Many people are overqualified for their jobs. They may have higher education than the position they are in demands, they may have held higher positions previously , they may have many more years of experience than their company required when they signed on. But think about it: do you not want the smartest people with the most to contribute?
And what does overqualified mean, anyway? A Ph.D. versus an M.Sc., 15 years of experience compared to 5, management background against those with no delegating ability, able to see the big picture, versus someone who doggedly (yet well) does their job with no interest in what is happening around him / her?
You want to build your company / team with strong, involved, alive, invested employees.
The trick is to hire them, and be able to keep them happy.

So what are the problems you will have to contend with / consider?
1. Salary – money is important to everyone, but for some people, the company reputation, prestige, quality products, interesting research, amazing benefits, 1 hour closer to home, great time off can make up for a differential, allowing a greater work / life balance. Many people seek these perks.
2. Boredom – the job you are offering may not be the Sr. Manager of XYZ but the role may expose the potential employee to many facets of the industry that s/he never had the opportunity to learn about. Perhaps it is a job in regulatory affairs, and s/he would now be the person interacting with Health Canada or the FDA – maybe they never did this before. Certain parts of the new job may still be challenging, and the team may be strong and fun to work with. Just make sure that s/he has enough to do.
3. Pride – you may worry that the potential employee will be embarrassed to take this job,
or interact uncomfortably with the team, feeling it is all beneath her / him, and
considering his/her previous job, or degree, or whatever. But this position may be in a different area, and s/he may want a shift in direction and will be thrilled to learn something new and contribute his/her skills to an allied area. You will also find that many people reach a point where they want to do the real job they love and do not want to worry about management issues.
4. Fear of rejection – this applicant may sense that you only want to hire him / her until you find someone closer to the job description, who may not have as many future job demands. If you like his / her skills and want to hire him / her, you must ensure that you and your team make her / him feel valuable and accepted, not resented, seen as a threat, or marginalized.
5. Hiring Manager not assessing pertinent qualities on resume – many people write their resumes with their job experience near the top and skills further down. A hiring manager may just look at titles and dismiss the person out of hand, feeling that s/he is not serious about taking a lesser title, or feeling threatened him / herself by the person’s background. It is important to match the applicant’s skills with the requirements of the job. Can s/he do the job? Is s/he bringing what you need to the table? Yes – then grant him/her an interview wherein you can sort out other issues. They will bring a fresh perspective , expertise, and contacts that can impact business and drive revenue.

If your company is on an upward trajectory, then hiring someone with promotion potential and management background arms you with the ability to grow, with the aid of the great people you already have in place. S/he will have the skills to help you scale up quickly and efficiently.
It’s a win-win situation.