“predictive analytics in talent management - pmap cebu · “predictive analytics in talent...

“Predictive Analytics in Talent Management:Harnessing Talent Data to Predict Performance and Retention”

By: Liza Manalo-MapaguCEO, HR Avatar Philippines

Liza Manalo- Mapagu, CEO HR Avatar Asia

Previous Posts• Managing Director of Assessment Analytics• Consulting Director of Strategic Consulting Services• Assistant General Manager of Eduquest, Inc.• Director of Center for Educational Assessment and Research, Human Resource

Development Center at the De La Salle-University-College of Saint Benilde• Head of Evaluation of De La Salle University-Institutional Testing and Evaluation

Office

Education/Affiliations• A BS Psychology graduate from University of Sto.Tomas• Master’s Degree in Measurement and Evaluation at De La Salle University• Ph. D course in Research and Evaluation at the University of the Philippines.• Member, Society for Human Resource Management• Member, Society of Industrial and Organizational Psychology

• Name

• Designation

• Company

• How do you feel today?

• HR Avatar Philippines is a management consulting firm which specializes in talent assessment as a strategy for human capital optimization.

• We provide an end-to-end assessment solution integrated in the various talent management strategies from acquisition, onboarding and training, on to succession management.

Who We Are

End-to-End Talent Management Solution

Exclusive Distributor of HR Avatar Solutions in Asia

• What is Human Capital Risk (HCR)?

• How Can Talent Analytics Address HCR?

• How can technology drive application of talent analytics in your organization?

Presentation Agenda

Almost everything that can go wrong in a business has a human capital component.”

David Creelman

“Risks associated with human actions are given only little attention until “something bad happens”. Unfortunately, when one of these risks contributes to a loss, it can be very costly in terms of brand, reputation, morale, or revenue.”

• What is Human Capital Risk (HCR)?

Human Capital Risks can be defined as events and employee behaviors that occur both within and outside the workplace that can affect employee productivity and/or otherwise affect the organization’s operational and financial results.

Aon Hewitt, Pacific

• Failure to attract required employees

• Selection of the wrong person• Undesirable turnover• Unsatisfactory performance

• Absenteeism• Accident/injury• Legal compliance issues• Fraud• Loss of knowledge

Types of Human Capital Risks

What are the business problems?

1. Customer Complaints

2. Turn Over Rate

3. Customer Retention Rate

What is the cost of the problem?

1. Bad Hires and Turn-over Rate ……. Php 155M

2. Customer Complaints ……. 1M

3. 70% Customer Retention Rate……. 20M

___________

176M

The Cost of Talent Issues

“Risk management is an important task. But even though human capital makes up a significant – if not the most significant –portion of an organization’s assets, it typically gets less attention when managing risk.”

“One of the reasons why HR departments have been limited in their capacity to address human capital

risks is the lack of data.

To be accepted as a strategic business partner, HR

Departments must be able to measure the value”

• Talent Analytics is the application of sophisticated data mining and business analytics techniques to human resources

(HR) data.

Predictive AnalyticsWhat can happen?

Analysis & MonitoringWhy did it happen? What is

happening now?

ReportingWhat happen?

Complexity

Bu

sin

ess

Val

ue

Stages of Analytics

Types of Analytical Models

Analysis & Monitoring

Predictive Analytics

Reporting

Drawing Conclusions or Inferences

Representation of Data and Summarizing

PREDICTIVE ANALYTICS

Past Data

Current Data Future

INFERENCIAL ANALYTICS

DESCRIPTIVE ANALYTICS

REPORT

PREDICTS

PREDICTS

PREDICTS

Steps in HR Analytics

Gather data by Reporting

Hindsight Insight Foresight

Make sense of data by Analysis and Monitoring

Develop predictive models

“Talent Analytics presented the second largest overall

“capability gap” for organizations”

27%27%30%31%37%45%48%52%63%

Level of…

Internal hire %age

% employees with dev plan

Retention/Turnover

Employee Engagement

Level of Expertise and Competence

What is generally measured/tracked today?

