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Experience Without Performance is Doomed to Fail

by
Yves Lermusi
Aug 29, 2007

In part one of this article we learned that selecting the right people for the right job is the most important talent-management decision you have to make.

We also asked why the internal-hire rate leads to successful placement about 90% of the time, while external hires barely reach the 50% success rate. It was concluded that the high internal-hire success rate can be partly attributed to the fact that internal hires and promotions are mainly based on performance and not experience.

External recruitment screening is based highly upon experience, as recruiters can only rely on anecdotal performance data.

This leads us to the paradox of recruiting: why does recruiting rely on less accurate criteria?

One reason for this paradox is the ease of gathering experience data versus performance data. The solution is found by understanding how internal mobility decisions are made.

In this part, we will look at how internal mobility decisions are made compared to external recruiting decisions. The differences, combined with the criteria upon which the decisions are made, will lead us toward finding a solution to the paradox.

Two Key Differences: External Vs. Internal Recruiting Decisions

The first obvious difference in the two recruiting processes is the time a candidate has been exposed to the recruiting company. Most companies make decisions about candidates after only having been exposed to them for a couple of hours and under artificial circumstances: interviews.

This is different than being exposed to a candidate who has already been working for the organization for the last 18 months (often the minimum required by many organizations before one can advance). It is also reinforced by the fact that the best way to screen a candidate is to see how they are behaving on the job. This is one reason why work-sample assignments or temp-to-perm positions are very effective ways to recruit people.

In contrast, the external hire process can be very risky thanks to the oft-forgotten first-impression-distortion factor. Some people can be very likable at first, but later fall short on delivery. Others can seem reserved but end up being top producers. Time on the job is, therefore, the best way to assess people.

The best proof of this is the probation period. Why are probation periods standard procedure at most companies? Perhaps because it is often revealed that the individual who joined your organization is not the one you interviewed.

The second difference between the external and internal hire process is that more people are often included in the internal recruiting decision.

The number of interactions an individual had prior to an internal move is significantly larger than the traditional couple of interviews performed for the external process. While working for a company, a candidate is often exposed to a multitude of people, while during a recruiting assignment, they are only exposed to a couple of interviewers for a limited period of time.

Take for example, McKinsey, a company that relies heavily on talent for its core business. This company does not rely on just one or two expert interviewers to conduct its core interviews.

Why? Perhaps because they understand one fundamental truth about decision making: the collective intelligence, sometimes called the “wisdom of the crowd,” reigns for this type of decision.

We can put this in colloquial terms: “two heads are better than one.” The collective intelligence concept has been popularized recently and goes against the traditional belief that only experts know best. The collective intelligence emphasizes that for certain types of decisions, the collective opinion of educated individuals is way more accurate than that of a single expert.

In summary, we understand that performance-based criteria are what you need to focus on in order to hire more successfully. The best way to assess one’s past performance is to have several people involved, each having worked with the individual for a good amount of time.

What about jobs that have clear performance indicators, such as sales or call centers? Do we recommend a focus on performance that has been assessed by many people over a certain period of time for all types of jobs? The answer is yes, because it is your time to get a better grasp on the last (and one of the most difficult) components of a successful hire: the cultural fit.

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.

  1. Jim Doherty

    As you distill the data down as to why the internal hire success rate is higher than the external rate one item really jumps out at me. Yes, it is good policy to promote and move people internally as well as less expensive.
    But the larger factor, I believe, is hiring internally is about risk management — it is the safe choice.
    The other aspect is the first hand knowledge/familiarity you have of the individual. That is also a key factor in why referrals by employees have a higher success rate.
    You tend to hire those you know more about than those you know less about.
    Risk management, safe choices.
    What’s the fix – take more time and effort to learn about candidates. This is not a sprint. It is not a marathon either. Deliberate, swift, decisive.
    Every interaction with a candidate is a data point. Even scheduling an interview, debriefing an interview.
    Yes, more interactions = more confident conclusions.

  2. Jim Cargill

    Man, what great comments,and insightful recommendations!

    I have to re-touch the figures quoted by the author, though. Although the result of survey data, that does not make them correct. Think about it for a minute. If 90% of internal promotions were truly ‘successful’, there would be few TPR agencies, and almost no in-house recruiting function. ERE would not exist. ‘The Peter Principle’, and ‘The Peter Prescription’ would never have been written, nor the dozens (hundreds?) of successful books which followed on the same subject.

    When erroneous information is used to develop programs, the programs seldom perform well. I like many of the ideas and comments in the articles, yet have some trouble getting past the flawed figures. Just my .02 worth, and I will not bring it up again.

  3. Josie Erent

    The outsider in most cases is very experienced. However, it is the corporate culture that causes the failure of many successful experience individuals.

    Most cultures hate change and hate new people……coming into a company. Classic example Moore Corporation and IBM.

    Most of these individuals are not trusted and destined to fail so experience has really nothing to do with this subject.

    The insider has obvious advantages in terms of acceptance having worked within this culture for many years. However, the insider does not guarantee change or robust perforance that the shareholders demand.

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