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Experience Without Performance is Doomed to Fail

by Aug 28, 2007

Strategic talent management is about making one decision and making it right. Today I am going to show you how this key decision can be improved by incorporating a new way of thinking and some new techniques into the decision-making process.

Having the right people in the right job can make or break your organization. While it may sound simple and clich?, it is and remains the key strategic talent management decision any manager will make.

It is also the one creating the most reward or pain! In its simplicity, it remains a tough task to perform unless you understand what I am going to uncover in this article.

There are two processes most organizations use to select individuals for a job. The first is called the recruiting process. This process serves to select someone new for the organization. The second process is commonly referred to as the internal mobility process. This process serves to select and place someone who is already working within your organization.

Over the years, many companies will experience internal mobility decisions leading to higher success rates compared to external hires. This specific topic, when applied to the CEO, often makes headlines. Several sources have often been quoted that the internal hire rate leads to successful placement about 90% of the time, while external hires barely reach the 50% success rate. The core question is, “Why?”

This core question is fundamental. Clearly understanding why the internal-mobility process has a higher success rate than the external-hire process will help you recognize and understand why this happens.

Further, as we understand the causes, we can then learn to improve the success rate of the recruiting process.

Improve Your Hiring Success Rate

Today I will look at which criteria primarily affect internal mobility versus the recruiting decision. This will help us identify the key difference that is responsible for the huge discrepancy in the success rate. In part two, I will look at how these decisions are made and whether there is a difference between recruiting and internal mobility.

Let’s look at the criteria a recruiter or hiring manager considers when hiring an external candidate versus an internal one.

The first qualifier a recruiter is looking for in a candidate is relevant experience. For instance, if you are looking for a marketing professional to help your organization promote its products, you will look for someone who has previous experience as a marketing professional, and preferably in your industry. Similarly, if you are looking for a legal professional to help you negotiate contracts, you will seek someone who has experience in that field.

Logical, yes? Actually, it is not as logical as it may seem when you look at the data.

Although it does help for the candidate to have some industry-relevant experience, experience without performance is doomed to fail. In other words, if you have been negotiating contracts for the last 10 years as part of the legal team, you may wish to tout that relevant experience, but you may have only been average at it.

This is what constitutes the main difference between an internal move and an external one. When you move someone internally, he or she rarely gets rejected due to lack of experience in that field because, by essence, it is a lateral move.

Consider this example: A couple of years ago, our company was looking for a legal person to be involved in contract reviews and negotiations. We reviewed many external candidates who were highly qualified lawyers with the right experience, but we finally chose someone from our marketing department!

Yes, you read that correctly, marketing. It helps that she had a law degree, but it was even more important that her track record with the company was very good. To my knowledge, she is still in place, was a great hire, and became a top performer.

What would have been the likelihood of finding someone to hire from outside of the company who had the same professional record? Close to zero. It would have been a leap of faith not having experienced the performance she delivered in the other department.

Choose Performance Over Experience

The motto for optimal strategic talent management should be: “Do not confuse past activity with past achievement.”

Just because you worked for a couple of years in a specific role doesn’t mean you were great at it. The core reason why past experience is preferred over past performance in the recruiting profession is simply because it is easier to identify experience than performance. Yet organizations are not the only and biggest victims of this faulty process; individuals are also to blame. We are all prisoners of our past experiences, and human nature pushes us to keep doing what we know. This cycle is called inertia.

Even though we sometimes wish to do something else, it is very hard to change careers because organizations look for experience first and whether one can perform in that field. Individuals who can’t demonstrate any of these qualities have very little chance of being considered unless they are internal candidates in the right company.

Because performance is so hard to monitor, many settle for experience, and have only anecdotal signs of performance. By doing that, recruiting departments are, in fact, increasing risk and not decreasing it. Indeed, most studies show that internal mobility placements based on performance are about 60% more likely to be successful than external recruitment based on experience.

By now you probably agree that performance-based hiring, as it is often called, is the way to staff your company. However, now we have a new problem because we expect that the “performance” comes from a field where they have built experience. At the same time, because experience is so much easier to find, we often settle for only anecdotal indications of their performance.

This almost always compromises the quality of the outcome. That is the paradox of strategic talent acquisition! The salvation could come if we can capture performance data without being so cumbersome that it is impossible to put in practice.

