What is lateral hiring?

When you advertise a new role at your company, you may receive a large number of applications from promising candidates. Having a wealth of choice can go a long way to ensuring that your new hire is the best possible fit, and any candidates who almost made the cut can be kept on file to potentially consider for future roles. However, certain roles, especially highly skilled or niche positions, can be harder to recruit for, and you may have fewer options or candidates who are not sufficiently qualified. This is where lateral hiring can provide additional options. Lateral hiring refers to the process of recruiting employees who are already working in a similar position at another company. These people are often not actively job-seeking but may be open to a role with a higher salary, better title or other benefits as well as a different company culture. Because these employees are already doing the role that you’re looking to fill or a very similar one, you have the advantage of knowing that they are capable of meeting your needs and won’t require a lot of training. They also typically bring years of experience to the table, making them a significant asset to your workforce.

Related: How to find good employees

Advantages of lateral hiring

Lateral hiring can be a bold and risky move, yet it’s one that often reaps considerable benefits for companies looking to level up their workforce. Let’s take a look at some of the advantages that it can bring.

Saves time and potentially cuts recruitment costs: Lateral hiring simplifies recruitment and can make less work for your HR department. It removes the need for a lengthy, labour-intensive hiring process, can eliminate the costs associated with advertising a position if you choose to hire directly and reduces the screening process as well as the amount of training that your new hire requires to get up to speed.
Adds instant expertise: Your lateral hires often bring in-depth knowledge and abilities as well as keen interpersonal skills. They may even have name recognition within your industry. This can impact the entire workforce, inspiring and motivating junior employees.
Brings new perspectives: Experience doesn’t only refer to the practice that an employee has had in their role but also the different environments that they’ve been exposed to over the course of their career. They can often bring with them innovative ideas and fresh perspectives and even initiate positive changes in the company culture.
Widens your network and increases leads: Seasoned professionals usually have a wealth of established relationships in the industry, from colleagues and thought-leaders to suppliers and even customers. They may be restricted in what sort of contacts they can bring with them, but it’s still likely that they can generate new leads by leveraging their previous experience.
Signals a commitment to investing in your workforce: By seeking the best workers in the field and bringing them onto your team, you send a message to other employees that having quality staff who can positively impact others around them is a priority to the company.
Builds your talent pool: Even if you don’t succeed in bringing your desired candidate on board, they could end up keeping you first in mind when they do decide to leave their current organisation. They could also suggest talented peers in similar roles who are seeking a move. This helps increase your candidate pool for those niche jobs that you struggle to fill.

Disadvantages of lateral hiring

Before embarking on lateral hiring, there are some potential pitfalls to consider:

Can sour industry relationships: With lateral hiring, your gain is another company’s loss. If your new hire was a critical and valued member of the company that they were working for, stakeholders there may be upset or annoyed with your actions.
Can impact your company’s reputation: Similar to the risk of harming industry relations, turning to direct lateral hiring too frequently can earn your company a reputation of ruthlessness.
Can be costly: To attract a lateral hire, you typically need to offer them a significant increase from their current salary and potentially other benefits, like a generous leave package and bonuses. This often results in you paying these employees well above market rates. You may also need to make other concessions that don’t necessarily work well for your team, like allowing a significant amount of remote working or flexible hours.
Harder to back out: This can be a pitfall if you’ve taken on a lateral hire who was not actively seeking a move. If you’ve made a miscalculation and your new hire turns out not to be as good a fit as you expected, it can be very difficult to back out of the arrangement, even during the probation period.

How the lateral hiring process works

There are several stages to follow when recruiting a lateral hire. Let’s break them down.

1. Find your candidate

It’s still possible to find a lateral hire by advertising the position openly, but this way, your candidate pool will consist solely of people who are actively seeking or investigating a move. To hire directly, you can reach out to your network for leads or hire a headhunter. You can even do your own research to find quality talent. This could look like perusing industry publications to locate rising stars or finding out who is behind work that you admire. For example, if you’re hiring a website designer, you could investigate who created websites that you think have a strong design.

2. Reach out to them

Once you’ve located your ideal candidate or candidates and conducted thorough internal vetting, it’s time to reach out. If they are open to considering an offer, you can set up an interview. You could also consider arranging a less formal interview, like inviting the candidate for a lunch or dinner. When going the informal route, make sure to choose a quality destination to meet. This signals to the candidate that you value them and are willing to invest time and money in bringing them on board. You can also think about inviting key stakeholders to join you.

3. Establish their needs

This process involves determining any pain points that your candidate has with their current role or company and what motivates them most at this stage of their career. They may be seeking a higher salary and better benefits or a company with more prestige and opportunities for growth. Or they could be looking for a better work-life balance, with more flexibility and limited overtime.

4. Make an irresistible offer

Once you know what is most likely to win your candidate over, you can make an offer. It’s important to research market rates as well as what top talent are earning in similar roles. You can reach out to your network again to help you do this. Be open to negotiation, but also know your limits and what the company can feasibly afford. What you are ultimately willing to offer can depend greatly on how much you want the specific candidate and whether you have other potential options for the role. If the negotiation process falls through with your first choice, it’s a good idea to have several back-up candidates who you can pivot to.

5. Set them up for success

The roles that you fill with lateral hires are typically ones that are critical to your company’s success, and retaining these employees is paramount. If you were able to successfully persuade a candidate to leave their previous role to join you, it’s very possible that another company could do the same in the future if the employee starts to feel dissatisfied. Setting your new employee up for success means viewing them as an investment in your company’s future. This can involve creating a development plan for them, ensuring there are opportunities for progression (if this is something that they want) and helping them adjust to your company culture. Regular check-ins and feedback sessions can also help them feel guided and appreciated.

Lateral hiring can streamline recruitment and win you candidates that you may otherwise not have had access to. It can work best when viewed as an investment in your workforce’s future and requires delicate and methodical handling to ensure employee satisfaction and retention.

What is lateral hiring?