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Hiring from outside the company

(chinadaily.com.cn)
Updated: 2008-09-28 15:51

As life-long employment fades and the workforce becomes increasingly mobile, many companies look to hire skilled, experienced workers to improve productivity quickly. Those workers, however, often bring baggage from prior jobs that can negate the benefits of their prior experience, according to new Wharton research.

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. The research found that training may be more productive than paying a premium to hire experienced workers who might come from a different sort of corporate environment.

"Human resources managers will want to (hire) people who worked in a related industry or firm for the skills they bring. That makes sense from a human capital perspective, but we question whether that's all they bring with them.

Do they bring other experiences ... positive or negative?" asks Wharton management professor Nancy Rothbard, co-author of a paper titled Unpacking Prior Experience: How Career History Affects Job Performance. Rothbard wrote the paper with Gina Dokko of New York University's Stern School of Business and Steffanie L. Wilk of Ohio State University's Fisher College of Business.

Drawing on psychological theory, the authors examined employment applications and hiring records at two call centers for a major property and casualty insurance firm. The authors set out to assess not only the impact of bringing in skilled and knowledgeable workers, but also cognitive and behavioral responses that developed during (the new workers') previous employment.

When more experience means less success

In interviews with managers early on in the project, Rothbard and her colleagues discovered that the issue of cross-corporation baggage kept coming up. A senior human resource manager told the research team, "We tried to hire from our competitors and paid a premium for the experience -- but those hires were the least successful." Another manager quoted in the paper said: "People are weighed down by the baggage they bring in."

Rothbard says executives at the insurance company told of hiring a talented and highly trained adjustor from another insurance company. 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.

"It was so embedded in his ideas about how to do the job that even at this other firm, where management tried to instill the other set of values, it didn't translate," explains Rothbard. "He had the skills to get up and running quickly in the (basics) of what an adjustor does, but ... he was ultimately not adaptable to the strategy and norms of the new firm. His experience tended to trap him."

Rothbard describes employment "baggage" as a set of norms and experiences that shape the workers' response to their jobs as much as, if not more than, the industry and occupation-related skills and knowledge they bring to their work.

According to the paper, "Habits, routines, and scripts that contribute to performance in one organizational context may detract from performance in a different organizational context. That is, the relationship between prior related experience and performance may not be wholly positive. Indeed, despite the common assumption that prior related experience will improve performance, past research findings have been mixed about the effect of work experience on performance."

Rothbard and the other researchers were intrigued by the notion that the norms and values employees pick up in the culture of one firm are not easily shed as they cross organizational boundaries. "Those kinds of transfers really are not discussed at all when we talk about mobility of the workforce. We assume people are cogs that can be plugged in and they will perform similarly in different environments."

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