The Power to Predict

Pre-hire assessment tools that mine data
 deliver true gold: the right candidate for the job.
 
By Ray Bixler
 
In today’s war for talent, finding qualified workers is becoming increasingly difficult. In fact, a recent study by Leadership IQ tracked 20,000 new hires and found that 46 percent failed within 18 months. The cost to replace an employee ranges from 50 to 150 percent of a position’s salary. Plus, these totals do not factor in the indirect costs of lost sales opportunities, lack of productivity, and lowered morale. It is clear: Make the wrong choice and your new employee will most likely impact the growth of your business, damage your team’s morale, and cause involuntarily turnover. On the other hand, make the right choice and your new employee has the potential to help your business grow, stay longer, and help the company succeed.
 
With so much riding on making the right hire, HR has
had a recent increased interest in pre-hire performance assessments. A recent issue of Forbes listed evolving assessment science as one of the nine hottest trends in HR technology, and The Atlantic featured people analytics on its December cover, and how it is “already transforming how employers hire, fire, and promote.”
 
Most HR professionals would agree that past performance
is the best predictor of future performance. According to the International Journal of Selection & Assessment, its peer- reviewed, published research shows that organizations that utilize pre-hire performance assessment data in their hiring process achieve clear benefits:

  • Anticipate future performance. The higher the performance assessment rating, the better the supervisor performance review once on the job.
  • Reduce turnover. Organizations have experience first- year turnover reductions as high as 69 percent.
  • Improve satisfaction. By selecting employees with a track record of exceptional customer service, overall customer satisfaction scores increased by an average of 16 percent year-over-year. 
But there are some underlying issues with the traditional ways of conducting pre-hire assessments. Perhaps the most widespread bias in hiring today occurs subconsciously.

In a recent survey of some 500 hiring managers by The Corporate Executive Board, 74 percent of respondents reported that their most recent hire had a personality “similar to mine.” Lauren Rivera, a sociologist at Northwestern, spent parts of the three years from 2006 to 2008 interviewing professionals from elite investment banks, consultancies, and law firms about how they recruited, interviewed, and evaluated candidates. She concluded that among the most important factors driving their hiring recommendations were shared leisure interests. 
 
What executives should be considering is data collected though a standardized assessment process. Reports that include skills the candidates have mastered, what traits and behaviors they positively display at work, and where they have developmental needs should be reviewed during the hiring process. 
Reference Checking Reinvented 
For decades, recruiters and hiring managers attempted
to gather behavioral insights on candidates by calling references. But this practice is becoming extinct for a variety of reasons.

  • References rarely provide any meaningful feedback. A few years ago, a SHRM study confirmed that because most organizations and individuals don’t want to be held liable for saying anything defamatory, they say nothing at all aside from verifying dates of employment.
  • The process is extremely inefficient. “You’re it” telephone tag can take weeks to complete.
  • The method is scientifically flawed. The data collection process is not standardized and produces inconsistent results, even when the references actually respond.

Organizations now have to the option to assess candidates’ past performance from references in a way that overcomes the legal, logistical, and scientific shortcomings of dealing with references by phone. Web-based pre-hire performance assessments can be initiated in minutes and completed in less than two days with no recruiter or hiring manager intervention. Research has shown that well-designed pre-hire assessments that gather and manage multi-rater feedback electronically deliver an 85 percent response rate while also mitigating legal risk inherent in phone-based referencing.
 
Assessments Assessed

Using self-assessments in another path to improve or validate hiring decisions. They are designed to measure cognitive ability, personality traits, and technical, job-related skills. These solutions have the potential to provide valuable insight into candidates during the hiring process, yet shortcomings exist. One of the biggest and most common challenges of self-assessments is they only offers the candidate’s perspective, which, in the end, may be flawed.
 
Personality tests also have their strengths, but there are several weaknesses:

  • These tests only measure future potential to engage in a given behavior or set of behaviors. They do not measure actual behavior, which is a better predictor of future behavior than measurement of potential.
  • Up to 30.8 percent of candidates fake a personality test according to the book, New Perspectives on Faking in Personality Assessment. Cheating is a growing concern with online tests.
  • Personality tests are often not job-related. Many personality tests do not contain questions that are specific to work, or more importantly, specific to a particular job. Most personality tests use the same survey to assess a candidate’s potential to succeed in many jobs. An extra step usually has to be conducted— one that takes time and consulting expenses to link the personality test results to specific job requirements.

There are also new Internet-based methods to evaluate job candidates, including mining social media records to create candidate persona profiles and new online gaming tools that test the candidate in a virtual environment. Research has yet to be conducted on their effectiveness and legal compliance.
 
These may prove to be better predictors of job success than current personality and skills tests, but they are still only measuring the candidate’s future potential to engage in a given behavior.
 
Best practice research has shown that companies that adopt the use of both self-assessments and third-party performance assessments have the best chance of more accurately predicting which candidates will succeed in their organization. Research from Psychological Bulletin finds “when the criterion was academic achievement or job performance, other-ratings yielded predictive validities substantially greater than and incremental to self-ratings.”
 
Pre-hire Performance Tools
A scientifically validated assessment tool, administered
to multiple raters who are offered the opportunity to confidentially rate a candidate’s skills, behaviors, and attitudes, can provide reliable insight into those hard to measure soft-skills. Pre-hire performance assessments completed by a candidate’s managers, colleagues, and direct reports can offer candid, honest insight from others who have managed, worked with, or reported to the candidate.
Assessment questions that are based on specific behaviors necessary for a specific job or role that are rated by a mix of the candidate’s managers, co-workers, and direct reports, yield tremendous insight. For example:

  • Teamwork/collaboration. Does the person maintain constructive and cooperative working relationships with others?
  • Self-control. Does the person behave appropriately, even in difficult situations?
  • Integrity. Does the person treat colleagues with fairness and respect? 
A recent study by SkillSurvey, published in The International Journal of Selection and Assessment, examined the correlation between pre-hire performance assessment scores and actual performance on the new job.

One finding indicated a “significant, positive relationship between the overall ratings by references at pre-hire and the overall ratings by supervisors on the same items post- hire.” Candidates with high reference assessments did, indeed, earn higher supervisor ratings once hired.
 
Another finding showed that multi-rater assessments can be used to dramatically decrease voluntary and involuntary turnover by helping to ensure a good fit between the candidate and the position/organization.
 
Another study that tracked 10,217 employees at 11 companies across four industries found that the number of employees terminated for cause decreased by 69 percent between year one and year two after they incorporated pre- hire reference assessments into the hiring process.
 
Beyond using pre-hire assessments on select individual candidates, organizations can realize broad benefits by aggregating data across the recruitment, selection, and on- going performance management process. Once this talent data is available in a central repository, advanced talent analytics tools can help organizations:

  • Spot recruiting and hiring trends;
  • Provide quality-of-hire metrics;
  • Identify hidden talent pools by tying assessment results to candidate sources;
  • Understand how assessment results correlate to ongoing business performance (by combining pre-hire and workforce performance data); and
  • Support all key talent and workforce planning decisions with objective data.

 
Organizations should consider conducting multi-rater, online performance assessments of job candidates during the hiring process for a good reason: It’s been proven to work. The right pre-hire performance assessment tools can help you better predict the candidates that will succeed in your organization.
 
 
Ray Bixler is president and CEO of SkillSurvey, Inc.
 

Posted May 15, 2014 in Talent Acquisition

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