Using Predictive Hiring to Improve Employee Performance
Since the middle of the 20th century, hiring managers have devised dozens of tests to use in the hiring process. These have included the Myers-Briggs personality test, the “big five” or OCEAN test (openness, conscientiousness, extraversion, agreeableness, and neuroticism), emotional intelligence, and more.“46 percent of newly hired employees will fail within 18 months” Leadership IQThink about that: Nearly half of all new hires – despite having strong, relevant experience and background, despite taking and passing a gauntlet of tests and spending hours in interviews – end up not working out. The cost in turnover, reposting and rehiring for the same position, is enormous—and the employees’ self-esteem takes a hit too.
There are many theories about what is missing in the current corporate American hiring process—still not enough measurement of emotional intelligence or “culture fit”; employees should be measured for “coachability” and ability to take and use feedback; and more. But there is one single factor that is emerging as a key predictor for employee success, and a growing body of resources that help measure for that quality is emerging as an enormously helpful tool for hiring managers everywhere.
How Recruiting Has Worked for Decades Is Not Great at Predicting Employee Success
Despite all the advances and focuses in candidate testing, personality assessment, and interview meetings to assess potential culture fit, nearly half of all new hires fail. That adds up to hundreds of wasted hours of onboarding and training replacements, not to mention tens of thousands of dollars’ worth of lost knowledge and expertise, time the position is unfilled, and more per employee, according to The Huffington Post. (The range mentioned by the Post is about $20,000 for a early career employee, all the way up to more than $250,000 for a senior leadership employee.) So, the bottom line is, companies and other organizations simply can’t afford to keep operating in the same hit-or-miss way.
Some of the challenges historically have included:
“If hiring comes from one budget and training and development come from another, you can see how support for new employees could fall through the cracks”
- Inconsistent recruiting processes across industries, even in the same company in different departments. Someone may know someone’s past work and that candidate gets a “shortcut” into the hiring processes. Other candidates are rigorously tested on skills – writing, development, etc. – but not on less tangible qualities like emotional maturity, commitment and ability to receive feedback.
- The post-World War II focus on hiring people of high IQ. The assumption in the mid-20th century was that naturally the smartest candidates were the ones a company wanted to hire, period. As corporate America soon learned, geniuses had many strengths, but working as part of a team, and staying focused on a group goal, may not have been among them.
- By the 1950 and 1960s, the “big five” factors – CANOE or OCEAN – became critical criteria. These stood for: Conscientiousness, Agreeableness, Neuroticism, Openness, and Extroversion. Personality tests were devised to test candidates against these personality traits – with varying degrees of success over the years. And while these are important factors to consider in a new employee, the failure rate remained high, so the big five and those tests measuring them began to wane by the late 20th
- Most human resources departments in big organizations have two different budgets, one for hiring and one for learning and development. This can lead to a disconnect in the ability to offering training and onboarding that new hires need, says Sarah Croft, Director of Assessment and Instructional Design at Koru. “If hiring comes from one budget and training and development come from another, you can see how support for new employees could fall through the cracks,” she says.
- One of the main reasons new hires fail: “Lack of culture fit” – which can be hard to measure in the hiring process. It’s not until someone has been at a company awhile, as a member of a team, and contributor, Croft says, that a bad fit might be noticed.
says Sarah Croft, Director of Assessment and Instructional Design at Koru
So Why Do Employees Fail – or Leave?
The high attrition rate of 46% of all new hires within 18 months is sobering enough. But the Solutions IQ test, according to Forbes, also says that of that number, 89 percent fail because of attitudinal problems. They have the technical or “hard” skills, experts say, but not the “soft” skills that truly determine if they will succeed in a company/team environment.
It’s not that America is teeming with ill-mannered or unreceptive job candidates, says Sarah Croft. It’s more that they may have unclear expectations about how to work effectively in a team, how to take ownership of a project, how to develop and demonstrate commitment, and how to receive and incorporate feedback. Managers may feel frustrated if an employee isn’t “rising to the occasion,” and new employees may feel frustrated because they seem to be expected to work or behave in a way that they seem to be constantly having to guess.
This, Croft believes, is where hiring managers and CEOs have a great opportunity to change the landscape, and the outcome of this expensive employee turnover. There are several ways to help turn around this situation, she believes.
