Past Performance Fails to Predict Future Performance

Copyright (c) 2009 Success Performance Solutions

Yogi Berra once said, "the future ain't what it used to be."

While I'll be the first to admit that quoting Yogi for wisdom's sake may lack credibility, this particular quote is quite relevant and meaningful today, especially for hiring managers, business owners, boards of directors, and anyone who is in the position to hire or promote an employee.

Up until recently many employees were hired and promoted based on a simple theory: past performance is a good predictor of future performance.

When the world was more predictable and change occurred over decades and not days or even minutes, past performance could be expected to lead to future success. That premise was based on a future environment that would be similar to the previous one.

In today's world, that assumption is wrong. Predicting performance based on the past is iffy at best and often disastrous. You can just read the headlines about failed executives, financial gurus, and business super-stars who crashed and burned and it becomes readily apparent that past success does not guarantee future performance. What worked in the past could be the recipt for failure in the future.

Hiring or promoting on past performance works if the environment in which the employee is expected to perform remains constant. In today's world, you'd have to be doing business in a cave located in a remote location in the world that is disconnected from all communication to do that. What business isn't affected in some way by the economy, technology, consumer behavior, demographics, government regulations, globalization, and so on.

For every small change in the environment, past performance becomes less of a valid predictor of future performance. Even a small change in individual compensation (either more or less) affects how an individual might value the job or opportunity and consequently improve or dull performance.

And few jobs are getting any easier. Responsibilities are more complex. Change is happening at a faster pace. All employees are being asked to make difficult decisions under increasing pressure more quickly. Often the employee is crushed under the the inflow of information. Other times he is being asked to make quick decisions with inadequate, inaccurate, or paradoxical information. He or she is expected to not only keep up but differentiate between fact and fiction. Decisions often must often be made on the spot before all the information can be processed or before it is even available. We live in a time of unprecedented change, ambiguity and paradox which nearly negates any reliance on past performance for employee selection.

Past performance as a predictor of future performance just doesn't work anymore. Hiring managers, board of directors and small business owners make terrible and costly mistakes relying on the past to move forward.

The new formula for predicting future performance is this:

Past Performance + Capacity + Potential = Future Performance

Relying on past performance to predict future success may be as much a predictor of failure as it is the crystal ball to see future success moving forward. It's not experience or education that matters anymore but the skills and abilities thast the individual used and developed during the experience that counts. What are the transferable skills that this employee developed and now owns that can be applied to new situations and during challenging circumstances?

In addition to these skills (often referred to as competencies), general mental abilities must be considered. If the complexity and pace requirements for a new role is more intense (which is generally the case), the employee will need to rely more upon excess mental, emotional and physical capacity than he/she did in the past.

What does this mean for hiring managers, management and directors?

Resumes are less relevant than ever. Where the candidate or employee has been and what they've done no longer are valid predictors of where hs or she is going in the future.

Behavioral interviewing just got a lot tougher. It's been well documented that the traditional interview is no longer a reliable tool for predicting performance. There are too many variables including the lack of training on the part of the managers and the preparedness of the candidates. It has become more the rule than the exception that the candidates spend more time preparing for the interviews and managers prepare interviewing.

It's skills and potential that count. Previous experience in the same industry or education from a top school no longer are tickets to success. From the recruitment ad to managing performance must be laser focused on screening and developing core competencies that lead to reliable and sustainable success. These skills (problem solving, analytical thinking, leading others, planning and organizing) are job specific, company specific, or even industry specific. They are transferable to any task, project or environment. Technical knowledge is still relevant but it merely creates a baseline for discussion. How and if the knowledge can be applied in the future is what hiring managers need to find out.

To our clients we recommend a balanced approach for selection. The formula is simple:

1/3 experience/education + 1/3 interview + 1/3 psychometric assessment = job fit

where the resume and interview help you the critical KSAs (knowledge, skills and abilities) that the individual used in his previous experiences. The psychometric tests then play a dual role in candidate assessment: (1) is the individual's innate talent consistent with his or her past success which may give insight if it can be repeated (or was he or she just in the right place at the right time)? (2) what is this individual's potential and capacity to apply and grow these skills to meet future demand.

Relying on past performance as a predictor for future success is a ticking time bomb. It is no longer the path or outcome that matters as much as the decisions made and knowledge gained during the experience that counts. The bar has been raised to hire and promote qualified people.

Is your organization ready?