Find Candidates Who Will Succeed in your Organization
Predictive Hiring
Agenda
Analytic applications and the rise of talent science Predictive hiring: the use of analytics in recruiting Not big data but the right data for better hiring decisions Action plan – what you can do now
Analytic applications
Hype Cycle for Analytic Applications, 2013 Published: 31 July 2013
Analytical capability is increasingly packaged as a solution to address specific business issues, rather than created with generic business intelligence tools.
Talent Science, an Analytics Solution in Its Infancy
Talent Science
Real Time Customer Offer
Engine
“Talent Science is not about the technology, but rather a mindset that sees data as a basis for decision making.” Gartner Analytics Hype Cycle, December 2013
Talent Science
Why the Interest in Talent Science?
“…this tale about baseball [Moneyball] may turn out to be the opening chapter of a much larger story about jobs. Predictive statistical analysis, harnessed to big data, appears poised to alter the way millions of people are hired and assessed.” Atlantic Monthly, December 2013
Why the Interest in Talent Science?
Leading companies like Google, Cisco, KPMG, GE and Facebook have already made the shift from gut feel to data-driven talent decision making.
Leaders Are Starting With Recruiting
Recruiting Has the Biggest Impact on Business Results
HR Function or Process Profit Growth
Profit Margin
Total Improvement
Recruiting 3.5x 2.0x 5.5 On-boarding and retention 2.5x 1.9x 4.4
Managing Talent 2.2x 2.1x 4.3
Employer branding 2.4x 1.8x 4.2
Performance management and rewards 2.1x 2.0x 4.1
Developing Leadership 2.1x 1.8x 3.9
Mastering HR Processes 1.8 1.8 3.6
Global people management/global expansion 1.8 1.7 3.5
Enhancing employee engagement 1.8 1.6 3.4
Providing shared services and outsourcing 1.6 1.7 3.3
Source: BCG/WFPMA, 2012
Hiring for a Competitive Advantage
McKinsey study shows the value of hiring top performers:
49% increase in profits in
management roles
40% increase in
productivity in operations roles
67% greater revenue
in sales positions
Source: McKinsey’s “War on Talent”
Your Gut Lies
For most managers, intuition is the primary guide to choosing from a pool of candidates.
Unfortunately, it’s also a hugely unreliable predictor of success.
“46% of new hires leave after 18 months”
Forbes, May 2013
Hiring managers wish they’d never extended an offer to one out of every five members on their team
Corporate Executive Board
Only 30% of American workers felt a strong connection to their company and worked for it with passion. 52% emerged as “not engaged,” and another 18% as “actively disengaged.”
Gallup Survey
Agenda
Analytic applications and the rise of talent science Predictive hiring: the use of analytics in recruiting Not big data but the right data for better hiring decisions Action plan – what you can do now
How Do You Predict Candidate Success Today?
Typical recruitment practices gather insight from the candidate’s perspective
Resumes and Interviews
Interviews may not provide a true representation because candidates: can be coached; can research interview
questions and appropriate answers online;
are ready to tell you what you want to hear.
“Over 50% of candidates lie on resumes…” Steven D Levitt – co-author “Freakonomics”
46% of employer, education, and/or credential reference checks conducted in 2008 revealed discrepancies between what the applicant provided and what the source reported…
ADP 2009 Hiring Index Report
“81% of people in a study lied about themselves during job interviews, with the more extroverted being more apt to tell untruths …”
Brent Weiss and Robert S. Feldman, University of Massachusetts
Finding the Authentic Candidate
Personality Assessments
One problem – results can be faked!
Review of 22 studies that examined actual faking: The estimated number of fakers
on self-assessments ranges from 15% to 49% (average = 30.5%).
Gaming the System
Skills Assessments
Limited correlation with job failure When new hires fail,
89% of the time it is for soft skills vs. job skills.*
Cheating
Estimates are that up to 1 in 10 candidates engage in it
*Forbes, 2012
Cognitive Assessments
Cognitive Measures can show Adverse Impact
Adverse impact occurs when protected classes of applicants (e.g., females, non-whites) show differences on selection tests that negatively affect hiring for diversity.
Data from a large number of studies show large average differences by race/ethnicity on cognitive ability tests.
Agenda
Analytic applications and the rise of talent science Predictive hiring: the use of analytics in recruiting Not big data but the right data for better hiring decisions Action plan – what you can do now
A Way to Get More Predictive Data
“Nothing in the science of prediction and selection beats observing actual performance in an equivalent role.” Peter Cappelli Director, Center for Human Resources, The Wharton School
Support for The Importance of Behavioral Assessments by Others
“When the criterion was academic achievement or job performance, other-ratings yielded predictive validities substantially greater than and incremental to self-ratings”
Connelly & Ones, 2010, p. 1092
In other words, other people’s ratings of an employee add more value toward predicting job success.