Using Predictive Models to Enhance Employee Performance
Companies who are focused on using data to boost their employees’ performance are committed to evaluations – and not just the typical annual review. New employees, especially, should be evaluated at 30, 60, and 90 days, at six months and a year. At each review, discuss successes and opportunities for improvement, as well as ways to measure that improvement agreed upon by both the manager and the employee.
Then as each successive evaluation occurs, the criteria become more and more honed and fine-tuned – so that nothing is a surprise on either side, and so that the employee, especially, sees how to track success.
The other benefit of committing to these regular review is that those employees who are the most successful can have their characteristics in turn used to shape the most sought-after characteristics for that department and the company.
In addition, many HR leaders believe each department should be routinely evaluated against these key criteria. Overall economic indicators should be reflected as certain industries and skills rise and fall with supply and demand as well.“One of the necessities for a predictive hiring process is a well-defined interview rubric,” says Wan. “Rubrics help to eliminate emotional biases and conduct a more efficient recruiting process.
“First,” Wan says, “you won’t fall in love with personality. A rubric can prevent you from jumping to conclusions by replacing emotional judgment with bite-sized factors—helping you make objective, micro-evaluations about each candidate.
“And second, you won’t commit to only one type of profile. Great candidates come in different forms. A rubric will help you compare different profiles and resolve differences in strengths and weaknesses.”
How to Use Big Data to Help Predict Top Performing Employees
Human resource departments that use systematic tools for measuring and evaluating employees have a rich opportunity to track patterns, habits and behaviors in their staffs. Each employee evaluation, if captured in a database, can help build the architecture of a successful set of values and traits that the company can clearly use and adapt as it grows.
This big data will become a statistical model that can help any organization spot and act on trends, and be proactive in finding issues and solving problems, as well as in tracking the kinds of characteristics and traits it seeks in new hires.
These review databases and statistical models can show big trends in skills and performance, yet should also capture “small data,” like individual departmental performance and culture fit, says Josh Jarrett, Chief Product Officer at Koru. Together this information creates a rich resource for any organization to use as a North Star for staff recruitment, development, and ongoing top performance.
The Single Biggest Predictor of Employee Success: Grit
As hiring departments and companies look to become more thorough in evaluating and predicting employee success and performance, there is a single quality that is emerging as the critical one, above all others. That quality is grit.
Professor Angela Duckworth is a professor of psychology at the University of Pennsylvania. She has been studying the psychological quality of grit for many years, and is the author of the bestselling book “Grit: The Power of Passion and Perseverance.” Over the years, Dr. Duckworth has studied grit – focus, perseverance and ownership – as a predictor of success in a variety of situations:
• Military performance (U.S. Marines; the Swedish army)
• Sales-specific scenarios
In studying cadets in basic training at West Point, for instance, she learned that while every cadet felt lonely and discouraged and thought about quitting sometimes – the ones who didn’t quit but stuck with it ended up being successful soldiers. Dr. Duckworth began studying this idea of tenacity in business and in education, and discovered that in virtually every case, grit was a supreme indicator of success.“Our potential is one thing. What we decide to do with it is quite another.” – Dr. Angela Duckworth, author of “Grit: The Power of Passion and Perseverance”
Those with advanced degrees – M.D., Ph.D., J.D. – showed more grit than those with just a four-year college degree, Dr. Duckworth found. In contrast, though, she found higher levels of grit and focus in those who achieved a two-year community college degree before going on to get their bachelor’s. That puzzled her, she says in the book, until she learned that 80 percent of all community college students drop out before graduation. Therefore, those who do get their two-year degrees have more grit than their classmates.
“The focus on talent,” Dr. Duckworth’s book says, “distracts us from something that it at least as important, and that is effort. … As much as talent counts, effort counts twice.”
How Organizations Are Changing Their Thinking—and Actions
Jacob Morgan the author of “The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspaces they Want, the Tools they Need, and a Culture They Can Celebrate.” He agrees that talent alone is no indicator of employee success in the workplace.
Morgan says, “PricewaterhouseCoopers, like many other organizations around the world, always assumed that hiring people from top-tier universities would yield better candidates and employees. After doing some data analysis internally, the company found that it was actually the employees from second-tier schools who performed the best, even better than those from schools like Harvard, Yale, and the like. As a result, they shifted their campus recruiting budgets to these other types of universities.”
