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Ask the Expert: How Important Is Industry Experience When Hiring Leaders?

January 17, 2017

ask-an-expert.jpgEditor's Note: This post is a question that we often receive from clients. We decided to have Select's Manager of Product Development, Amie Lawrence, Ph.D., give a detailed answer.


I have a couple of hiring managers who reject all leadership candidates who do not have experience in our specific industry. The problem is that we work in a niche industry and finding experienced candidates can be challenging. How important is industry experience when hiring leaders?

Dr. Lawrence's Answer:

This is a tough question and one that is faced by many organizations. To answer this question, let’s first examine what experience brings to the table. What most people want from experience is the technical knowledge that comes with it. If that technical knowledge is integral to success on the job, then industry experience might need to be a requirement.

But, that technical knowledge could also be obtained through education or on-the-job training. Some organizations use all avenues for ensuring employees have the technical knowledge that is needed and don’t always rely on hiring from within the industry. The best way to determine if technical knowledge is a necessity for a position and if it is needed before someone can perform the job is to conduct a job analysis.

When looking at leadership positions, understanding the industry can be a plus, but it’s important to also examine those roles closely to determine the underlying characteristics and behaviors that make a leader successful. Many times, individuals with strong leadership skills who can motivate, develop others, and find innovative solutions can apply those skills to any industry.

To better understand the role of experience for your situation, I would recommend the following:

  1. Conduct a job analysis to identify the knowledge, skills, and abilities needed to perform the role successfully. Be sure to talk to current leaders and ask specific questions around technical knowledge. Find out how many of them had the knowledge prior to their leadership role. Ask questions around how often the technical knowledge is used in their day-to-day responsibilities. If most of their responsibilities involve managing people and setting a strategic vision, it’s possible that they can learn the technical knowledge as they go or be brought up to speed through training or classroom instruction. Use this information to build a leadership competency model.

  2. Once you have a leadership competency model, build a selection process around it. Find the right assessment tools to capture the competencies of highest importance to the job. If you find the technical knowledge is nice to have but strategic planning, coaching, and managing change are must haves, then focusing on the leadership behaviors in the selection process might make sense.

  3. Include your hiring managers in the design process and educate them on the full selection process. If they better understand the importance (or unimportance) of industry knowledge, they may be more willing to take a chance on a leader from another industry.

  4. If you find that hiring from outside the organization and other industries just isn’t an option, then developing current employees to be future leaders may be your best bet. I would focus on identifying high potential employees and working on a succession plan to ensure your organization is prepared for the future.

The role of industry knowledge may differ from industry to industry and job to job, but there are definitely some skills that can move across industries. Use the process above to find out what makes sense for your organization.

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Amie Lawrence, Ph.D. Amie Lawrence, Ph.D. is the Manager of Product Development at PSI. She is an expert in the design, development and validation of psychological assessment tools. An integral member of PSI since 2000, Amie has led the development of numerous competency-based assessments, including online in-baskets, job simulations and motivational fit instruments.