A nearly universal HR tradition is the use of off-the-shelf talent assessments to screen job candidates. Underpinning the approach is the myth that assessment value lies in weeding out the ‘bad fits’. Instead of optimizing and driving toward candidate, company culture and role requirement alignment, pre-fabricated hiring processes are blunt implements: ambiguous in their effectiveness while delivering questionable returns.

ANALYTICS IN TALENT ASSESSMENT

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More challenging is the set-it-and-forget-it nature of these solutions. Plug-and-play assessments based on inputs at one point in time underachieve. The dy-namism of culture, corporate needs, real-time busi-ness challenges and evolving job requirements mat-ter. The interplay of these variables is what makes a company unique - and the resulting shifts they prompt in hiring strategy need to be incorporated in the what and who of candidate targets as a company evolves.

Hiring processes that under appreciate these chang-es affect candidate quality, productivity and tenure. This bears repeating -

Across the hall from the Vice President of Human Resources sits a company CFO. Ask her if she would organize the company’s capital investments, treasury strategy and assess merger or ac-quisition opportunities with financial data points from 6, 12 or 18 months ago OR without careful consideration of the impact on forthcoming company initiatives? Most certainly not.

HR departments, alternatively, often can’t conceive of another way.

According to Deloitte’s human capital research team, the US mar-ket for pre-hire talents assessments may exceed $2 billion1. Sala-ries and health benefits are proportionally the number one and two expense lines on corporate P&Ls. Even Zappos.com founder Tony Hsieh has gone on record to say that past bad hires have cost his company “...well over $100 million”2.

BUILDING AND DEPLOYING

A TALENT ASSESSMENT TOOL

BIRTHED OUT OF POINT-IN-

TIME DATA FOR THE ONGOING

FILLING OF HEADCOUNT IS

MISGUIDED AND COSTLY.

“IT WOULD BE A FIDUCIARY

IRRESPONSIBILITY FOR ME TO MAKE

SUBSTANTIVE, DIRECTIONALLY

SHIFTING DECISIONS ABOUT THE

COMPANY’S FUTURE WITH STALE

DATA”, SHE’D SAY.

1http://www.workforce.com/2011/05/27/more-companies-go-with-online-tests-to-fill-in-the-blanks/2https://www.youtube.com/watch?v=XHcyKU-wZoA&feature=youtu.be

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Regular missteps in this process cannot be understated and have devastating financial outcomes. Consider the results of a CAP study on talent turnover.

If the C-suite demands real time information for ongoing decision calibration, why doesn’t HR? At Furstperson this tendency is called the rear-view mirror problem. And the consequence of this is that hiring results and associated performance are a trailing indi-cator; lacking synchronicity with the state of the business.

FROM A SCOPE AND SCALE STANDPOINT,

HEADCOUNT DECISIONS WIELD DIS-PROPORTIONATE IMPACT ON CUL-TURE AND BOTTOM LINE.

3https://www.zanebenefits.com/blog/bid/312123/employee-retention-the-real-cost-of-losing-an-employee4https://cnmsocal.org/featured/true-cost-of-employee-turnover/

Financial impact notwithstanding, severe but other oft ignored costs of attrition include3:

• COST OF HIRING a new employee including the advertising, interviewing, screening, and hiring.

• COST OF ON-BOARDING a new person including training

and management time.

• LOST PRODUCTIVITY... it may take a new employee a year

or more to reach full productivity.

• LOST ENGAGEMENT - other employees who see high turn-

over tend to disengage.

• CUSTOMER SERVICE AND ERRORS - for example new

employees take longer and are often less adept at solving problems.

• CULTURAL IMPACT - whenever someone leaves others

take time to ask “why?”Costs associated with employee replacement are estimated to be 100% to 300% of the base salary of replaced hire.4 Even for wage roles under $30,000 annualized, replacement costs eclipse 20%.

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Fortunately in Human Resource science a precedent of forward thinking around traditional approaches has been made. Incremental shifts in the last decade have brought performance analytics, cloud-based tools and even machine learning and predictive fit tools into HR’s tool kit. But legacy approaches persist and decades-old use of classic, structured interviews or static multiple choice tests, for example, remain primary. Most modern initiatives still do not address the issues underpinning the rear-view misguided-ness. These ‘upgrades’ are often akin to giving the CFO more graphs, charts and research on the same out-dated data.

With the close of 2016, the US saw its 75th consecutive month of job gains with 2 million jobs created within the year alone.5 The voluminous progress is reflective of a buoying economy and is a boon to corporations. But as these heads onboard into new roles, the stakes and potential effect on culture and costs grow.

5http://money.cnn.com/2017/01/06/news/economy/december-jobs-report-2016/

KNOWING MORE ABOUT STALE

INFORMATION IS ONLY A MARGINAL

IMPROVEMENT OVER KNOWING

LESS. IN FACT, IT CAN BE PERHAPS

MORE DANGEROUS BECAUSE OF

FALSE SENSE OF CONFIDENCE IT

MANUFACTURES.