The cost of a Talent walking out the door

Organisational Knowledge Lost

Performance and motivation impact on direct report

Time lag to competence

Lose talent to competitor

Wasted Recruitment Spend

“the cost of employee turnover is one-and-a-half the amount of employees monthly salary…..and the cost is even more ahigher with first year hires”

The PWC Saratoga Review, 2008

Attrition is getting worse…

A growing number of new hires -- as well as top-performing employees -- are choosing not to stick around for long.

34.1% in 2013

22.6% in 2012

2014 PwC Saratoga U.S. Human Capital Effectiveness Report

Big Data: Driving HR Analytics

STOP REPORTING!START PREDICTING!

Predictive Analytics Defined

Predictive analytics is the branch of data mining concerned with forecasting probabilities. The technique uses variables that can be measured to predict the future behavior of a person or other entity.

Predictive analytics is the technology that learns from data to make predictions about what each individual will do — from thriving and donating to stealing and crashing your car,“

The power to predict who will click, buy, lie or die.

Predictive Analytics Defined

How can predictive analytics benefit your pre-employment hiring process

by Jeff Furts

Benefits of Predictive Analytics for Talent Acquisition

1. Predictive analytics will help you improve your quality hire

hiring process• performance• attrition data• engagement survey

data

pre-employment assessment results, interview results, recruiting sources, personal data

Top 8 High-Impact Talent Acquisition Practices

High Impact Talent Acquisition Bersin by Deloitte, 2013

http://www.slideshare.net/jbersin/highimpact-talent-acquisition-research-findings

2. Predictive analytics will help you source more efficiently and effectively

Benefits of Predictive Analytics for TA

Hiring managers can trace the hire back to the original hiring source and then link that to quality of hire.

3. Predictive analytics will help you improve your speed of hire.

Benefits of Predictive Analytics for TA

1

0.70-0.99

0.60-0.69

0.50-0.59

0.40-0.49

0.30-0.39

0.20-0.29

0.10-0.19

0.01-0.09

0.00

Assessment Methods - ValidityPERFECT PREDICTION – Impossibly Good

Work Sample tests

Ability Tests / Structured Interviews

Job Knowledge Tests / Group Exercises / Personality Questionnaires

Assessment Centres (poorly designed and facilitated)

References

CV’s/Resumes / Years of Work Experience

Academic Results / Years of Education

Graphology / Age

CHANCE PREDICTION – Impossibly Bad

Source: Journal of Occupational and Organisational Psychology (2001), 74, 441 – 472. Robertson, I.T & Smith, M.

What do you want to predict?

• Job Fit

• Culture Fit

• Performance

• Retention

• Potential

• Trainability

How to use predictive analytics for predicting:

•Trainability•High Performance•Culture Fit

Competencies is at the heart of the human capital management cycle….

Acquire Talent

Deploy

Talent

Develop Talent

RewardTalent

Retain Talent

Measure Quality ofHire

Assess for potential

Career pathing

Foster engagement

Talent matching

Succession planning

Development needs

COMPETENCIES

A Competency is:

• “a cluster of related knowledge, skills and attitudes that affects a major part of one’s job (a role or responsibility) that correlates with performance on the job.

Types of Competencies

• Threshold

• Differentiating

• Core

• Technical

(Spencer & Spencer, 1993)

Types of Competencies

“Threshold” are essential characteristics required for all job incumbents to perform the job at a minimal level of proficiency.

Example: Cognitive Ability, Language Proficiency, Positive Work Attitude, Basic Skills

To predict: TRAINABILITY

POTENTIAL

Types of Competencies

“Differentiating” competencies distinguish superior from average performers.

