Is Over Hiring an Effective Recruitment Strategy?
When farmers plant a field, they generally plant more than they intend to harvest. Wine growers, for example, “green harvest” excess grape clusters, typically from younger vines, to ensure that the remaining grapes are able to fully ripen. The same holds true in other agricultural niches. If one fails to thin out their beet crop, for example, they risk ending up with all tops and no bottoms, or just the beet greens without the beets. The equation is simple—plant more than you need, keep only the healthiest plants and give them ample space to grow and thrive. Crop thinning, however, isn’t just a practice in farming. Many professions from law to higher education to business also embrace a “crop thinning” mentality when recruiting new employees. In other words, they hire far more people than they intend to retain in the long term, but is this strategy ultimately good for business? This article considers the benefits, risks and long-term return on investment for recruiting and training far more new workers than one is committed to retaining over time.
Over Hiring in Law, Higher Education and Business
Law: To this day, law remains a profession known for over hiring. Since the early 20th century, large law firms across the United States have been practicing what is widely known as the “Cravath system,” named after the law firm where the practice was originally honed, and hiring as many as 15 times the number of employees they intend to keep.
For the lucky and ambitious few who do get hired by large competitive law firms straight out of law school, their “lucky strike” on the job market typically means spending anywhere from three to ten years toiling away up to twelve hours a day under constant scrutiny. For those who survive, the prize on the other end is a partnership at a prestigious law firm. For those who don’t survive, however, the prospects are typically far from devastating. Major law firms that over hire new lawyers are seen as a great training ground and smaller law firms are usually more than happy to hire such firms’ rejected lawyers.
But is the “Cravath system” good for the profession? While a growing number of law firms are beginning to reject the system, citing the importance of work-life balance, the longstanding tradition remains highly regarded as an effective approach to training within the profession.
Higher Education: Like law, the academy, at least at its most elite, has historically embraced over hiring as an employment strategy. Indeed, to this day, most Ivy League universities in the United States hire far more assistant professors than they plan to tenure. Universities hoping to become more elite also frequently embrace this practice to raise their status (e.g., recently, Brown University rethought its tenuring practices because its 70% tenure rate was considered too high for an elite research institution). While figures vary from year to year and across institutions, generally, tenure rates at public universities are above 90% while tenure rates at elite private universities can be as low as 11% (e.g., humanities at Yale, which has historically not even guaranteed tenure to all of its qualified candidates).
Hiring an assistant professor, training and mentoring them for years and letting them go comes at a cost. While not necessarily always the case, young professors often arrive with little teaching experience and essentially learn to teach on the job. Unlike their older colleagues, with few exceptions, they also have yet to build an established reputation, so they also hold less potential to bring notoriety to an institution. On the flip side of the coin, however, they are often more dedicated, more willing to spend long hours on campus working with undergraduate students and desperate to publish and attend conferences at a much higher rate than their older colleagues, since they know that publishing and presenting their research is the only way they will hold on to their jobs.
But is the tenure system with its high rates of denial, at least in elite contexts, good for education? While it fosters a very competitive environment and can push young scholars to do more work and more rigorous work, it can and often does create a toxic environment where personal relations and work-life balance suffer.
Business: Like law firms and elite universities, top investment firms have a longstanding tradition of hiring a large number of recent graduates and then selecting only those who can withstand the profession’s grueling hours and competitive nature. Take, for example, the situation at Goldman Sachs. Like many investment firms, Goldman Sachs hires a large cohort of eager young recruits every year, typically on two-year contracts. While Goldman Sachs does not intend to keep all of its recruits (it reportedly has a 5 year retention rate of only 38.6%, much lower than the tenuring rate at Harvard), it does make its new recruits sign a contract stipulating that they will not seek work outside the firm within their first 18 months of employment. New hires who do stray (and are caught) are immediately fired. Given the likelihood that they won’t make the firm’s initial cut after two years (notably, there’s a 50% chance that they will be axed at the two-year mark), the fact that young recruits frequently flee before their first 18 months is by no means a surprise. Again, the question remains—who stands to benefit from the firm’s over hiring practices?
What are the benefits of over hiring?
In agriculture, crop thinning enables farmers to select the best produce and make room for it to flourish. To some extent, the same holds true in the case of excess hiring. Among other benefits, hiring more employees than needed enables employers to:
Create a competitive environment both in house and across the profession.
Evaluate new recruits’ abilities to apply knowledge in context.
Take greater hiring risks (e.g., theoretically, if you’re hiring more people, you can also afford to hire more candidates who may not fit your traditional profile of an employee, and this in turn should hold the potential to diversify your workforce over time, but many studies suggest that over hiring in fact has an opposite effect–it leads to homogenous workplaces where women and visible minorities are often the first to leave).
Permanently hire only those employees who have already proven to be a good cultural fit for the organization.
What are the risks of over hiring?
Over hiring also comes with notable risks, including:
The high cost of low retention.
Production of a toxic work environment.
Knowledge loss: While some large law firms and some universities, such as Yale, profess that training and letting go of young hires is in fact part of their “service to the profession,” in other sectors (e.g., the IT sector), employee loss can be dangerous. If Yale lets go a classical studies professor, chances are, they won’t be taking any top secrets with them when they move on. If a young software engineer leaves Microsoft or Apple, the knowledge they take with them is valuable and can compromise the organization they are leaving.
What’s the bottom line? ROI and Ethical Considerations
Recruiting, onboarding, training and evaluating new employees—at least when done well—requires organizations to invest. Logically, then, over hiring should represent a loss. While this may be the case in some instances, however, in many organizations committed to over hiring, the hyper competitive environment created by letting new recruits fight to keep their jobs enables the organizations to extract more work out of fledgling employees (also see our earlier post this week, “How to Train Like an Amazonian (or Not)”). While this may in fact yield a high return on investment over time, is it ethical? Again, it depends on how you approach the question. While asking young lawyers and newly minted MBAs to work 80 hours a week for little pay may appear unethical, many people in these professions stand by the fact that the practice of over hiring is synonymous with rigorous training. Likewise, in the academy, as often as it is criticized, the tenuring process at elite universities continues to be seen as a way to extract the best work from the brightest rising stars. Whether or not this makes over hiring ethical remains in question but there is one thing that is clear—whether you’re a wine grower or employer, “crop thinning” remains one strategy among many to cultivate an elite product.