Chiranjit Banerjee

A Rolls Royce can’t come for the price of a Nano even if it’s a run down one.
This may sound like a cliché but this seems to be the predominant thinking within companies seeking to take advantage of a supply thick labor market. Ever since the global economic meltdown gathered moss early last year, most companies have either abandoned new hiring or chosen the least expensive channels for hiring.

The time-tested cheap channels are internal moves which is also referred to as “IJP” (Internal Job Posting) or referrals from employees. Whilst the former route is virtually cost neutral unless one is relocating the chosen employee, referrals cost a pittance compared to what companies pay to recruiting firms. Many IT companies are saving costs by over promoting individuals who have been passed over for elevation in the past. Some senior business managers have confided in me that employees looking to make a quick buck are referring former colleagues and friends by doctoring the capabilities of these aspirants. Even during normal economic conditions, companies are far more stringent in their demands that are spelt out to recruiting firms than they are while evaluating their own staff for elevation.

The loyalty factor often clouds judgment in these situations. It is nobody’s case that loyalty should be trifled with but in the dynamic times that we live in, critical success factors are far too diverse. Even in less fleet-footed PSUs, loyalty does not necessarily reap rich dividends. The majority of non-management staff of PSU banks never makes it to the officer cadre as these banks go into the market every other year to recruit young officers, especially the State Bank group. Lateral hiring is a means to circulate blood in a company which is after all an organic entity. But the knee jerk reaction of most companies to eliminate this option during these troubled times is a sign of management myopia. As a matter of fact, unconventional thought leadership is even more crucial during a recessed market period than during “bull runs” as Lee Iacocca demonstrated with Chrysler years ago. Try as they might, companies are also discovering that proven talent does not come cheap even in a recession just as a Rolls Royce can’t be had for the price of a Nano. High performance managers are generally sharp in managing their personal finances and are rather adept in staying ahead of a slowdown. They are also smart enough not to sell themselves short in an over-supply market. Many recruiting companies believe that no matter how chiseled a candidate is, he would blink first but that is not turning out to be the case as several managements are discovering.

When the markets come back, myopic companies will realize that they are sitting on a pile of dead wood while a handful like JPMC, Goldman Sachs, Deutsche Bank and Wells Fargo’s back end operations that have gone out and got what they were after will have widened the gap with their competitors by light years.

Human resources are not quite commodities like shares that converge closely with indices. This would turn out to be the most defining learning of managements of companies who continue to believe that a Rolls Royce can be relegated to the ranks of a Nano. But by the time they do, it could be yet another massive opportunity lost.