Using Analytics to Improve the Hiring Process

Presented by:

Matt Betts, Ph.D.

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Learning Objectives

• High level overview of typical recruitment and selection process

Current State of HR and Selection

• Understand how to build competency models and different selection tools

Competencies and Selection Tools Development

• Describe different approaches to assessing candidates

Introducing Multiple Assessment Types

• Key takeaways to implement into hiring process

Practical recommendations and best practices for hiring

Work Group Speakers

Scott Mondore, PhDManaging Partner

Hannah Spell, PhDDirector of Research and Analytics

Shane Douthitt, PhDManaging Partner

Matt Betts, PhDConsultant

Presenter

Matt Betts, Ph.D.Consultantmbetts@SMDhr.comsmdhr.com/leadershipteam.html

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SMD OVERVIEW: Driving Business Results Through Surveys & Assessments

OU

R T

EC

HN

OLO

GY Analytics Based:

Links People to Critical Business Outcomes through:

• Employee Surveys

• 360 Feedback

• On-boarding & Exit Surveys

• Selection Assessment

• Competency Modeling

OU

R P

RO

CESS 4 Steps:

• Prioritization of Key Business Drivers

• Selection of Improvement Areas

• Customized Action Items

• Business-Focused Action Plans

YO

UR

BO

TTO

M-L

INE Common Outcomes:

• Operations Metrics

• Financial Metrics

• Customer Satisfaction

• Patient Satisfaction

• Turnover / Retention

• Whatever is most critical to your bottom-line

SMD Link – Rethink Assessment

With a foundation in

science, all of our

tools and solutions

work together

through SMD Link

and connect to your

key business

outcomes –

whatever they may

be.

CURRENT STATE OF HR AND SELECTIONCOMPETENCIES – DEFINING THE “HOW”APPROACH TO ASSESSMENTCASE STUDYRECOMMENDATIONS

Developing Advanced Talent Analytics: Why It Matters to CFOs

• “More mature companies along the talent analytics spectrum employ analytics to gather insights for effective talent decision-making. At these companies, HR has strong credibility in providing data analysis and recommendations to decisions.”

• “On the other hand, business leaders at companies at the lowest maturity level typically make talent decisions based on their own experience or judgment, with little data-driven input.”

• “Sophisticated analytics teams can evaluate the effectiveness of different recruiting sources, assess the quality of hires, and use pre-hire assessments to select better candidates.”

Interview with Karen O’Leonard, Vice President, Benchmarking & Analytics Research at Bersin by DeloitteWall Street Journal, Monday January 13, 2014

Why HR Analytics?

• HR Analytics connect employee data to business outcomes

• HR Analytics prioritize where and how much to invest

• HR Analytics calculate impact/ROI from people investments

People Investments Analytics Business Outcomes

Why wouldn’t organizations invest in HR Analytics???

We Have Lots of Data…

Although many questions can be answered using one data source, more strategic questions often require data from two or more sources

Linking People Assessments to Business Outcomes

Critical Business Outcome (e.g. Sales)

Leadership Competencies

Personality Factors

Experience

The linkage analysis will demonstrate the level of impact that each competency, experience, skill, etc. has on individual performance and business outcomes.

This allows leaders to focus on the most important competencies, skills, experiences and determine the appropriate level to invest in developing each area.

Identifying Critical Drivers of Business Outcomes

Employee Attitudes

Technical Skills/Abilities

Salesforce Competencies Hire, train, &

reward based on KNOWN drivers of

results!

Typical Approach to Selection

• Recruiter: Resume screen and phone interview

• Background check

• Candidates interviewed by multiple leaders (unstructured interviews)

• Review the interviewers feedback

• Decisions based on liking the candidate

The Opportunity

• To discover the competencies, skills, experiences, etc. that drive business outcomes

• To build a business case based on ROI

• To be viewed as a strategic partner that drives business results

• To make people investments based on drivers of results

• For HR to take the lead in making HR processes business-focused

Comprehensive Selection Process

Resume/Phone Screen

Personality Assessment

Behaviorally-based Structured Interview

Role Play/Simulation

15

Incorporating these tools can make your hiring process 5 times more effective.

