I have a Human Resources midterm coming up on Friday and was reading up on recruitment and selection. One of the problems companies face is that they have certain budgets and costs that is a constraint against hiring the best talent. With this in mind, companies have to make do by hiring less qualified people in order to fill up job vacancies.
But lets stop right there and put up this hypothetical situation. Assuming hiring a genius would cost $100,000 a year, and hiring an average person would cost $50,000 a year, and there are two job vacancies, would it make sense to hire the two rather than the genius?
Now in the investment banking world, people work 100 – 120 hours a week. Thats easily more than double what a normal 9 – 5 job would entail. So why do people go through such an ordeal? Reasons range from an interest in finance, an Excel addiction, prestige, etc… But regardless, the investment banks make sure their employees are appropriately compensated with a lot a lot of money and thus manage to attract the best talent in the world.
So why don’t these investment banks simply hire two people to do the job? It could simply be the banking way of doing things but I’m convinced its because that way they can continue attracting talent into their organizations. Investment banks are a lot like technology companies, its success depends almost entirely on the ability of its people. As such, attracting the very best is absolutely necessary for the organization’s continued survival and growth. By giving undergraduates $100,000 a year for an entry-level position, geniuses enamoured by the pay will be willing to overlook even the most insane hours.
Perhaps this is the route companies will take in the future. The aging population will be causing a labour shortage and with limited qualified applicants, those applicants will be very highly paid. In exchange for doing the work of two.