Here’s How You Do it…
• Focus on job-relevant competence at work – Specific soft skills needed for the job
• Gather feedback via observations from relevant others
– Managers, peers, direct reports, clients
• Strictly adhere to scientific principles and best practices discussed here today
• Leverage the benefits of technology to expedite the process and gather large amounts of data
What Are Competencies?
Refers to an individual’s knowledge, skills or abilities that are necessary to perform in a job successfully.
– Some examples :
dependability, accepting feedback, building relationships, clearly communicating
– Unique for each job
A Job-Specific Assessment Library is Essential
Engineering Engineering Managers Engineering Technician Mechanical Engineer
Healthcare Pharmacist Physician Assistants Physician Physical Therapist RN
Education Admissions Officer Faculty K-12 Educators
Sales Sales - Field Sales - Inside Sales Manager
346 surveys based on specific job competencies in SkillSurvey’s extensive library allows you to get predictive feedback on candidates for every position. Some examples include:
Customer Service Customer Service Manager Customer Service Professional Customer Service Rep - Online
IT Database Administrator Helpdesk Support Software Developer
Hourly Customer Service Hourly Skilled Trades Worker Warehouse Order Selector
Finance Accountant Accounts Payable Finance Manager Financial Advisor
Managerial Administrative Managers Customer Service Manager Operations Manager
Retail Loss/Prevention Specialist Retail Cashier Seasonal Worker
Hospitality Food Service Manager Hotel Clerk Housekeeper
Administrative Administrative Managers Administrative Professionals EPIC Administrative Professional Executive Assistant
Engineer Survey
Sales Professional Survey
Customer Service Representative Survey
RN Survey
All Valid Assessment Methodologies Have Psychometric Integrity
Reliability • Consistency
Validity
• Measures what it’s intended to measure
• Predictive
Compliance • No adverse
impact • No bias
Psychometric Integrity
Study Results Prove Behavioral Assessments From Others Have Psychometric Integrity
Areas of Focus Results
Reliability Internal Consistency Test-retest Consistency Inter-rater Consistency
Validity
A statistically significant predictor of turnover
A statistically significant predictor of supervisor evaluations
Compliance
No statistically significant difference based on Race/Ethnicity Gender Age
SkillSurvey Published Research
11 studies conducted….34,054 new hires tracked….observed over 21 months
*new hires across 3 companies and 3 industries (healthcare, retail, engineering)
7.32
2.24
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
Year 1[144/1968]
Year 2[116/5178]
Perc
ent
Year Using SkillSurvey [Termed for poor performance/Total number hired]
% Termed for Poor Performance Within 365 Days of Hire
69% Decline In First Year Turnover For Cause
Data from our combined 11 validity studies *new hires across 3 companies and 3 industries (healthcare, retail, engineering)
18.24
11.53
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
Year 1[359/1968]
Year 2[597/5178]
Perc
ent
Year Using SkillSurvey [Voluntarily termed/Total number hired]
% Termed for Poor Performance Within 365 Days of Hire
36% Decline In Voluntary First Year Turnover
Meta-Analysis ρ SDρ CI-Low CI-High % var 1. Bare-bones .10 .06 .02 .18 38
2. Corrected for unreliability .13 .08 .03 .24 38
3. Corrected for unreliability & indirect range restriction
.26 .14 .08 .44 41
Notes. Number of studies (K) = 7. Total sample size (N) = 2789. ρ = sample size mean weighted correlations. SDρ = standard deviation of ρ. CI-Low = lower 10% of correlation. +CI-High = upper 10% of correlation. % var = percentage of variance accounted for by all artifacts.
Statistically Significant Predictor of Supervisor Evaluations
HCAHPS (government survey* – collects patient satisfaction with care)
• Hospitals using SkillSurvey’s Pre-Hire 360® reference assessment solution in their recruitment process have statistically higher HCAHPS scores than other hospitals
• Hospitals using SkillSurvey’s Pre-Hire 360® for reference checking their job applicants, outperforming similar hospitals in nine out of ten areas of patient quality.