CURRENT STATE OF HR AND SELECTIONCOMPETENCIES – DEFINING THE “HOW”APPROACH TO ASSESSMENTCASE STUDYRECOMMENDATIONS

Competencies vs. Standards vs. Technical Skills

Competencies: The knowledge, skills, & behaviors required to successfully perform a role

Standards of Performance: A set of behavioral expectations for all

employees (e.g., Customer Service)

Customer Service

Competencies

Accounting Competencies

Leadership Competencies: A set of behavioral expectations for leaders

(e.g., People Developer)

Managing Accounting Competencies

Many Organizations Create Two Distinct Competency Models

Often times specific knowledge and skills

are identified for specific jobs or job

families

Don’t Over-Build Competencies

• Often times two core competency models will suffice

– Overall Model for Staff – often called Standards of Performance or Behavioral Standards

– Leadership Model

• Build specific job or job family competency models for:

– Positions with many employees in same role or similar role (e.g., customer service rep.)

– Critical positions (e.g., nurses, sales)

– Roles with significant turnover

Behavioral Standards - Example

AccountabilityLiving the

ValuesProfessionalism

Communication Teamwork Customer Focus

Problem Solving Innovation

Customer Focus - Example

Defined, observable behavior:

– Uses active listening skills when engaging customers

– Gains understanding of the customer’s expectations and needs

– Fulfills customer/stakeholder requests in a timely manner

– Meets or exceeds customer’s expectations

– Confirms satisfaction and invites further interaction

– Solves the customer’s problems

Competencies are the Foundation

• Utilize in selecting new employees

• Reinforce through communications

• Tie to reward and recognition opportunities

• Evaluate competencies as the “How” or behavioral component of performance management

• Tie pay to performance through the “How” assessment in performance management

• Train to the competencies

Defining Competencies

• Competency Library

• Behavioral Standards Team

• Gather input from Subject Matter Experts, staff, leaders, high performers

– Interviews

– Focus groups

– Competency surveys

CURRENT STATE OF HR AND SELECTIONCOMPETENCIES – DEFINING THE “HOW”APPROACH TO ASSESSMENTCASE STUDYRECOMMENDATIONS

Predictors of Performance• Strengths

• Challenges

• Potential Derailing Leadership Behaviors

Personality Characteristics

• Top Drivers

• Values

• Environment Preferences

Motivational Characteristics

• Types of Experiences

• Depth of ExperiencesPast Experiences

• Problem Solving

• Aptitude/KnowledgeCognitive Ability

• Functional (e.g., Solution Selling)

• General (e.g., Teamwork)

• Technical (e.g., CRM)Competencies

Behavioral-Based Interviews

• Proven track record for predicting future performance—validity is high

• Legally defensible

• Reliability is high

– Consistency among different interviewers and over time

• Uses interview questions that elicit descriptions of the candidate’s behavior in specific situations:

– Tell me about a time when you…

– Tell me how you would handle the following situation

• These questions elicit more descriptions of specific behavior in situations like those on the job

Personality Assessment

• Highly valid assessment of personality ‘fit’ for key roles in your organization

• Cost-effective

• Can be customized to the any role by the organization’s leadership

• Focuses on numerous aspects, including:

– Adjustment- Stress tolerance; optimism/pessimism

– Ambition- Expectations for self/others; leader-like tendencies

– Prudence- Attention to detail and following rules

– Inquisitive- Visionary vs. implementation-focused approach

Hogan Basis Report

Assessment Center

• Candidates participate in Role Plays

• Role Plays based on competencies relevant to performance on the job

• One of the most valid approaches to selection

• Example:

– Nurse candidate asked to interact with a patient

– Raters observe nurse candidate react to different patient situations

• Can also be used to make promotion decisions

Simulation Overview

“Staff Responsiveness to Patient Diet Concern”

• Today you are a Nurse at XYZ Hospital. You have just started your afternoon shift, and have been informed by one of your patients, Mr. Brad Pitt, that his diet is incorrect and has been incorrect through two meals. You are concerned with correcting the problem and reassuring the patient.

Your goals:

• To address the problem with the kitchen.

• To recover the patient.

• Be prepared to discuss your long-term plan for correcting the issue with your Nurse Leader.

COMPETENCY & BEHAVIOR Y/N

CONFLICT MANAGEMENT:

Did the candidate take corrective action immediately (i.e., remove the incorrect food)?

Was the candidate able to seamlessly handle the heated situation without creating more of a disturbance?

PROBLEM SOLVING:

Did the candidate ask appropriate questions to identify the cause of the error?

Did the candidate work with the kitchen to develop a solution that was acceptable for both parties?