Morgan also believes that companies that offer and promote programs internally that can help employees create longer career paths at the same place can work well.
Morgan says IBM is a good example of this. “IBM implemented an employee- and job-matching program in an effort to keep employees from leaving the company,” Morgan says. “Based on employee and job data, employees would opt in to a program that would notify them of relevant opportunities inside of the company. Hundreds of IBM employees who were potentially going to leave the company ended up staying and simply moving roles.”
Further, Morgan says, gamification is becoming a tool more companies are using in the hiring process.“Some organizations are using games to predict the success of potential candidates. Imagine playing something like Angry Birds on your phone that analyzes every move you make and every swipe you take to determine your behavior: Are you risk averse? Are you cool under pressure? Are you empathetic?” – Jacob Morgan, workplace expert and best-selling author
“Royal Dutch Shell is one of the organizations that has been using these types of games to help determine the success of employees,” Morgan continues. “They are able to input the ideal characteristics they are looking for—like grit — and then hire candidates who best reflect those qualities, thus far it has proven to be an effective tool for hiring the right people”
How to Test for Grit in the Hiring Process
At Koru, Dr. Duckworth’s findings on grit as a predictor of success are taken very seriously. According to Sarah Croft, it’s possible to test a candidate for grit as part of the hiring process. The Koru testing process involves three parts, Croft says:
- Using big data to look at a candidate’s past performance. This involves evaluating the candidates to see the chances they would do well, based on their actions and successes in previous roles, as well as what they do or have done outside of work that may have involved the need for grit and perseverance.
- Testing the candidate’s Croft says that this involves administering a simple personality test to assess candidate’s aptitude for grit (perseverance, investment in polish, ownership). This test consists of “forced choices,” Croft says, where candidates are told there is not right answer, though ultimately there is an answer that reflects whether that candidate has grit or not.
Assessing performance. This involves asking questions that are open-ended show how a candidate thinks and makes decisions. Croft says her tests get at the concept of “grit” by asking questions about teamwork, getting the project done, individual ownership and the like.
Other Factors to Increase Strategic Hiring, Internally and Externally
Supplementing the creation and use of databases on employee performance criteria, and the testing for grit in potential candidates, are several other factors that shouldn’t be overlooked, says Bennett Sung of Smartsheet. These include:
- Learning how to grow a better understanding of each business unit in a company and their own hiring practicesAchieving consistency in assessments and expectations should be one of the first things any organization looks to for improving employee performance.’ –Sarah Croft, Director of Instructional Design at Koru
- Assessing and understanding employees’ varying backgrounds, ambitions, and competencies—so that an employee can truly be set up for success
- Currently there is often no consistency in these assessments across a department or even across a company, which weakens the organization as a whole
- Identifying the best talent networks and tailoring postings to both the audience you are seeking to connect with, as well as including messaging about pride in ownership, etc., to signal early on the importance of grit in any potential position. New job websites appear all the time, and some are more popular with early career candidates, for instance; others may be more popular with tech workers; still others are geographically targeted, so hiring managers must work to keep up with those users, and what messaging resonates with them.
- Learning how to grow a better understanding of each business unit in a company and their own hiring practices
How to Help Existing Employees Improve Performance
Once employees are hired, there are many things employers can do to boost their staff’s performance. Employees should feel as though there are clear expectations for their role and for their success, as well as options for their own growth within a company. Some things to consider:
- Companies as part of their deep database should list employee skills that may be relevant to other in-house positions.
- Predictive job maps can help identify which types of roles and employees are more likely to change roles within a company and predict performance there. After studying employee hires, resignations, performance and movement within the company from one role to another, a company can have a deeper understanding of career paths and predict further success.
- Such job maps can both help identify a job path for a candidate – for instance, a user experience architect may be able, after a few years in the role, to move into a role of experience designer—which might be a position he or she never realized existed before taking the original position.
- These maps can also help showcase potential gaps and opportunities for the workforce of a company’s future. If most project managers leave that role to become, say, account directors, the company can consider expanding the project manager role into one with more account-facing responsibility and a higher level of prestige.
In addition, an outside company, like Koru, can work with a company to assess and map job competencies to company values.
