Experience Without Performance is Doomed to Fail

Aug 27, 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.

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