SERVICE RECOVERY:

Did the candidate inform the patient of the steps taken to address the issue?

Did the candidate indicate that he/she would follow-up with the patient at the next meal?

Did the candidate manage up the kitchen (i.e., reinforce the kitchen’s commitment to excellence)?

HOURLY ROUNDING:

Did the candidate’s follow-up plan include hourly rounding?

RELATIONSHIP BUILDING/FLEXIBILITY:

Did the candidate demonstrate compassion, patience, and respect in communications?

Observation Checklist

Sample Structured Selection Process

Initial Screen

(Hurdle 1)

Personality Inventory (Hurdle 2)

Structured Interview (Hurdle 3)

Assessment Center with Structured Role Play

(Final Hurdle)

• Delivered to Hiring Manager/HR

• 30 minute screen to discuss fit, the roll, job expectations & provide a realistic job preview

• Completed online by job candidate

• Provides assessment of several personality dimensions; results indicate candidate level of fit with the job

• 1-hour interview conducted by Hiring Manager

• Focuses on specific behaviors and competencies required for the role

• 1-hour role play of 4 different sales meetings

• Rating guide provided to assess performance

Approach Validity Coefficient

Potential Number of Poor Hires

Unstructured Interviews .10 32/70

Behavior-based Structured Interviews

.40 21/70

Multiple Hurdle Approach (e.g., Personality testing followed by a Structured Interview)

.55 16/70

Assessment Center .70 11/70

Assessment Center – psychologists assessing candidates

.85 5/70

Selection Options – Importance of Multi-Assessment

*Validity coefficients are estimated based on client and meta-analysis research.

Expected ROI

• $50,000 turnover cost per nurse

• Assumptions: not including any safety risks of poor nurse performance

Approach Potential Number of Poor Hires

Expected Savings

Unstructured Interviews 32/70

Behavior-based Structured Interviews

21/70 $550K

BBI and Personality Assessment 16/70 $800K

Assessment Center 11/70 $1.05 million

Assessment Center – psychologists assessing candidates

5/70 $1.35 million

Selection Approaches

Approach Pro’s Con’s

Behavior-based Structured Interviews

•Cost effective•Speed to develop and implement

•Requires interviewing all minimum requirement applicants

Multiple Hurdle Approach (e.g., Personality testing followed by a Structured Interview)

•Incremental effectiveness over interview only approach •Hurdle reduces number of interviews required

•Face validity of testing hurdle

Assessment Center •Most effective•Senior leader participation and buy-in•Strong development component for participants

•Most expensive option•Time required to develop and implement

Obstacles on the Front-line

• Pushback against adding structure in the hiring process is not new

• Key opportunities to overcome pushback:

– Training on conducting structured interviews

– Easy, practical tools that help hiring managers:

• Build out customized interviews based on relevant competencies

• Manage multiple candidates

• Simple reporting to make valid, data-based hiring decisions

CURRENT STATE OF HR AND SELECTION

COMPETENCIES – DEFINING THE “HOW”

APPROACH TO ASSESSMENT

CASE STUDY

RECOMMENDATIONS

CASE STUDY: Small Pharmaceutical Company

OVERVIEW

• THE PROBLEM: The company needed to understand which of the knowledge, attitudes, behaviors, and personality traits of their sales force drive new business revenue.

• THE GOAL: Determine what competencies, motives, and skills drive business outcomes. Use this to make data-driven decisions on future hiring and development.

Prioritizing Based on Need and Impact on New Business Revenue

Prioritizing at the Behavior-Level

New BusinessRevenue Priority*

Competency Behavior

Planning

Identifies the partner's known (or potential) strategic business initiatives.

Pursues and qualifies potential opportunities identified in the customer / partner account plan.

Sales ProcessUses CRM (similar technology) to capture and communicate opportunity status within the sales process.

ToolsUses XXX technology (SFDC etc.) effectively to facilitate every phase of the sales process.

Value CreationIdentifies the value of solving a business issue in financial terms that are most important to the customer / partner.

1

2

3

4

*Priorities determined based on the magnitude of the relationship with New Business Revenue.

Sales Reps that score at an Advanced or Expert Level on these 5 behaviors generate 47% more New Business Revenue than their peers at XXX.

Predictors of New Business Revenue

New Business Revenue

.35

.09

.21

.18

.11

Inquisitive

Prudence

Adjustment

Value Creation

Planning

Consultative Sales Conver.

