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Hiring Isn’t a Crapshoot: How HR Can Become Heroes

December 16, 2015

SelectionIsntACrapShootThe use of assessments in corporate America has grown tremendously over the past decade. A 2014 report by business intelligence firm Aberdeen Group showed nearly 60 percent of employers use a formal hiring assessment.  Moreover, research and advisory firm Bersin by Deloitte estimates that the assessment industry has grown 30 to 40 percent in the past five years. Some estimate its revenue nearly $800 million.

The driving force for pre-hire assessments has been costly hiring mistakes. According to HR trade association the Society for Human Resource Management, the cost of a bad hire can be as much as five times that of a new hires’ annual salary. To reduce this cost, companies use assessments to get quantifiable data with the hope of changing the “gut instinct” hiring strategy and reducing the mistakes that go along with that strategy.Today, pre-hire assessments have evolved to do much more.

Avoiding a mistake suggests mitigating risks associated with hiring. CEOs want something much more effective for growing the business. Every person needs to be a “linchpin” (reference to Seth Godin’s popular book Linchpin). And new hires need to have the  “potential” to reach two or three levels above the position they start at. Otherwise, they may be blocking the organization from developing a workforce of linchpins.

While assessment vendors proliferate, using them in the hiring process is a delicate balancing act — one that forces talent managers to weigh their
potential benefits and drawbacks in equal measure.

Do Your Due Diligence

Talent managers need to ensure the assessment serves its purpose. First, an assessment should eliminate the guesswork – giving the hiring stakeholders clarity around a person’s talent and gaps for performing in the job.  Ensuring the hire is a reasonably good fit for the role, the organization and the candidate is paramount.

When not used correctly, even the best pre-hire assessment tools can backfire. One example is the recent legal battle involving retail
giant Target Corp. In that lawsuit, the U.S. Equal Employment Opportunity
Commission sided with Target job candidates who said the tests they were
given as part of a hiring process for upper-level management positions were not sufficiently job-related. They also argued the assessments disproportionately screened out applicants based on race or gender. Target
agreed to pay a $2.8 million settlement. [Note: Target was and is not a
client of The Nielson Group.]

These high-profile cases have some HR and legal advisers responding cautiously to hiring managers’ requests to use assessments for hiring. Unfortunately, advising internal clients to categorically not use pre-hire assessments is very bad advice. The good news is that such high-profile cases haven’t stopped proponents from saying the tests are scientifically able to predict job success. “Well-developed assessments have repeatedly been shown to reduce turnover and predict job success,” said Samuel McAbee, an organizational psychologist and assistant professor in the psychology department at the Illinois Institute of Technology.

The Nielson Group uses a patent process to identify the talent requirements of the job – letting the job talk. We use the resulting “job benchmark” to compare to applicants’ talent assessment resulting in a gap report and suggested interview questions for the hiring manager to use.

Companies must understand what it takes to implement a pre-hire assessment strategy that gets the results and protects the company legally. Many assessments come with flaws. For example, the Myers-Briggs Type
Indicator (MBTI) has been used for many years as a pre-hire assessment, yet it is not validated for use in hiring. The publisher, CPP (www.cpp.com) has acknowledged the instrument is not to be used for hiring. See Forbes
article, The Mysterious Popularity Of The Meaningless Myers-Briggs.

Not all assessments are validated for pre-employment. So the first step is to ensure the assessment is valid for hiring.

It’s also important to use tests that are developed per testing industry and EEOC guidelines.

Second, assess from different dimensions of talent. The Nielson Group uses a multi-modal approach with two, three and four sciences to identify and gauge a person’s talent. The two-science assessment may be the best choice based on the position. The four-science assessment will provide more insight and will be more suitable for management-level, sales and professional technical positions.

Finally, make sure you are partnering with a specialist that supports the interpretation. Hiring is both art and science – you need a specialist to
evaluate and protect the integrity of whatever measurement instrument you choose.

Clearly Define Roles

Assessments should only be used when the job they’re hiring for is clearly
defined. One of the biggest mistakes employers make is assessing a candidate before understanding the role they are hiring for. A ‘job analysis’ or ‘job benchmark’ starts with a proper description of the role’s key accountabilities (the actual work someone will be doing) and concludes with a scientifically constructed survey that is completed by stakeholders
(hiring managers,incumbents, key benefactors of the role). The result is a
valid and reliable job profile that will not only identify the talent requirements for the job but will also protect the company from legal
challenges.If the Job Could Talk

High-Low Performer Analysis Has Been Subordinated

In the past, the only way to create a job profile was to analyze top performers by piloting an assessment technology with current incumbents in the role and then performing a rigorous analysis on the results of the high and low performers to come up with a job profile. The skills and attributes identified in the study were then used to help build the “fit profile” and correlate to candidate results.

