Why Employers Overestimate the Value of Experience in Recruitment

A significant number of young people and those making a career change face a catch-22 situation: you can’t get a job without experience, and you need experience to get a job. This reality is unbelievably frustrating and is holding people back from their dream jobs. Moreover, youth unemployment is an increasingly serious societal problem and is having severe deleterious effects on the global economy. The answer from politicians and government officials is often to give young people more experience via internships, work experience, or even a peacetime conscription programme.

However, is experience all that important in the first place? In this article, I will outline how experience relates to performance in the workplace, and whether employers should really be requiring previous experience during the hiring process.

The association between experience and job performance

In human resources circles, the ideal selection criteria are a matter for debate, and different business leaders can hold widely differing opinions. In organizational psychology circles, however, the matter is largely settled, and we have decades of research to draw from. The seminal paper on selection and assessment in organizational psychology, “The Validity and Utility of Selection Methods in Personnel Psychology” (Schmidt & Hunter, 1998), does an excellent job of outlining the predictive power of experience.

The meta-analysis found that experience is only weakly associated with job performance, showing a correlation of 0.18. To put this in context, a structured interview shows a correlation of 0.51 with job performance, making it a substantially more powerful predictor of future success and thus a more useful selection tool. Additionally, they also found that experience was almost completely unassociated with performance in training programmes, showing a correlation of 0.01. This suggests that having relevant experience does not help you to further expand upon your skills, inferring no advantage over people without relevant experience.

However, when delving deeper into the research, you do find something interesting regarding the association between experience and job performance. It seems that experience is actually quite a strong predictor of performance during the first five years of one's career, somewhere between 0.33 and 0.47. It is hypothesized that, in most occupations, you do most of your learning and knowledge acquisition during the first few years, with experience becoming less important thereafter. However, it certainly isn’t the magic bullet that employers think it is, even under ideal conditions.

Why employers overestimate the importance of experience

The biggest reason why employers overestimate the usefulness of experience in selection is the recency bias. The biggest advantage of experience is that it is a particularly powerful predictor of performance on day one, as only people with relevant experience can hit the ground running. Because first impressions matter significantly to people, hiring managers' opinions are often validated quickly, as the most experienced new hires clearly outperform everyone else right at the start. This reinforces the opinion of experience as a selection criterion, making it more ingrained into the selection process.

However, after a week, a month, a year, etc., the predictive power of experience reduces significantly, particularly if the organization is providing extensive training. After completion of full training, the utility of previous experience inevitably reaches zero, ceasing to matter altogether. This is particularly important in early careers, as organizations tend to provide extensive training, development, and qualification support. In these roles, having experience from the start simply isn’t relevant, especially considering the lack of association between experience and training performance.

Lastly, it is an unfortunate fact that many organizations are hesitant to provide training to new hires, fearing high costs or resource-intensive effort. Instead, they would rather let another organization provide training, and then hire their experienced staff who have already received it. Organizations with this mentality fear that other companies will simply do this to their staff if they train them, which is a particularly cynical perspective. This creates a significant opportunity cost, as organizations inevitably orient their selection towards mediocre candidates with experience over high-potential candidates regardless of experience, hurting organizational performance in the medium to long term.

Conclusions and Recommendations

Although organizations definitely overestimate the utility of experience, there are situations where employees really do have to hit the ground running. Freelance, contract, and interim work requires people to be productive right from the start, with no scope for training or development. In these roles, prioritizing candidates with up to five years of experience makes intuitive sense and will likely add value to the selection process. However, in roles where significant training is provided, hiring specifically for experience adds no value to the process, and artificially reduces the size of your applicant pool, forcing you to settle for mediocre candidates.