If you already have decent technical staff, then the answer should be easy, you let them find out who's best. If you already have a staff member who knows Perl and XML, it's an easy task for them to determine if any potential applicant really knows her stuff or has only read the buzzwords the night before.
The problem is different when you have nobody with the knowledge to tell the difference between the clueless and the clueful.
The common point in all these cases is that the "consultant" is readily available. You give them a call, wave some money at them, and if it's a large enough wad they'll fit you into their schedule somewhere. Unfortunately, that just doesn't work when you need to hire someone full-time.
Full-time staff just don't get around the same way consultants do. A consultant might work with dozens of different clients each year, whereas a full-time staff member usually just has one -- their own place of work. Employers also don't want their staff members being poached, so you can't expect to see the same recommendations as you would with a consultant.
As such, new staff for a business can be quite an unknown, and making a mistake can not only be expensive in salaries paid, but also in clean-up costs if the staff-member has done their job poorly. Hiring the wrong problem can sometimes even make matters worse.
There are some fairly common industry practices such as probationary periods which business use to cover themselves in case they hire the wrong person. While these can be useful when the problems are obvious, most software development, system administration, and other technical tasks seem like magic to the lay-person. It's very hard for a business to tell if their technical staff is really doing a good job.
After some consideration, the bootstrapping phase of getting your first member of technical staff seems clear. Ask all your friends who the best consultant is in the field you're after. Hire the consultant to discuss what sort of full-time staff you need, and then find your staff in conjunction with the consultant "expert" who can make recommendations, review resumes, and sit-in on interviews. Compared to the costs of hiring someone for a year, the consultancy costs can be considered insignificant.
I'm wondering if anyone has actually seen this occur in-practice, either in the software or other industries? What other practices have you seen businesses use to take on their first techincal staff member? Have you any amusing stories about business who hired the wrong person and it went horribly, horribly wrong?
Paul Fenwick
Perl Training Australia
Update: Adjusted title to make the node more useful for future generations. Thanks to crazyinsomniac for the suggestion.