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Do You Have A Talent-matician?

Kevin Wheeler wrote a great article on ERE asking about selection science and measurement. His is suggesting staffing professionals adopt better methods for candidate evaluation or assessment and make more effective use of HR analytics to link candidate evaluation data to business outcomes.

Here are a few questions around measurement discipline, the answers to which may be revealing.

  1. Ask your CFO – “How much has been invested in the data capture and analysis system you use to report EBITA?”
  2. Ask your EVP of Sales – “How much has been invested in the data capture and analysis system you use to report daily sales performance?”
  3. Ask your EVP of Manufacturing; “How much has been invested in the data capture and analysis system you use to calculate process yield?”
  4. Then ask your EVP of HR (self) – “How much has been invested in the data capture and analysis system you use to create a differentiated workforce?”

In every case, for Fortune 1000 companies, the answer to the first three will be hundreds of thousands and in some cases millions of dollars. Unfortunately, the answer to #4 typically pales by comparison. Why?

I have never sat with an executive who stated their organization was just like their competition. In fact, great pride is expressed in how their people, their products, their services are different than others. The work that true talent-maticians (I just invented that) do is using HR analytics in quantifying, to the degree possible, the human variables that contribute to those differences. That requires rigor, discipline, experiment design, and time.

Michael Porter of Harvard suggests competitive advantage comes from business processes which are difficult to copy. Authors Becker, Beatty, Huselid, in The Differentiated Workforce, present a similar framework for evaluating HR practices that put forth a ‘Me Too’ or a Differentiated outcome. An example of this is the use of off-the-shelf assessments without local validation. By default, the user states, we are willing to use a measurement tool developed for and by someone else and calibrated by another organization to provide data on our talent decisions. Sounds like a Me Too tactic. One path to a differentiated workforce is at least conducting a validation analysis on how the measurement tool (pre-employment test) is adding value to your decision process. The underlying premise is that a good assessment provides a degree of better data and therefore, better decisions. With in-house validation, you document the relationship between assessment results and business outcomes.

Without an in-house validation, the test is not calibrated to performance in your organization and outcomes are anecdotal. The practice that gives assessment a poor reputation is poor implementation.

In an earlier work by the three authors above The Workforce Scorecard, they document those organization hiring a higher percentage of employees with validated evaluation methods achieve higher levels of financial performance. Aon and SHRM conducted a significant piece of research in the mid 1990s that included a glimpse at staffing process outcome (out of print but avaiable from the research dept). Survey participants stated the most lacking qualities in new hires were defined as work style, and basic reasoning. Those traits or attributes can be objectively evaluated with a variety of pre-employment tests. Companies stating they were most satisfied with staffing process outcomes were using the most comprehensive candidate evaluation methods.

  • Companies hire engineers to solve complex measurement problems.
  • Companies hire actuaries to solve complex measurement problems.
  • Companies hire statisticians to solve complex measurement problems.
  • Companies that know their competitive advantage comes from their people hire an industrial organizational psychologist to solve complex measurement problems in staffing. These folks are the talent-maticians.

Even if you do not measure variables that provide insight to performance potential, performance variation exists. In fact, you hired your best performer and your worst performer with the same evaluation process. In manufacturing terms that is known as performance variation and is marked by upper and lower limits. You see, staffing is a business process with a yield to measure and manage. To do that requires data capture and analysis.

However, enter another piece of data. It has been known for some time that a structured interview extracts better candidate evaluation data than an unstructured interview. In a survey on Use of Objective Candidate Evaluation Methods I conducted with SHRM (write for a copy), very fascinating evidence of interview practices emerged. Only 55% of respondents stated they use behavioral interviews with questions written in advance (an intentional discovery process). When asked if the interviews were supported with behaviorally anchored rating scales (a method to discern an effective response from an ineffective response), only 24% of respondents stated this practice was used. Staffing practitioners are largely ignoring known practices which at the simplest level produce better outcomes. Implementing assessments requires the same rigor the CFO expects from data capture and analysis in financial matters.

In some jobs, learning more about what factors contribute to retention can add significant value. However, most companies do not even measure and track the cost of early turnover. In a survey on Staffing Waste I conducted with SHRM (write for a summary), only 8% of 636 respondents stated they track and report the costs of what I call False Starts – new hire turnover that occurs in less than 120 days. The analogy would be a head of manufacturing that does not measure defects and scrap rates. Manufacturing is held accountable for managing the yield of that process. In my paper Staffing Waste: Identify it, Measure it, Reduce it, a range of examples for applying measurement-based process improvement to staffing is offered.

Yes, Kevin, the future of staffing practices will include more measurement, more science, more accountability for understanding and managing process yield. There are exceptional methods to evaluate candidate-job fit. It can be measured, it can be analyzed and it can contribute to the bottom line. However, the practice leaders are already out there, doing the work right now.

For one example kook at the 2010 ERE Award winner KeyBank. They reduced staffing waste in one position by over $1.7 million in one year by bringing science and measurement rigor into their staffing process. They were able to add objective candidate evaluation in a manner that measured candidate-job fit. The retention and gains in a range of job performance metrics are impressive.