We will examine this in part two tomorrow when we analyze how hiring decisions are made for internal moves versus external recruiting.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Joseph Murphy

    With any external candidate the question is always ‘Can they do the job?’ One of the main underlying reasons for temp to perm hiring strategies is to obtain and observe a work sample. With internal candidates the opportunity to observe their capabilities has been in place since date of hire.

    Companies such as P&G that almost exclusively promote from within have a sound mechanism in place to advance the most qualified and often least expensive candidate. In addition, this keeps the uncertainty of external hires in lower risk, lower priced entry level positions, thus containing the costs of talent acquistion.

    This approach requires a solid support system to develop talent. If you find your organization must continually go outside for talent and make higher risk external offers, it may be a factor of your talent development and succession process.

  • Scott Birkhead

    Most hiring managers just won’t do the work to get to the point where they can ask the right questions and get the right level of detail to make their questions meaningful.

    As a result, they end up playing amateur psychologist instead of making criteria-based decisions.

    I think whether a manager hires internally or externally, they still have the same decision to make, need the same information, and still have to manage someone to success…having a template to estimate required experience and performance, a tool to understand past experience and performance, and the will to manage the gaps is what makes hiring successful.

    Great insights!

  • Jim Cargill

    In most cases, this should be a no-brainer. Would you rather have someone who has been very successful at something, but lacks experience in your area, or someone who has experience in your area, but has never been very successful? If you have to think about that, you’re already in trouble.

    But let’s be real here, if nowhere else. First, most companies skew the performance ratings of internal promotions intentionally, or inadvertently. In thirty-plus years in a variety of corporate environments, I found it rare for anyone to own up to making a mistake promoting someone, even when performance was unquestionably less than hoped for. It is much easier to admit to a hiring error than a promotion error. Promotion errors cause far more problems for the organization. Is anyone not aware of the Peter Principle, which is no less a problem now than it was in 1969??? Failure to question the glowing stats of internally-promoted workers indicates failure to realize how companies and people tend to glorify the results of their decisions.

    Secondly, most discussions on hiring incorrectly assume that people in the company role know how to interview. One only needs to spend a short time as a TPR to learn that few Hiring Managers know much about interviewing. Most Hiring Managers find out so little about an external candidate during the interview that making a decision is akin to selection by dart-throwing, which greatly explains the dismal 50% success rate (which, by the way, is also skewed).

    Until Hiring Managers learn HOW to effectively quantify a candidate’s past performance, any discussion of ‘experience vs. performance’ is premature. Further, with HR often lacking a deep understanding of what the Hiring Manager really needs, they are unable to apply their better interviewing skills toward assisting in the right selection.

    Lastly, in support of your premise, it is almost unheard of for us (TPR agency) to have a candidate not move forward due to past performance issues. However, it is often due to ‘not enough experience’ showing up on the resume. You would not believe the number of solid gold candidates clients have passed up because they didn’t think they had enough experience. Fortunately, most of those passed up go on to make piles of money for a competitor not so steeped in ‘years of experience’.

    I look forward to your Part II…

  • Mauritz Cloete

    I agree with some of the comments made in the article, although I believe recruiting is far more complex than simply taking experience and or performance into account. The hiring manager should carry a lot of the blame for poor appointments.

    It often happen that positions or roles are not well thought through. The position descriptions not updated, the context within which this person will have to operate is not clearly defined as the hiring manager have and keep it all in his/her head. The people, colleagues, with whom this person will have to work should also be incorporated in the decision. Personalities may cause failure. How many companies are prepared to do personality profiling as part of their selection process?

    Lastly, the question should be asked whether or not all stakeholders in the position to be filled agree that they do not have the right person internally to fill the position. Too often internal politics lead to setting people up for failure in new positions.

    I am looking forward to Part II of the article..

  • Jim Cargill

    ‘Most hiring managers just won’t do the work to get to the point where they can ask the right questions and get the right level of detail to make their questions meaningful’.

    Scott, you are absolutely correct, and you make a bold point. Developing proper interview skills takes time, lots of time. For most folks it is learned over decades. How shallow is it that people in the hiring process think Hiring Managers should have skills equal to or exceeding those of people who specialize in interviews and hiring for a living?

    Of course, the above is only compounded when the process requires many people to be involved in the decision, supposedly in which all have pooled their wondrous talent for hiring. Yet another way to miss out on great candidates…but, I digress….

    Good comments, Scott.