Example:

• Results-Orientation, Multi-Tasking, Selling and Negotiation, Customer Service, Quality Focus

To predict: HIGH PERFORMANCE

Core competencies are characteristics that must be

possessed by every member regardless of their level

of performance; they extend to all individuals in the

organization.

Core competencies support the organization's mission, vision and values

To predict: CULTURE FIT

Types of Competencies

Distinctive (Technical) competencies are position-specific KSAs.

Example: Selling and Negotiation, Territory Management, Product Knowledge

To predict: PERFORMANCE

Also use for TRAINING NEEDS ANALYSIS

Types of Competencies

• What are the BEST PRACTICES in applying Predictive Analytics?

Best Practice #1Predicting HIGH PERFORMERS

through establishing Success Profiles

Concurrent Validation Studies(Internal Benchmarking Study)

Why will you set Success Profiles?

This Performance Benchmarking Study aims:

To improve the company’s ability to:

• Predict top performers

• Hire talents within the competency

standards of the company

Outputs of the Study

SUCCESS PROFILES

Provides the profile of the person whose competencies and performance are

critical to the organization’s current and future success.

Provides the factors that differentiate performers from marginal employees.

Presentation of Data

Frontline ManagerOverall Score Comparison between High and Low Performers

Frontline ManagerComparison between High and Low Performers

Frontline ManagerComparison between High and Low Performers

Frontline ManagerComparison between High and Low Performers

Frontline ManagerComparison between High and Low Performers

Identify the best predictors of performance through PredictiveValidation Studies

Best Practice #2

Predictive Validity• Predictive validity is the extent to which a score or

test predicts scores on some criterion measure.

Independent Variables Dependent Variables

(X=Predictors) (Y=To be Predicted)

• Personal Factors• Knowledge• Skills• Attitudes• Job Satisfaction• Engagement

Job Performance

The conduct of Predictive Validation Study aims to validate:

• If there is a significant correlation

between test scores (or any talent

data) and performance, and

• The extent to which the talent data

used can predict performance.

Predictive Validity of Employee Selection Criteria

Regression Summary Table for Job Performance

Variables R2 Change of R2

1. Cognitive 0.20

2. Interview 0.12 0.016

3. Job Experience 0.10 0.015

4. Education 0.09 0.010

% of Prediction 0.241

It can predict 24%

Use of assessment solution to predict:

TrainabilityPotential

Best Practice #3

Types of Competencies

“Threshold” are essential characteristics required for all job incumbents to perform the job at a minimal level of proficiency.

Example: Cognitive Ability, Language Proficiency, Positive Work Attitude, Basic Skills

To predict: TRAINABILITY

POTENTIAL

• How can HR Avatar help you in predicting:

TRAINABILITY?

PERFORMANCE?

Wide Range of Assessments

Better Hires Through the Right Talent Data

Does the candidate:

Have the ability to learn and master all aspects of the job once hired?• Attention to detail• Analytical thinking

Have personality traits that ‘fit’ the needs of the job – to ensure tenure?• Expressive enough for sales?• Conscientious?• Etc.

Have the right attitude towards work?

Have a history of behaviors that correlate with consistency and tenure?

Have the specialized skills or knowledge needed for the job?

Cognitive Simulation

Personality Inventory

Personality Inventory

Behavioral History

Skills and Knowledge Modules

Animated Pre-Employment Tests

Job-Specific

Based on US Government Occupational Information Network (O*NET)

Designed exclusively for quality of hire

Each test contains:• Animated work simulation (cognitive abilities)• Personality inventory• Behavioral history questionnaire• An automatically scored essay*• One or more job-related skills or knowledge

tests*

* Included when appropriate for the job.

• Sample Report for Engineer

• Interpretation of the test

Overall Weighted Score

Individual Scores

Percentile scores

Interview Guide using Behavioral Event Interviewing

Use of assessment solution to predict:

• Leadership Potentials• Retention

Best Practice #4

How to use predictive analytics for predicting:

• Leadership Potential

WHO are potential candidates to the Talent Pool?

