Value Traps in Talent Hiring

Rajneesh Mittal

12/17/20231 min read

Like value traps in the stock market, there are similar alluring dangers in job hiring market too.

A value trap is an investment that appears to be cheap because it trades at low valuation metrics. A value trap attracts bargain hunters as they optically seem inexpensive relative to industry peers in given market conditions. Investors believe they have a deal at hand and that they have identified a hidden gem at a price to die for. But more often than not, there are fundamental concerns which keep their prices depressed and ultimately erode value rather than creating it.

In last few years, I have observed similar signs when hiring for talent. Sometimes you come across a candidate who ticks all the right boxes. And s/he comes at a affordable salary especially in this age when tech salaries have been going through the roof. You believe that you have the right guy at an unbelievable price. But there have been cases where these value buys were traps. It turned out that they were cheap for a reason. They were just not who you perceived them to be. (How they appear to be so is a topic for another day).

Yes, like in stock market, you can be lucky where you actually discover something which is hitherto hidden and over time it turns out to be a true-blue value buy. But mostly cheap is cheap for a reason. Often times, higher salary actually turns out to be a pretty solid indicator that the guy is really worth it and s/he is the one that you want instead of a penny stock deal.

If you want a Titan, look for a Titan and pay for the Titan.