Much has been written about how banks are focusing more on their graduate pipeline than experienced recruitment or stripping out expensive MDs and bumping more junior staff into positions of responsibility. But can your potential, rather than experience, really count more in a job hunt?
Bear with us on this one; in a world where only 100 percent fit hires will do and sign off for new recruits is hard to come by, this theory seems unlikely. However, a new study by Stanford’s Zakary Tormala and Jayson Jia and Harvard’s Michael Norton suggests that potential could outweigh achievements when it comes to recruiting.
Imbued with Uncertainty
They ran a series of experiments, looking at preferences for everything from athletes to artists to hiring decisions and conclude that: “Potential is more interesting than achievement precisely because it is imbued with uncertainty: The target might achieve greatness, but also might not. This uncertainty appears to be more cognitively engaging than reflecting on what is already known to be true.”
In the sports world, identifying the next big thing is obviously fairly common. The research focuses on how participants playing the part of an NBA manager would pay more for a rookie on the basis of his potential capabilities, than a veteran with the statistics to support their achievements.
The Search for Leaders of the Future
But is this theory relevant to recruiting in financial services? Apparently, yes.
The research compared perceptions of one candidate applying for a "divisional leader" banking position who had two years’ relevant experience and a high score in a test of leadership experience versus someone with a similar academic background but no experience and a very high score in a leadership potential test. They plumped for the latter, believing them to likely perform better in the fifth year of their career than the other applicant would by their seventh year.
“Even though people would recognize that a high achievement target has a more objectively impressive resume at present, they still prefer and are more subjectively drawn to an individual with high potential.”
Just to be clear, the research did suggest that this was not an age-related bias and used controls to ensure this wasn’t a factor.
The Split Between Experience and Potential
If this is currently a reality in the job market, then many people with a wealth of experience will feel understandably frustrated.
It’s true that investment banks are taking the old "more with less" approach – throwing junior staff in at the deep end with greater responsibilities, while eliminating expensive MDs. However, relevant experience is still a key selling point.
If financial services firms sign off on a new role, they want to see results immediately or at least take on someone able to hit the ground running. With such a wealth of talent on the job market, hiring processes may be slow, but those firms doing the recruiting are using it as an opportunity to take on some people who may otherwise been unavailable or subject to expensive buyouts.
Potential is, of course, relevant at a graduate level. If you’ve ever asked a graduate recruiter to spell out exactly what they’re looking for in an investment banking analyst, the answer is unlikely to be: “An ability to work on spreadsheets and pitchbooks for up to 90 hours a week.”
The ability to conduct day-to-day tasks will be taught. The somewhat clichéd responses to what they want from new recruits are therefore “drive,” “motivation,” “self confidence” and “enthusiasm” – or, in other words, potential.
The Problem of Proving Your Potential
From a candidate perspective, one of the problems of this theory is having to prove your potential. You can’t walk into a job interview and espouse your qualities and the benefits you can bring to an organization in the future without anything to back it up. Essentially, someone else has to identify this.
“Perhaps perceivers interpret high potential claims as defensive or as masking some crucial deficiency,” says the research. “If so, we would not expect to replicate the current findings in the context of self-endorsements.”