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Recognition of the inordinate power of deploying people has gone mainstream. Global consultancy McKinsey & Company goes so far as to call into question financial metrics that have been unquestionably connected to corporate value measurement.6,

If McKinsey is correct and profit-per-employee and the wealth creating potential of human capital are as substantial as suggested, then the bulk of the effort hinges on getting the “right” raw material (i.e. - people) in the doors.

“ ...companies focus far too much on measuring returns on invested capital (ROIC) rather than on measuring the contributions made by their talented people. The vast majority of companies still gauge their performance using systems that measure internal financial results—systems based on metrics that don’t take sufficient notice of the real engines of wealth creation today: the knowledge, relationships, reputations, and other intangibles created by talented people and represented by investments in such activities as R&D, marketing, and training.

Increasingly, companies create wealth by converting these “raw” intangibles into the institutional skills, patents, brands, software, customer bases, intellectual capital, and networks that raise profit per employee and ROIC. These intangibles are true capital, in the sense of delivering cash returns, even though the sources of those returns are intangible. Indeed, the most valuable capital that companies possess today is precisely intangible rather than financial. Companies should redesign their financial-performance metrics for this new age. “

6http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-new-metrics-of-corporate-performance-profit-per-employee

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Success, then, depends on two critical, parallel experiences.

The first is, continuous evaluation of the results of established pre-hire and talent assessments. Aware or not, HR leaders have too limited expectations in their hiring assessment tools’ ability to deliver results. In effect, assessments are implemented and functionally considered ‘satisfactory’ if roles are filled in a reasonable time frame.

Success isn’t filling reqs, although in competitive hiring markets managers are lulled into this way of thinking. Real success is time-to-productivity, longevity, and workplace enhancing contributions that vetted individuals make.

COMPANIES NEED TO

RAISE THE BAR.

Second, and supplemental to the assessment itself, are data flows sharing key employment and hiring performance metrics at near-real-time intervals. With readily available ETL tools, there is no excuse for companies not to expect, and engage with, talent assessment companies who use feedback loops to synthesize, draw conclusions and re-tool assessments in quasi-real time to drive smarter, better aligned and cost-effective hiring decisions. The relation-ship between new hire profiles, role delivery and resulting productivity needs to be established. Attention here will unearth conspicuous trends that can be incorporated into forecasting. These forecasts inform subsequent hiring and the iterative process becomes a notable advantage.

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While robust solutions and premium feature sets are desireable, having a rich custom built predictive cultural and behavior assessment test or mobile app access, is only helpful to the degree that it satisfies the persistent, nuanced needs of your company. And that effectiveness is validated ongoing. If ‘cultural fit’ is a critical hiring factor, for example, does the cultural contribution of the hires your tool delivers mesh with management’s expecta-tions? Is the cultural contribution even being quantified or captured for reporting? If not, tweak the assessments, measure and repeat.

At this point, ahead-of-the-curve HR leaders may dismiss the urgency of the situation. “We conduct exit interviews and benchmark employee retention rates”, they say. But data capturing is not the same as data analysis and incorporation. The degree that learnings flow back upstream to inform the initial assessment process is a determiner for improved hiring success.

CONVERSATIONS ON FEATURES AND FUNCTIONS

OBFUSCATE THE PROBLEM.

KEY SOLUTION WINS INCLUDE

Consider the example of a large telecommunications provider with which Furstperson is engaged. The company struggled with high con-tact center attrition and performance in its corporate and outsourced customer support jobs. Needed was a global solution to first improve attrition and then performance on key indicators. FurstPerson designed a custom process to support both the customer’s internal and outsourced centers. The solution concentrated around a robust discovery effort to align applicant qualities with ongoing performance gaps. Post implementation, diagnoses and monitoring efforts continued to reinforce delivery effectiveness.

IMPROVEMENT IN CSAT SCORES

20% 15% 14%13% 38%

35%

31% 10% 14%69% 17%

18%

31%

31%

29% 8%36% 25%

29% 10% 14%26% 6%

6% 5% 5%

1% 14%10%

10%

REDUCTION IN 90-DAY ATTRITION

20% 15% 14%13% 38%

35%

31% 10% 14%69% 17%

18%

31%

31%

29% 8%36% 25%

29% 10% 14%26% 6%

6% 5% 5%

1% 14%10%

10%

GAIN IN ISSUE RESOLUTION

20% 15% 14%13% 38%

35%

31% 10% 14%69% 17%

18%

31%

31%

29% 8%36% 25%

29% 10% 14%26% 6%

6% 5% 5%

1% 14%10%

10%

INCREASE IN TOTAL KPI SCORECARD

20% 15% 14%13% 38%

35%

31% 10% 14%69% 17%

18%

31%

31%

29% 8%36% 25%

29% 10% 14%26% 6%

6% 5% 5%

1% 14%10%

10%

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Fortunately, hiring better is not a skill endowed to a select few. Brilliance, intuition and relationships may help selectively, but sustained hiring success is achieved when leadership is in tune with performance indicators and committed to employing sys-tematically monitored and managed talent assessments.

These companies embrace analytics and a virtuous cycle of review, improvement and feedback incorporation into their talent acquisition process. Tools for hiring are not static but connected dynamically, in concert with leading vendors, to the flow of business.

The formula of companies that win boils down to this:

THEY HIRE BETTER