Should You Hire an Overqualified Candidate?

As politicians and economists puzzle over America's jobless recovery, managers who have started to hire again face another problem: how to handle all the overqualified candidates coming through their doors. The prevailing wisdom is to avoid such applicants. But the unprecedented availability of top talent created by this recession and new research on the success of these candidates may be changing that.

What the Experts Say
Recruiters have traditionally hesitated to place overqualified candidates because of several presumed risks, says Berrin Erdogan, a professor of management at Portland State University and the lead author of a recent study on the subject. "The assumption is that the person will be bored and not motivated, so they will underperform or leave." However, her research shows that these risks may be more perceived than real. In fact, sales associates in her study who were thought to be overqualified actually performed better. And rarely do people move on simply because they feel they're too talented for the job. "People don't stay or leave a company because of their skills. They stay or leave because of working conditions" she says.

Claudio Fernández-Aráoz, a senior adviser at Egon Zehnder International and the author of Great People Decisions and "The Definitive Guide to Recruiting in Good Times and Bad," agrees that there are more benefits to hiring an overqualified employee than there are risks."When making hiring decisions, visionary leaders don't just focus on the current needs, but on the future," he says.

Here are several things to consider next time you are looking at a stack of overly impressive resumes.

Overqualified or over-experienced?
Don't assume someone is overqualified based on a quick screen of their credentials. "There is a lot of misunderstanding over what overqualified is," says Ergodan. "We define it as meeting and exceeding the skill requirements of the job. So having a lot of education doesn't over-qualify you." Nor does experience, if the person's prior positions are not directly related to the job in question. Get to know the candidate before you decide to pass. There may be reasons why he is interested in this specific position. He may want to shift industries, move to a new location, or achieve greater work/life balance. And there may be ways that you can make use of his "extra" experience.

Think bigger than the job in question
When considering a candidate who is, in fact, overqualified for the job opening, ask yourself if there is room to expand the role and make use of the skills he brings. "While the old paradigm for hiring was to determine that a job was vacant and look for the right candidate, in today's world one should also consider the talent opportunities at hand, and try to find the jobs that may be created or open in the near future for them, in the larger organization," says Fernández-Aráoz.

"Hiring overqualified candidates can help you achieve much higher productivity, grow, and achieve opportunities that you may not even be thinking about pursuing right now." There are other less obvious benefits too: these employees can mentor others, challenge peers to exceed current expectations, and bring in areas of expertise that are not represented at the company.

Bring them on carefully
"Effective onboarding is essential, especially for the overqualified," says Erdogan. "Unmet expectations are one of the more common reasons for turnover," so you should be clear with yourself, the new hire, and the rest of the organization about what the job entails, as well as what it could become. Adds Fernández-Aráoz: "You need a clear and explicit plan for the future, whether you are thinking of a promotion, a lateral move, or a new project altogether. You need to think and discuss beyond the initial stage where he or she may be temporarily underutilized."

Both he and Erdogan caution that recruiters need to manage an additional risk: a boss who feels threatened. "Managers often worry, 'Can I supervise the person effectively?'" says Erdogan. A superior with less experience than the new hire might be concerned that the person will take her job, make her look bad, or be too challenging to manage. This is not reason enough to say no. Instead, focus on the future for that candidate. In cases where the boss is insecure, "you should not bring that new hire in without a plan to promote him in the near term," says Fernández-Aráoz.

Pay what they are worth
Although it's tempting in a bad job market to buy top talent on the cheap, Fernández-Aráoz disapproves of the strategy. "While my experience shows that you can get candidates for up to 25% less in the middle of a big recession, I would not recommend underpaying an overqualified candidate," he says. "We all have the expectation to be rewarded in a way which is reasonably proportional to our effort and contribution, and fair." And if the candidate is as strong as you think, you are likely competing with other employers for her. If you can't afford her, Fernández-Aráoz says it's better to pass than to underpay. If she wants the job anyway, simply have a frank conversation about her future prospects in terms of promotion and compensation so that she fully understands what she's getting into.

Principles to Remember

Do:

• Think broadly about your organization and its overall talent needs now and in the future
• Consider how you could accommodate a promising candidate's skill set by shaping the job
• Onboard carefully and be clear about your plans for the new employee

Don't:

• Narrowly define the hiring process as finding one person for one role
• Confuse education and experience with skills; a candidate with lots of experience still may not have the capabilities to do the job
• Try to pay an overqualified candidate less than he's worth

Case Study: The hiring risk pays off
In 2009 Lara Galinsky, senior vice president at Echoing Green, needed to hire a finance director for the young, but growing, global non-profit. She thought the ideal applicant would be someone relatively young but with a few years of non-profit finance experience. She was not expecting a candidate like John Walker.

John had most recently worked for a venture capital fund that was forced to lay people off because of the economy. Prior to that, he had spent over ten years in the defense industry in a variety of senior design and management roles. "I didn't have a background in social enterprise or non-profit. I didn't know anything about 501(c)(3)s," he says. But he did have deep experience in running, buying, and selling companies.

This was not an unusual situation for Echoing Green. "We get a lot of resumes from people who want to do a sector switch," Lara explains. They have a lot of work experience but not necessarily a lot of experience in the sector." She had previously ruled out candidates who were overqualified for certain positions or who didn't bring enough relevant experience.

But John had been referred by a friend of the organization, and since Echoing Green straddles the world of for-profit business and non-profit organizations, she thought his experience might be applicable.

Lara and her team talk about the risks and the opportunities of hiring each candidate. They knew that there were risks with John because he had never worked in the sector. But they saw many upsides too. "We didn't have anyone on staff with private equity experience and yet we work in that space. We knew we could use a for-profit lens," explains Lara.

In the end, Lara thought the benefits outweighed the risks. They had been impressed with John's willingness to learn what he didn't know. "Hunger and potential are the most important factors we look for in candidates," she explains. "We hire for talent, not necessarily for acumen. I look for people who can grow, mesh, and evolve."

John came on board in early 2009. Lara encouraged and incented him to network with finance directors from other organizations, so that he could gain insight from experts in the field. The learning curve was steep but he was able to come up to speed quickly and is now thriving in the position. As Echoing Green moves into impact investing they have also been able to tap directly into his previous VC experience. While John wasn't the person Lara initially envisioned hiring, she hadn't imagined what someone like him could do in the position. "We have evolved with him — and used his skills in ways we didn't anticipate."

Source: HBR