. What was that person entrusted with and by whom? It’s not just about whom they reported to, but who reported to them and relied on them. For instance, a VP of Sales who consistently had to give presentations to the Board of Directors is someone who was trusted by the CEO to deliver the nuance behind the numbers, while the Board of Directors trusted the expertise of the individual to deliver the message on a quarterly basis.
As humans, we all function off of pattern recognition. That pattern goes beyond a resume and a 30-minute introductory call. If you’re on the fence on someone, why wouldn’t you try to get to know them?
How Do You Cultivate Potential?
Not all high-potential people come as a result of an external hire. Remember how we said that perfect candidates don’t exist? OK well, that wasn’t exactly accurate. They can actually be created.
A study done by Harvard Business Review a decade ago demonstrated that just because an employee is a high performer does not mean that they are engaged. One in four intends to leave within a year and one in three doesn’t put all their effort into the job. Why such a lack of commitment? The study suggests a mismatch between expectations and the reality of many alternatives. And unlike marriage vow renewals that doom the relationship, continuous recommitment between you and your employees, particularly those that can transform your business, is imperative for retention.
Making sure that expectations align with the individual’s ability to make a difference is one way to keep your high potential talent in your organization. The other is to continue to reinvest in them. In another study done by Korn Ferry in 2019, the organization found that only four Fortune 500 CEOs are Black. Among the myriad of factors that compound to that number, one of them is that Black leaders have not been given the opportunities to advance into senior P&L roles. In fact, fewer than 10% of senior P&L leaders are Black. What happened?
According to the report, one of the factors in the wide gap was a lack of proactively assigned stretch opportunities that would enable the executives to demonstrate their abilities. 50% of the people surveyed stated that they continuously sought out these stretch assignments to demonstrate their potential. A high potential individual, particularly one who knows their value, would never passively wait for an opportunity to come along. So if they see that there is no way to advance inside their current company, they’re going to look elsewhere.
So what can be done? Organizations need to be proactive in creating their own ideal candidates. Giving your team opportunities to stretch into roles and supporting them along the way enables you to reduce the uncertainty of the unknown, while at the same time reengaging your high performers to your mission.