predictive hiring: find candidates who will succeed in your organization

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Find Candidates Who Will Succeed in your Organization Predictive Hiring

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The facts are clear: Most companies today need to do a better job selecting talent. Recent survey data collected by the Corporate Executive Board indicates that nearly a quarter of all new hires leave their companies within a year, and that hiring managers wish they never extended an offer to one of every five members of their team. And a recent Gallup survey found that 52 percent of American workers were “not engaged” with their work. Can you afford to miss an opportunity to learn how best-in-class organizations are using new technologies to scientifically assess talent before hiring, resulting in lower turnover, higher job performance and greater employee engagement? In this presentation, you will: Learn about new solutions that predict candidate success. Discover how best-in-class organizations are incorporating these new solutions into their hiring process. See the bottom-line results realized by these best-in-class practitioners.

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Page 1: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

Find Candidates Who Will Succeed in your Organization

Predictive Hiring

Page 2: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 3: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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.

Page 4: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

Talent Science, an Analytics Solution in Its Infancy

Talent Science

Real Time Customer Offer

Engine

Page 5: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

“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

Page 6: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 7: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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.

Page 8: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

Leaders Are Starting With Recruiting

Page 9: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 10: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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”

Page 11: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 12: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 13: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

How Do You Predict Candidate Success Today?

Typical recruitment practices gather insight from the candidate’s perspective

Page 14: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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.

Page 15: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

“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

Page 16: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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%).

Page 18: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 19: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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.

Page 20: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 21: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

A Way to Get More Predictive Data

Page 22: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

“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.

Page 23: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 24: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 25: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 26: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

Engineer Survey

Page 27: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

Sales Professional Survey

Page 28: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

Customer Service Representative Survey

Page 29: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

RN Survey

Page 30: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 31: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 32: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

SkillSurvey Published Research

11 studies conducted….34,054 new hires tracked….observed over 21 months

Page 33: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

*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

Page 34: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 35: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 36: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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)

Page 37: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 38: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

Validity Study – Large E&C Corp

Validity Study on New Hires (2007 – 2012)

Page 39: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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.

Page 40: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 41: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 42: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 43: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 44: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 45: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 46: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 47: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 48: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization

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

Page 49: Predictive Hiring: Find Candidates Who Will Succeed in Your Organization