Sales Process.18

Legend

Personality

Motivation

Competency

Aptitude/Knowledge

Commerce

Problem Identification

.29

.32

.19

.15

5

2

2

1

4

3

6

7

8

*Higher path values indicate a stronger impact based on a 0.0 to 1.0 scale.Circled numbers indicate the development priority based on the magnitude of the relationship with script writing & market share.

Aligning Hiring & Development through Analytics

Hiring Profile

Planning

Sales Process

Value Creation

Prudence

Adjustment

Inquisitive

Consultative Sales Conver.

Problem Identification

Commerce

Behavior-Based Interview

Personality Assessment

Knowledge Assessment

Motivation/Values Assessment

Development Profile

Planning

Sales Process Sales Tools

Value Creation

Consultative Sales Conversation

Problem Identification

Planning Workshop

Process & Tool Launch

On-Demand Courses

Solution Selling Workshop

Solution Selling Workshop

Sales Reps that score at the 75%tile or better on these behaviors/traits generate 33% more New Business Revenue than their peers.

Summary

Step 1 Goal

• Gain a complete picture of what high performance looks like in the given job type and within the context of your organization

Step 2 Goal

• Links competencies to organizational outcomes, prioritizing competencies for development and selection

Step 3 Goal

• Development: Create individual development plans for your team, based on the critical competencies

Step 4 Goal

• Selection: Develop a selection system that hires candidates that have the competencies to succeed on the job and contribute to organizational success

CURRENT STATE OF HR AND SELECTION

COMPETENCIES – DEFINING THE “HOW”

APPROACH TO ASSESSMENT

CASE STUDY

RECOMMENDATIONS

Ask Good Business Questions• Recruiting:

– Which sources produce best future employees?

– Which labor pools should I focus more time?

– Did I make a true business case for change/investment?

• Hiring:

– Which assessed competencies yield the best hires?

– Which assessments yield the best hires?

– Which assessments keep employees here longer?

– Did I make a true business case to convince front-line managers to follow the structured hiring approach?

Recommendation

• At a minimum, use structured interviews in your process – easiest to implement with the biggest ROI

• Managers may resist – convince them with a business case focused on ROI and connection to what matters to them – results!

• Make the process simple and easy to use

• Once you have a manager “on-board”, they will be advocates forever

• Calibrate your pull-through rates – don’t make the hurdles so difficult that you lose all your candidates

Practical Tips

• The selection process isn’t complete when all of the positions have been filled

• Revalidate the knowledge, skills, abilities, and competencies used in the selection process as well as the components of the selection process itself

• Determine how well the assessments are predicting performance and/or retention

Practical Tips• Determine Critical Outcomes: What are the key outcomes/metrics for which the

employees who went through the hiring process are now held accountable? • Create a Cross-functional data team: Who owns the specific outcomes/metrics for

these employees? • Assess Outcome Measures: Are the important business data/metrics collected at the

appropriate level—in this case, at the individual level? • Analyze the Data: Are the pre-employment tests and assessment center exercises

predicting job performance (i.e., did higher scores during the hiring process lead to better job performance now?) and/or turnover?

• Build the Program and Execute: Based on the analysis, which hiring process components are more/less important than others? Is there a specific component that is underperforming? Should we enhance, eliminate, or change that component?

• Measure and Adjust: How do we ensure that the quality of our future hires remains high?

Summary

1. Utilize current employee data to determine which assessments, and which factors of those assessments, are the most strongly related to actual performance and turnover.

2. Assess candidates on those factors found to be most critical in successful performance and base hiring decisions on candidate strength in those areas.

3. Apply predictive analytics to validate and adjust the selection program once it has been used to make hiring decisions.

Questions and Comments

• Please use the chat function to submit a question

• Recorded meeting and PPT deck will be posted to the HR Analytics Work Group website

• On HR Analytics Work Group LinkedIn page you can ask the group and speakers additional questions after the meeting

Next Meeting

Making it Practical for Every Leader (Case Study)

Presented by Hannah Spell, PhD

August 9th at 1:00pm EST

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Let’s get in touch:

Matt Betts, Ph.D.Consultant

mbetts@smdhr.com678.386.7887

smdhr.com

Sources

• Interview with Karen O’Leonard, Vice President, Benchmarking & Analytics Research at Bersin by Deloitte Wall Street Journal, Monday January 13, 2014