The Cost of “Empty Labor” in Employee Performance
Some challenges that company manager and human resource directors find in trying to improve employee performance involve “empty labor” – not exactly goofing off, but time spent doing non-job-related activities. This can include excessive time surfing the web or on social media, playing on the company’s foosball table, or schmoozing around the office. These activities are innocent but can add up to an hour or more a day of basically doing nothing productive.
However, when transparency is achieved, and companies shine the light on those kinds of time-wasting activities, employees almost always reduce or eliminate distractions, Koru has found. Those employees with a good dose of grit renew their commitment to focusing on the project at hand. And while some companies are still reluctant to have a remote work force or to allow employees to work from home, more studies indicate that work-from-home staff members are actually higher performing and more productive.
Assessment Strategies for Improving Employee Performance
As mentioned previously, it’s critical to take care of your employees once they are hired. And one of the best tools for doing that is making their assessments routine and regular.
Josh Jarrett, Chief Product Officer of Koru, says that doing more regular check-ins than the annual review takes the dread out of the process, and makes it more of an ongoing conversation between employee and manager.
Other helpful tips include:
- Looking beyond the manager. Peer reviews are key to ensuring a balanced workplace and to hearing every aspect of an employee’s performance. There can be fallible hiring managers, so they should not be in a position to have the sole input on an employee’s performance.
- Storing all the assessments internally to build a database as the company and its workforce grows.
- Devising both qualitative and quantitative tests for a well-rounded review, because humans are complex and need both art and science to be fairly and completely evaluated.
- Ensuring that the organization keeps focused on workforce analytics, including overall patterns in recruitment, promotion and employee turnover. These analytics are essential to defining causes of overtime, low morale and productivity, and absenteeism. Employee reviews should reflect these companywide analyses, tracking problematic issues on the individual level before they become bigger issues that compromise performance.
From the Early Career Talent's Perspective: Making a Company People Want to Work For
Of course, the relationship between company and employee is a two-way street, and companies who want to recruit – and keep – talented millennial workers should be aware of what those workers value in a workplace.
Darrell Crosgrove is a researcher in the Department of Management at the University of Toledo and has focused on the motivations of younger workers in today’s corporate environment.
“Today’s early career workers are different from generations before them,” Crosgrove says, “in that they don’t feel they need to be committed to a company. So if a company doesn’t share their own values, they are likely to leave.”
Crosgrove points out that even Wall Street investment companies are changing how they operate for millennial workers, offering up to a year’s sabbatical to retain their top “junior banker” talent. “They are starting to realize that they would rather do without this young staff member for a year, and then get them back for four or five years after that.”
Early Career talent want to have time to enjoy their lives, and would even take a pay cut to have the time to themselves, Crosgrove says. And they want a personal connection. “Don’t forget that one of the best ways to evaluate a candidate is to sit down face to face, human to human. All the tests in the world still need that human touch to supplement them.”
Using Potential Future Talent Predictive Analytics
Once a candidate has been hired, and proved successful through talent and grit, and has been reviewed and has grown a career path at the company, what comes next? There are several factors that can be reviewed as future predictive analytics, according to Sarah Kroft:
- Measuring revenue per employee per company
- Predictive analytics focused on future productivity issues. Croft says that if reviews are regular and transparent, and if employees are rewarded for their ownership and leadership, productivity should not be an issue, or could be quickly turned around with a frank conversation.
- Predictive analytics focused on employee behavioral issues. These can include costly issues like absenteeism, disengagement, fueling the gossip machine, low morale, or a creeping error rate. These are signs of an employee who has checked out, or who is in danger of doing so. The good news is that the predictive hiring test can often weed out candidates who may have these kinds of issues, and a staff “reset” survey can also help course-correct those issues for employees who truly feel invested in the company.
- Enhancing employee success from the manager – an effective manager can be inspiring yet tough; a cheerleader yet an active border collie. Managers who expect top performance from their employees need to foster trust and transparency – and learn what motivates those employees to do well.
Anne Hurley Leverages her 15 years as an editorial director and content strategist to research and develop action-oriented articles for Koru’s HR, talent acquisition, and business leadership audience. Her experience ranges from The New York Times to Amazon and Microsoft. Connect on LinkedIn at https://www.linkedin.com/in/annehurley/More from Anne Hurley