Evidence Soup
How to find, use, and explain evidence.

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Monday, 08 September 2008

Some evidence contradicts conventional wisdom about hiring experienced people: Knowledge and experience are two very different things.

People are weighed down by the baggage they bring in… those hired from other [insurance] carriers were the least successful.
-Claims Department Manager, "InsurCo"
This is from a paper suggesting that experienced people often carry baggage that interferes with their performance at a new company -- or even at a long-time employer. But knowledge and skill help counterbalance that, so their performance isn't all bad (44-page pdf).

Knowledgevsexperiencewharton

Is experience over-rated? The evidence is offered by Nancy Rothbard of Wharton, along with two co-authors, in Unpacking Prior Experience: How Career History Affects Job Performance, based on a study of career histories at a large insurance carrier ("InsurCo"). Results led them to conclude that "We find that prior occupational experience has a positive effect via knowledge and skill but a negative direct effect that diminishes the overall relationship, and we provide preliminary evidence that the negative effect is driven by behavioral and cognitive rigidities." In-house experience may not be so great, either. The authors found "Interestingly, once knowledge and skill is controlled for, within firm experience (i.e., tenure) at InsurCo also has a negative effect on performance, similar to prior related experience." I can believe this: Haven't we all worked with someone who has been with the company 10+ years and developed a reputation for being set in their ways, refusing to learn new tricks or otherwise accept change?

Impact: Does this matter to us? Start with a clean slate if possible. But oftentimes, you'll need to hire someone with deep know-how -- not something you can replace with a little (or a lot) of training. In those cases, you're accepting whatever negatives there are from prior experiences and imprinted corporate culture, expecting they'll be outweighed by the knowledge and skill that experienced people provide your company. (In some cases, aren't you hiring someone from a different, more desirable, corporate culture to help improve yours? But that would be the exception, not the rule.)

Findings: Translated from the academic-speak. Technical knowledge: Good. Behavioral experience: Not always so good. From the research abstract (pdf): "So far, explanations about the imperfect portability of experience have primarily been about firm-specificity of knowledge and skill. We draw on psychological theory to propose additional socio-cognitive factors that interfere with the transfer of knowledge and skill acquired from prior related work experience. As we hypothesized, we find that task-relevant knowledge and skill mediates the relationship between prior related experience and job performance, and that it acts as suppressing mediator of a negative direct relationship between prior related experience and current job performance."

Methodology: Gold star. I like that these folks have diagrammed the relationships they're talking about. And their methodology seems solid:

  • They began with clearly stated research hypotheses, such as "When knowledge and skill is controlled for, prior related experience negatively affects performance."
  • For independent variables, they used objective measures such as prior work experience, and knowledge and skill based on competency assessments where "supervisors and HR managers evaluate work product (e.g. case files, recorded phone interactions, etc.) to rate workers on areas of competence that are specific to their particular jobs. Competencies include technical knowledge and skill and general work skills."
  • For dependent variables, they used annual performance reviews-- admittedly "even though our measure is subjective it is not subject to the single-source error that can plague traditional supervisory evaluations. As in most large corporation contexts, the performance evaluation is a product of the input of multiple raters and is the result of a standardized process."
  • Hypotheses were tested using sophisticated statistical analysis, and the authors explained what methods were used.

This research was recapped on Knowledge@Wharton: "Companies might be better off investing in training fresh recruits with little experience in an industry so the companies can have more control over how the new workers adapt to their new employer's corporate strategy and culture." One example they give: When an insurance company hired a talented, experienced adjustor from another firm: "While the hiring company provided high-end insurance with a strong emphasis on customer service, the adjustor came from a company that was more focused on keeping costs down. Rothbard says the adjustor just could not help himself from 'nickel and diming' customers on their claims, even though that attitude conflicted sharply with the firm's strategic direction and culture."

BNET has covered this also, saying "Hiring managers often pay a premium for experienced workers, but new research reveals that what passes for valuable experience, may actually amount to problematic baggage; training fresh recruits may be the better investment."

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