When Possible, Validate Job Profiles with Top Performers

A good job profile will take into account the skills and characteristics of
a company’s top employees in the role. According to Aberdeen Group, companies who correlate pre-hire assessments with ongoing employee
performance are 24 percent more likely to have employees who exceed
performance expectations. While this can’t be done for every job, where
there are multiple incumbents and you have solid high performers in the
role, assessing the incumbents and analyzing the match to the job profile will solidify the validity of the job profile. The watch-out here is that identifying top performers is easier said than done.

Most organizations don’t do a good job of identifying their top performers, in which case, taking this validation step may not be possible. Several years ago we took a client through the high-low performance analysis to validate the job benchmark and were struggling with a significant inconsistency. Three months later, we learned a person identified for our study as a high performer was fired for performance.Whether the client planted the bad apple on purpose to test our ability or didn’t realize what high performance was is unknown.

Today, our patented job profiling process eliminates dependency on a
subjective high-low performer process. Doing the high-low performer analysis is now subordinated to a post-benchmark validation step. Using this job benchmark process, we are able to steer employers toward a deeper understanding of top performers that is unique to their company. Often a hiring manager may be focusing on attributes that they think are critical, but when we dig deeper and test assumptions, those are not the attributes their top performers actually have. We like to say we “let the job talk”.TTI_Assessments_2015Pages

Don’t Stop There

If talent managers consistently return to the job profile throughout the
talent life-cycle, the new hire has a greater likelihood of predictive success. The exercise need not stop at the pre-hire stage. Once a person is hired, the patented process used by The Nielson Group not only produces a clear job profile for hiring, we use the job profile for new hire onboarding. A manager-new hire review of the key accountabilities and key talent requirements of the job within the first week is incredibly valuable for new hire success. This step not only helps match for job fit, a master job profile enables a faster ramp up for the new hire.

To maximize the value of a pre-hire assessment, use the assessment report as an ongoing developmental tool for the employee. Ordering the expanded coaching report based on the pre-hire assessment results in a minor additional expense. Both manager and new hire benefit.

Measuring Talent With 2, 3 or 4 Sciences

Applicant assessments are all but moot if they can’t be applied to the job’s talent requirements. Any applicant assessment must be evaluated
against a specific job family or specific position. Many jobs can be effectively profiled using two sciences. For management-level positions, success increasingly requires cognitive acumen. One’s ability to understand people, tasks and systems and ability to assert ones self is key to success in management roles. This is where three or four sciences become very important. We also find cognitive acumen to be an important measure for technical professionals in highly complex roles such as project-based engineers working in a cross-functional team environment.

Designing an Assessment for Every Job or Designing the Job Profile, Which is Easier?

A solid applicant assessment allows the evaluation to be tailored based on the job. The other way, tailoring the applicant assessment, is very cumbersome and will likely open the door to validity/reliability challenges. Rather, the job profile provides the ability to tailor the evaluation properly. That allows the applicant assessment to maintain validity and reliability. If we had to create an applicant assessment for every role, the
cost and sheer weight of the development work would stop the initiative
cold. We see this issue often in things like role-based in-basket exercises.

A Good Assessment Helps Avoid Unnecessary Spending

In terms of immediate return on investment, the immediate payoff of a solid  applicant assessment is that they help companies determine when it makes sense to move forward with a candidate – or not. This saves time and money for the employer. Many of our clients are flying candidates in for face-to-face interviews at a cost of thousands of dollars per job. An effective process that involves administering assessments after resume and phone screenings but before incurring travel expenses avoids unnecessary expenses and time.

A multi-modal assessment strategy is key to driving return on investment. Hiring managers reduce their interview-to-hire ratio by 30 to 40 percent, which ultimately means they are spending less time with poor-fit candidates, more time with good-fit candidates, and getting to a smaller sample of more-qualified individuals faster and more reliably.

An applicant assessment alone won’t deliver the return on investment that most companies are seeking in hiring. A total talent management system that profiles the job and assesses people is one resource that needs to be coupled with other processes to create a turnover reduction.

Companies also need to continue to focus on things like refining their pre-screening questions and training managers on interview techniques.

For more information, call Carl Nielson @ 972.346.2892.

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