High-Performers vs. High PotentialsHigh-performers give immediate

return on investment, with

estimates averaging from more

than 50% additional value, to as

much as a 100% increase in

productivity over average

performers.

iii Corporate Leadership Council, Executive Summary, February 2005. William D. Koch, Directions: Closing the Gap Between the

Best and the Rest, Development Dimensions International, 2007.

WHO are potential candidates to the Talent Pool?

High-potentials are typically

defined as those

demonstrating high-level

contributions, organizational

values, potential to move up

to an identified position

within a given timeframe,

and potential to assume

greater responsibility

iii Corporate Leadership Council, Executive Summary, February 2005. William D. Koch, Directions: Closing the Gap Between the Best and the Rest,

Development Dimensions International, 2007.

“Most high-performers are NOT high-potentials BUT all high-potentials are high-performers.”

Assessment of Leadership Potentials

Types of high-performers who fail to become high-potentials

“Engaged Dreamers” have high

motivation, but only average ability.

“Unengaged Stars” have aspiration and

ability, but do not fully believe in their work or

organization.

“Misaligned Stars” have ability and

organizational commitment, but lack the

drive and ambition for success at the next

level.

IntellectualInterpersonal (Personality)

Engagement Aspiration

How do we assess High Potentials?

• How can HR Avatar help you identify your Leadership Potential and Readiness?

“CareerTrack”

Talent Mobility

Talent Audit o High Potential

Identificationo Competency Level/Gap

Identification

Training Needs Analysis

Process-People-Technology Solution through HR Avatar

Online 360 Feedback

Full Outsourcing of Assessment and Dev’tCenter (ADC)

ADC Technology Transfer

Competency Modelling (Differentiating plus Leadership Potential Factors)

Packages According to HR Initiatives

SampleReport

Distribution of High, Medium and Low PotentialsCompany Y

Distribution of High, Medium and Low PotentialsCompany Z

Potential

Business Strategy

Performance/Results: ‘Past’

measures

1. Performance metrics

2. Track record

Competenciese.g.

1. Behaviours

2. Skills

Potential e.g.:

1. Motive

2. Personality

3. Values

4. Cognitive

Competencies

Results

Ingredients of Talent Audit

IMBALANCED ASSESSMENT

SUMMARY: MEASUREMENT RISKS

Results

Potential

Competencies

Too much focus on:

Achieved in the past….but may not be able for the challenges ahead

Knows how to do it….but doesn’t get the results

Could do it in the future….but might not be ready to do it now

Who will you get?

Maximize the value of giving feedback and validation of talent data with the talent.

Best Practice #5

The talent…a human being

Feedback and Validation

• Feedback

• Selection Process

• Development

• Do they recognise they have a development need?

• Do they appreciate the impact their behaviour has?

• Do they recognise the benefit of changing their behaviour?

• Do they know how to change their behaviour?

Developmental Feedback

Feedback process

Feedback and Exploration

Explain Dimension

Explain Position

Qualify

Probe

Explore Impact

Link

Summarise

112

Johari Window

Unknown by others

Known

by others

Unknown

by self

Known

by self

1 –Self-awareness/ feedback solicitation 2 - Self-disclosure / exposure 3 - Shared discovery

Ask

Tell

2 3

1Blind Area

Open/FreeArea

Unknown Area

HiddenArea

113

Objective assessment and feedback help to maximise the learning opportunity that can be offered by the organization.

Expanding open/free area thus revealing a greater appreciation of individuals potential strengths and limitations.

In Summary:

Organizations are now challenged to manage Talent Risks

These risks can only be managed if we produce the RIGHT TALENT DATA

Predictive Analytics is a solution to prevent the risk from happening or minimize the negative of the impact of the talent issue

Predictive analytics offers tremendous opportunities to use historical data in a way to predict future behaviour.

Liza M. Mapagu

lizam@hravatar.com.ph

+632 917.8999180