Demerits of lateral hiring at entry level jobs

Is it better to go for more freshers or lateral hires for a role? This is rather debatable.

There is no hard and fast rule when it comes to choosing between freshers and lateral hires for filling positions. It depends primarily on the role.

For roles at the bottom of the pyramid or entry-level positions, companies tend to hire either freshers who have just finished college or talent with under three years of experience.

Lateral hires have their own advantages. They need no investment in terms of time and money when it comes to upskilling and training. They can start off from day one of joining.

However, too many lateral hires in an organisation has its own challenges.

“Lateral hires often do not stick around for long”

Suchismita Burman, Senior HR Leader

As per HR leaders, it is very difficult to comment on whether one should hire more freshers than laterals or vice versa at any level, since it is contextual and also depends on which stage the organisation or business is in. “The company may want to scale up quickly, and hence, seek talent that is ready to deliver immediately. In such situations, lateral hires are preferred,” explains Suruchi Maitra, senior HR leader.

A mix of lateral hires and freshers is an ideal strategy, especially at the lower levels of the pyramid, irrespective of the circumstance or stage the organisation is.

Today, trends are changing. In 2021, HCL Technology expressed an intention to hire more freshers than laterals. While earlier the company hired 60 per cent of laterals and 40 per cent freshers. However, it wants to increase the intake of freshers to 70 per cent and reduce lateral hiring to 30 per cent. The change in strategy came about because HCL realised the need for new-age skills in the areas of Devops, cybersecurity and digital, which are not easily available in the market. Therefore, it decided to pick more freshers possessing these much-in-demand new-age skills and preferred to mould them as per its needs by upskilling them.

The IT sector has found it fairly challenging to hire laterals as dropout rates in this category have been very high. As per media reports and researches, dropout rates amongst the lateral hires was 40 per cent at an average in 2021.

“Lateral hires come with a lot of baggage and experience. Therefore, it takes them time to unlearn and re-learn the new ways of working in the organisation”

Suruchi Maitra, Senior HR leader

Talent dynamics can be very different in different industries. A 2017 report revealed that in the legal industry in the US, lateral hires failed to stick around for long. Aboud 47 per cent of lateral hires exited the company before completing five years. “Lateral hires often do not stick around for long,” confirms Suchismita Burman, senior HR leader. However, she also points out that freshers may have more fungibility and may stick around in ancitipation of more growth.

Maitra is of the opinion that lateral hires come with a lot of baggage and experience. Therefore, it takes them time to unlearn and re-learn the new ways of working in the organisation. The same research in the legal industry dated 2017 says that laterals actually take considerable time to become productive and actually come up to speed.

Jitender Panihar, CHRO, Fitelo, believes that any kind of talent, whether lateral or fresh, has its own advantages. “I really value lateral hires as they come with the right set of experience and maturity, while freshers can be moulded as per the needs of the organisation. It all depends on what kind of a personality one is looking to hire,” asserts Panihar.

“I really value lateral hires as they come with the right set of experience and maturity, while freshers can be moulded as per the needs of the organisation. It all depends on what kind of a personality one is looking to hire”

Jitender Panihar, CHRO, Fitelo

Since all HR leaders believe that freshers and lateral hires come with their own merits and demerits, it is probably ideal to have a mix of both to make an effective team.