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Random Chance and How Managers Make Faulty Hiring Decisions

By Lou Adler, August 6, 2008

Hiring is too important to leave to chance, but that's exactly what hiring managers do when hiring experienced outside people.

Consider this: managers typically make three different types of hiring decisions – an internal move (either a promotion or lateral transfer), hiring a rookie right out of college, and hiring an experienced outside person for an open position.

What's surprising is that a different set of rules applies for how each decision is made. More surprising is that the success rate for recent college grads and internal moves is far more predictable than for an outside, experienced hire. This suggests that it might make sense to change the outside hiring decision to more closely mimic the process used for college grads and internal promotions.

Read more articles by this author.

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Let's dig a bit into this. In most hiring decisions, managers base their selection on three core factors: the level of experience and competency to do the work, the person's track record of success, and the person's overall potential.

Most people would agree, and it's confirmed by extensive research, that a person's track record of success and overall potential are far better predictors of success than the person's absolute level of experience and competency. This is a critical point worthy of discussion, so don't hesitate to contribute to the on-going discussion here.

Here's one point for proof of this. Consider the idea that internal moves are the most predictable hiring decisions, since the person's track record of success and overall potential is well-known by those making the decision. Since the purpose of the move is for the person to gain more experience and new skills, having them already is obviously not a prerequisite. This aha! point alone should suggest to reasonable people that experience and skills should not be too highly valued when deciding to hire someone whom you don't know.

Now consider the performance of college grads. This is reasonably predictable since you have a sense of their potential and a peek at their success record. These include factors like academic record, recognition and honors received, work on special projects and community events, performance in internships, selection to various groups, demonstrated leadership skills, and the like. Obviously if you don't measure these factors, predictability declines. Typically people are hired out of college with minimal work experience and some low threshold of basic competency. Those that are successful on the job tend to be able to learn new skills quickly, successfully work with a variety of different people, have a strong work-ethic, and fit well within the culture of the company. Since there are more unknowns with respect to hiring recent college grads, interviewers are forced to look at factors other than experience when making the selection decision. In this case it's their ability to learn (a part of potential) and the level of success they've achieved. The stronger both of these are, the more likely the person will succeed.

When considering all of the factors critical to on-the-job success, the performance of experienced hires tends to be less predictable. While most managers get the technical competency part right, they often miss work-ethic, tenacity, responsibility, team skills, organizational and planning ability, cultural fit, and decision-making. Weak assessments should come as no surprise when the hiring team over-relies on the person's past experience and absolute level of competency rather than potential and track record of success.

Making matters far worse for experienced hires is the fact that the entire sourcing process is built on finding people who have the required level of skills and experience listed in the job description. This eliminates the best high-potential people from consideration before they ever get interviewed, since those who don't meet the required experience levels don't apply, even if they could do the work. And those who have the required skills won't apply either, since the work doesn't appear challenging.

This double whammy effect seems to be the root cause of many companies' inability to fill their experienced staff positions with enough high-potential people. On one level it's caused by excluding the best from consideration because they don't meet some artificial standard, worsened by the fact that they're then assessed based on how much of this standard they possess.

These conditions are summarized in the table below:

Assuming all of the above true, it seems obvious that all one needs to do to improve the accuracy of the outside hiring decision is to increase the emphasis on a person's track record of success and potential, and minimize the value placed on related experience and the person's current level of competency. Equally obvious from a sourcing perspective is that in order to expand the pool of high potential candidates being seen, all you need to do is highlight the opportunities and challenges, and minimize the level of skills and experiences required. On the surface this may seem somewhat heretical, but commonsensical when made in comparison with the performance of recent college grads and people moved internally.

Here's an example of how this would work for sourcing. Rather than state, "Must have 5-7 years of international accounting experience, a CPA, and a complete understanding of Sarbanes-Oxley," you'll attract more people with, "Use your international accounting experience to help lead the development of a comprehensive worldwide financial reporting system."

On the interviewing side, it's already easy for a manager to measure technical competency and figure the person's level of experience. That's probably why they use it so much. To counteract this, managers need to be able to ask questions that focus more on the person's track record of success and overall potential. Here's one question to get them started on this path. As part of this an assessment process needs to be implemented that emphasizes qualities and traits other than experience and technical competency that better predict job success. Here's a form we use for this, but the real idea here is to implement a formal process that overrides a manager's tendency to make improper decisions based on the wrong data.

Companies already have a hiring process that's quite predictable – it's the one used for hiring college grads and promoting people internally. Surprisingly, this approach is ignored when hiring experienced staff. This makes little sense. All it takes to make this shift and improve assessment accuracy is to emphasize a person's potential and track record of success over the absolute level of experience and competency. As a huge bonus, when you emphasize the same attributes for sourcing top performers, you'll find many more of them then ever expected.