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“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.
• 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
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.
