Is it better to hire people on the basis of their experience or their potential? If you believe experience is preferable, and that age equates with experience, there's no better time than now.
By 2011 about half UK workforce will be over 40, which means they will have had 20 or so years of work experience.
But experience is not the issue. The question is, experience of what? Is experience as a bank manager a predictor of performance as a customer service manager in a telecoms company? Is a person who has been in a job for five years more experienced that someone who has been in the job for one year, or does five years actually mean one year's experience five times in a row?
The problem of hiring on the basis of experience gained in a former job is the assumption that it parallels what is needed in the new job. Organisational cultures and situations can and do differ dramatically. There is a litany of highly competent executives like Bob Nardelli, who excelled at GE, but was unable to duplicate that success at Home Depot. Experience is situation-specific.
Experience also tends to equate with baggage. Behaviour is learned. We do what we do on the basis of it having led to success in the past. We've all been annoyed by people who insist on telling us how things were done in their last company or last job. There are benefits to learning how other people do things, but the underlying message is that what we're doing is no good, and that can be demoralising.
So what about hiring on potential? This, too, comes with some small print.
For "potential", read "lack of directly applicable experience". That means giving the individual time to learn, which implies training, coaching and the provision of development opportunities.This one of the reasons many companies fall back on what they hope is the quicker-fix solution of hiring so-called experienced people -- it takes less effort.
There are a number of companies that have successfully hired for potential though, notably Southwest Airlines, the originator of the discount airline model. Southwest claims it hires for "attitude" -- motivation, energy, keenness, and team spirit.
But Southwest doesn't make the mistake of thinking that's enough. It follows up with intensive skills and culture training. People learn what behaviour is acceptable and rewarded. Very few organisations make a conscious effort to do this. Instead, people have to learn the hard way.
If you wish to hire people for their potential, you need to define the core competencies for the roles in question. These are things like a demonstrated ability to motivate people, being able to close sales, a record of building effective teams, or being able to make and stand by hard decisions.
Either people have done these things or they haven't. They can be tested and observed. Assessing potential doesn't have to be subjective -- it manifests itself in observable behaviour.
But as James Callaghan, a former British Prime Minister, once said: "Some people, however long their experience or strong their intellect, are temperamentally incapable of reaching firm decisions." No amount of experience can change that.