There is a trend in 2022 as many companies are hiring employees who are the most qualified for the job. Companies are going for the ‘best of the best’ in a seismic move to stay competitive. This brings about a few consequences, consequences that may not be immediately apparent at first glance. Lateral hiring is a method of finding an employee that can do a similar job to one that is vacant, but with experience and background that is comparable, potentially from another similarly related organization and hence the candidates potential is above entry level. This helps keep the company’s workflow going, even if it is at a slower pace, and provides room to grow.
The premise of lateral hiring is logical: recruit a high-performing professional from a similar organization to help shake up, grow and lead your business. You get someone with a wealth of relevant experience who can hit the ground running. It’s more efficient than hiring and training someone younger or promoting from within.
Unfortunately, it rarely works out as smoothly as you had envisioned. In the legal world for example, a 2017 report by ALM Rival Edge found that globally, 47% of lateral hires fail to stay with their firms for five full years (from 2011 – 2016). This figure is 45% for the US.
Surprisingly, the research found that it takes two to three years for a lateral hire to come up to speed at a new firm. But when it takes another two or three years to recoup recruiting and compensation costs, it’s clear that hires who stay less than five years are loss-makers for the firm. Even worse, the report found that many lateral hires muddle along and never become productive – increasing the losses even further.
It’s difficult to find statistics in other industries, but they probably aren’t too far removed from these.
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Lateral hiring: What’s wrong with the process and how to improve retention
In many cases, the problem is that lateral hires are not properly onboarded and integrated into the culture of their new organization. We already know that they are good at their job (or were in their previous company) but for some reason they just can’t replicate this success at your company.
Picture this: you’re the new hire and it’s your first day. You are pretty pleased that you negotiated a better salary and this company seems to really understand your value and potential. The day starts off nicely but your arrival is announced by email only and you are not introduced to senior management. Fast forward three months and you still don’t really know the management team. You have no idea where to find the files you need, and your team doesn’t include you in their social lunches and after-work drinks. You haven’t worked on any new or challenging projects. And there’s no budget for training. You feel like a failure. The promises made when you were recruited turned out to be empty. You start looking for something else, or you reopen discussions with your old company.
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5 ways to improve retention of lateral hires
Improving retention is not actually that difficult once you understand the problem is usually related to employee integration and company culture. You could break down your lateral hiring retention strategy into five steps:
Plan a holistic welcoming and onboarding strategy for lateral hires. We encourage companies to ensure that senior managers take the time to personally welcome all new hires, either in person on the phone. We also recommend planning a variety of meet-and-greets and socials to give employees the chance to get to know the new hire outside of work projects, and for the hire to understand and fit into the company culture.
Make sure the new hire has easy access to all the information they’ll need to do their job. A robust orientation program, supported by a concise document that introduces and links to relevant files, folders and processes is incredibly helpful to a new hire.
Assign a mentor or peer guide to help the new hire settle in and navigate their first few projects. Introduce them to the various affinity and network groups they can join, or invite them to join a particular form group.
Show your new hire that you value their input by assigning them a more challenging project, or inviting them to join a cross-departmental group project.
Offer your new hire regular, real-time feedback – and request feedback from them to find out how you are doing, and how they are settling in. Provide training opportunities or ask a senior hire to coach them through a new project.
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With the right approach to lateral hiring, you can increase your return on investment and reduce the rate of culture-damaging turnover.
Learn more about how vi can help
vi creates modern and intuitive talent management modules that plug into your existing HR software. Our employee integration platform is a popular solution for firms around the world. Watch the video below to see how it works.