The Most Expensive Mistake Most Companies Will Make

The most expensive mistakes organizations make are hiring inexperienced professionals or people with the wrong experience. With experience, comes wisdom. With wisdom comes good decisions. 

Experience comes from Latin experientia "testing of possibilities, participation in events, skill gained by practice". According to Webster Dictionary, experience is the knowledge or mastery, gained through involvement in or exposure to a profession, over a period of time. Experience involves the aspect of intellect and consciousness experienced as combinations of thought, perception, memory, emotion, and imagination, including all unconscious cognitive processes. Simply put, experience is the basis for our thought process. 

Oxford English Dictionary defines wisdom as "capacity of judging rightly in matters relating to life and conduct with soundness of judgement”. Wisdom is the ability to think and act using knowledge, experience, understanding, common sense and insight. Wisdom isn’t simply intelligence or knowledge or even understanding. Wisdom is the ability to use your experience and knowledge in order to make sensible decisions or judgments. Experience is the most valuable tools in acquiring wisdom. What we learn from experience.

When you hire the right experience, you are hiring someone with the capacity for making wise decisions.

 Costs of Hiring an Employee:

There are two kinds of expenses when hiring an employee; perceived expenses and unperceived expenses. Perceived expenses are salaries and benefits. Unperceived expenses include low production, training, handholding, poor/delayed decisions, poor presentations, time spent building relationships and developing a network, learning processes, etc. Perceived expenses are somewhat fixed and can easily be calculated. Unperceived expenses are variable and more difficult to determine. Unperceived expenses are real and, in most cases, exceed perceived expenses.

When you hire for experience your perceived expenses are higher, but your unperceived expenses are lower. Experience comes with higher level of knowledge, reducing training time. Experience needs less handholding, has better presentation skills, stronger relationships, better network, higher productivity, and better decisions.

When you hire inexperienced professionals, you are making a huge investment. I have heard it said, hire them green and train them the right way. Years ago, that was a sound strategy, when employees stayed with one or two companies their entire career. In today’s world, the sad truth is employer/employee relationships are weak. Loyalty from both the employee and employer is almost nonexistent. The average tenure of a professional is less than 4 years. Realize, when you hire inexperienced professionals, you are making an investment in training and your competitor will reap the benefits.

 Taking some real-world examples:

In 2012 Marissa Mayer was appointed CEO of Yahoo. Previous to taking over Yahoo, Marissa was a Vice President for Google. As Vice President, Marissa was a brilliant talent, managing some of Googles most successful innovations and overseeing Google’s suite of local and geographical products. Marissa’s success in running a department or division was insufficient experience to lead one of the largest companies in in America. Because of inexperience, Marissa made a series of poor decision ranging from employee benefits to bad investments. After 4 years, Yahoo’s profits were substantially down and eventually was sold to Verizon.

On the other hand, there is Lee Iacocca, former CEO of Chrysler. Prior to Chrysler, Lee Iacocca was the former CEO of Ford Motor Company, where he created the Ford Mustang. At the time Lee took over, Chrysler was on the verge of going out of business. Because of his experience and wise decisions, Lee was able to secure government assistance and financing to keep the doors opened, while at the same time develop the, K-Car line, the Dodge Aries and Plymouth Reliant. All small, efficient and inexpensive, front-wheel drive cars that sold rapidly during the early 1980’s recession. Hiring experience not only saved Chrysler from assured destruction, but catapulted Chrysler back to the top of the automotive industry.

Although these two examples are extreme, the same principle holds true: Hiring the right experience is a good investment for the success of any organization. This holds true for entry level positions to senior levels management.

Understand the role experience plays in success is important. However, there are many other factors to consider when hiring the right person. Experience is only one factor to consider. All else being equal, experience trumps inexperience every day.

Experience does not guarantee great decision 100% of the time, but it does give you a basis of knowledge to make better decisions consistently. 

When you analytically consider both perceived and unperceived expenses, hiring experience is much less expensive than hiring someone with little to no experience.

Please follow me for daily education and inspiration

linkedin.com/in/davidmaus1

facebook.com/DavidMaus01

instagram.com/David1Maus

 #davidmaus

 Search #davidmaus for past article and postings