What’s the difference between experience and capacity?
A lot of small business owners want to hire leaders with experience, and oftentimes they confuse experience and capacity. Experience covers whether a candidate has the background in a certain industry or has completed similar tasks in the past.
Capacity takes this a step further – it’s the ability to understand information, make competent decisions and clearly communicate and execute.
So what are the differences between experience and capacity?
Hiring for experience looks like the following:
I have a business that does $10 million in sales per year and my sales manager quits. I decide to go out and recruit my competition’s sales manager. After six months, sales are exactly the same.
That’s because your competition probably does $10 million as well. And though this new hire is a great sales manager, they’re coming from an environment which is virtually the same as yours.
They don’t have the capacity to help expand your business. They don’t have the length of experience. They don’t have a larger company experience, and they don’t have the depth in the sales organization to be able to design, implement, and affect procedures for you to scale.
Here’s a real life situation we have encountered:
We worked with a client years ago to hire someone for accounts payable.
This firm had a high volume of accounts payable, and it was full cycle. They were processing 150 to 200 invoices per week. This particular client had hired several seemingly competent candidates who said they were processing 200 invoices a week at their old job, and came from a big oil and gas firm. These new hires couldn’t keep up. They didn’t know what they were doing. So when we examined those big organizations, did they have the relevant experience?
They were certainly in accounts payable. They came from a larger organization. But did they have the depth of the experience within that organization?
When we did some digging and looked at these large organizations, we found that accounts payable was generally broken into three different categories.
There was a person who received the invoices and inputted them, a person who did the matching, and a person who cut the checks. So, yes, in their world, they were processing 200 invoices a week – but they weren’t doing full cycle accounts payable. They were only doing a portion of the process.
They didn’t have the depth of experience within the Department that we’re looking for.
So how do we hire for capacity?
This is especially when we’re hiring leaders, as we always want to bring in more experience, more process, more procedure and more education than we need today. Hiring for experience causes you to chase your growth and create Band-Aid policy and procedure as you go. Hiring for capacity is hiring someone who will build the policies and procedures upfront and your company can grow into them.
When we’re looking to hire a leader that brings capacity to our business, we want to look at three main categories.
- Relevant industry experience.
- Experience in a large organization.
- Depth of that experience.
We want to be very clear that they understand the entire picture. Sometimes, when people come from a large company, those companies are so segmented that people aren’t in charge of an entire process. They’re only in charge of a part of that process.
This is what we mean by the depth of that experience. Are they responsible for the whole thing? Can they bring their experience, their knowledge of a larger operation and their depth of knowledge to set us up to scale?
We’d love to know what your thoughts are on hiring for capacity and the difference between capacity and experience!
If there are any topics you’d like us to cover coming up, drop them below as well. We’re happy to answer any questions you might have.
Whether you are in the middle of the hiring process or are looking to expand your business, set up a FREE CONSULTATION with us! No pressure, no weirdness, just help tackling your Human Capital Challenges. Sign up today at www.keyhire.solutions.
Until next time, stop grinding and start growing!