Experience without performance is doomed to fail

by Yves Lermusi, August 2007, www.ere.net

Yves Lermusi (aka Lermusiaux) is CEO & founder of Checkster (www.checkster.com). Checkster is a new Career and Talent Checkup tool.

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 (also set out below), 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.

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.

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