Whether executives, entrepreneurs, or investors, we all tend to place a higher value on professional experience when determining who to hire, when to promote, where to invest, or who to trust with challenging projects. It does seem like a reasonable practice, and we all think we do a good job; except we don’t!

According to a 2015 Gallup research study on the success of candidate selections, 82 percent of the hiring decisions managers make are poor, and, the new-hire failure rate is averaged at 50 percent. Why is that? I think it’s because while on the surface experience may seem like a reasonable selection criterion, we need to fine-tune the definition so we hire and/or promote the right people.

How does this “experience factor” contribute to the failure rate of our selection decisions? As Kahneman pointed out in Thinking, Fast and Slow, our brain has a natural tendency to avoid work by looking for shortcuts. In the hiring process, our brain takes that dangerous shortcut and equates “experience” with “years on the job.”

My observation, after assessing, building, or restructuring management teams across the world for over two decades, is that a person can be on the job for 15 years and acquire 15 years’ worth of cumulative experience and knowledge, while another person can hold the same job for 15 years and only accumulate 1 years’ worth of experience and knowledge, repeated 15 times.

I have seen many hiring managers and investors follow the “years on the job = experience” model in their decision making, and inevitably hire the wrong people. If we want to improve the selection process, and ultimately increase retention and improve candidate-company fit, we should consider modifying our hiring approaches. As a start, try these practices:

● Open the range of “years on the job” during the recruiting process. If you think you need someone with 5 years of cumulative knowledge and experience, set the “years on the job” range to 3-7. This approach will expand the search pool, attract more diverse candidates, and may expose you to talent with a broader skill and experience set.

● Create an experience (or situational) interview guide that tests for the overall experience you believe someone should bring to the role and the company overall. Include situational questions; for example, if you expect the candidate to have firsthand experience on how to deal with supply chain disruptions, ask them to tell you about a time they experienced a supply chain disruption and how they responded to, or mitigated, that risk. Pay attention to the answers; Do they draw on experience, or are they giving you a textbook response?

● Ask them to describe their three most valuable and/or challenging work experiences. If they describe routine or unremarkable events, you can assume the candidate has only sailed in smooth waters and has no experience in a storm. That’s experience, not Experience.

Human Capital is one of the most important assets we develop as leaders and managers, and look for as investors. Every hiring and investment decision requires thought, and management hiring decisions even more, so investing time to uncover the experience someone brings to the table is both necessary, relevant, and critical to improving our selection decisions.

And remember; sometimes a candidate will have real experience in a similar job but in a different market; don’t let that deter your decision–they may only need a few weeks to gather the knowledge needed to fill that experience gap.

I serve as a board member for The Tampa Bay Wave and The Lowth Entrepreneurship Center at the University of Tampa. The advice shared in this article is a preview to the counsel I provide to entrepreneurs, founders, and Private Equity and Venture Capital clients I’ve worked with over the past three decades. Feel free to contact me with any additional questions or business inquiries.