• Followed 5,754 new hires in healthcare companies (9 companies). Results: Those with low
(vs. high) scores are 200% more likely to be fired
for poor performance
Those with low (vs. high) scores are 24% more
likely to terminate within the first
year
*for a review see - (www.cms.gov or www.hcahpsonline.org or www.medicare.gov)
Predictive Power of Others’ Ratings
Higher ratings by others were accurate
predictors of:
• Future behavior
• Voluntary and involuntary turnover
• Improved satisfaction of line managers
• Increased customer and patient
satisfaction
• Enhanced employee engagement
Validity Study – Large E&C Corp
Validity Study on New Hires (2007 – 2012)
Measureable Business Outcomes
Lower Involuntary Termination
(fired for cause)
Lower Turnover Overall
Higher Performance Evaluations
Overall, results of this study show that SkillSurvey predicts 3 critical business
outcomes* of New Hires
*Note that these results are consistent with our published results based upon six previous client validity studies: Hedricks, Robie & Oswald (2013). Web-based multisource reference checking: An investigation of psychometric integrity and applied benefits. International Journal of Selection & Assessment, 21, 99-110.
Overall, Those Who Termed Were Significantly Less Likely to Have a SkillSurvey Pre-Hire 360®
NO
SkillSurvey Pre-Hire 360®
YES
SkillSurvey Pre-Hire 360®
% Less Likely to Terminate, if had SkillSurvey Pre-Hire 360®
Terminated, overall (n=5,146) 53.8% 35.9% 33.3% less likely
to terminate
Involuntary term--fired; (n=556) 74.8% 25.2% 66.3% less likely
to terminate
Voluntarily terminated (n=2,513)
75.2% 24.8% 67.9% less likely to terminate
* 2,900/10,256 (27.6%) had a Pre-Hire 360® Report 40
Engineers Who Termed Were Significantly Less Likely to Have a SkillSurvey Pre-Hire 360®
NO SkillSurvey Pre-Hire 360®
YES SkillSurvey Pre-Hire 360®
% Less Likely to Terminate, if had SkillSurvey Pre-Hire 360®
Terminated, overall (n=546) 69.2% 30.8% 55.8% less likely
to terminate
Involuntary term--fired; (n=52) 84.6% 15.4% 81.8% less likely
to terminate
Voluntarily terminated (n=384) 69.5% 30.5% 56.1% less likely
to terminate
41 Feb 20, 2014 Confidential, for internal Gartner use only without prior approval from SkillSurvey
1.5
0.0
9.1
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0
High (5/340)
Medium(0/91)
Low (3/30)
Percent Who Were Involuntarily Terminated
Engineers With Low Scores Were Much More Likely to Be Fired
Engineers With Low Scores Were 507% More Likely to be Involuntarily Terminated (Fired)
Feb 20, 2014 Confidential, for internal Gartner use only without prior approval from SkillSurvey
344 Work-Weeks Saved -- 95% Reduction in Time Spent Reference Checking 9,727 Candidates
43
364.8
20.4
0
50
100
150
200
250
300
350
400
Telephone SkillSurvey Pre-Hire 360®
Number of Work-Weeks to Ref Check 9,727 Candidates
95% reduction
Feb 20, 2014 Confidential, for internal Gartner use only without prior approval from SkillSurvey
Lowest-Scoring Behaviors of Engineers Who Were Involuntarily Terminated (Fired)
• Interpersonal Skills – Act as a business partner with peers and all levels of management to
achieve business objectives – Communicate information, ideas and data clearly, concisely and so others
will understand
• Delivers Results: – Handle multiple projects effectively in a fast-paced environment – Plan and prioritize work effectively – Handle multiple tasks effectively within demanding deadlines – Consistently meet or exceed goals
• Displays Professionalism: – Show the ability to be self-managed (e.g. can manage own time and
prioritize work to meet deadlines)
*the average score of these behaviors was “medium low” 44
Agenda
Analytic applications and the rise of talent science Predictive hiring: the use of analytics in recruiting Not big data but the right data for better hiring decisions Action plan – what you can do now
1. Recruiters Source Candidates
2. Screen Top 3-5 Candidates
3. SkillSurvey Pre-Hire 360®
4. Select top two, and use feedback to structure behavioral interviews
Determine How Behavioral Assessments From Others Will Fit Into Your Process
Getting Money From IT For a Test
Position this as a Predictive Talent Analytics pilot
Goal: Test a new cloud-based tool to predict which candidates have the highest probability of succeeding after they are hired. Expected Business Outcomes: • Lower first year turnover, both voluntary and for cause • Better supervisor ratings at 90, 180 and 360 days
The Risk of Failure is Low, SkillSurvey Has A Significant Track Record of Success
1.3 MM Candidates
300%+ GROWTH SINCE
2009
850+ CLIENTS
Healthcare
Hospitals Long-Term Care
Consumer Products
Financial Services Services & IT
Engineering & Construction
Energy & Utilities
Human Resources Manufacturing
Education
7 of the Top 14 U.S. Hospitals 45+
Magnet Hospitals
7 of the Top 20 Children’s Hospitals 50+
Teaching Hospitals
Technology
Pharma & Medical Devices
6.5 MM Reference Providers