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Notes from the HR Technology Show: Assessment (and the rest of HR) hits the jackpot with data analytics

by Oct 12, 2011, 5:38 am ET

After the HR tech show last year I wrote an article bemoaning the absence of pre-employment assessment from the radar screen. Assessment really didn’t seem to be an area of much interest to anyone. I have a bit of a chip on my shoulder about the perceived value of assessment as it has been a continual struggle to get folks to buy into the value proposition it provides. Still, I am pretty perceptive, and last year there was almost no buzz about this important area of HR.

What a difference a year makes! After this year’s show I am smiling from ear to ear as I was able to clearly tap into a great vibe of interest in assessment tools. I am still a bit disappointed that the majority of talent management vendors do not include assessment as a core part of their product offering. However, there were many talent management vendors who have begun to take steps down the right path. There were more vendors than ever offering a variety of interesting and unique products that demonstrate a continued deeper integration of assessment products designed to do more than just sling tests at job applicants.

What is the reason for the difference between this year and last? There are several, including:

  • The economy is getting better
  • There is a continued search for more value from hiring via quality of hire
  • The talent management mindset is driving a competency-based vision of the employee lifecycle that requires continual measurement to determine competency levels
  • Technology has made it increasingly easier to integrate assessment into other, related products

But the real reason lies beyond all of these factors (although it actually incorporates all of them). This reason is a newfound ability to clearly demonstrate value for programs of all sorts via rapidly increasing capabilities for data analytics and business intelligence.

In fact, powerful and easy-to-use data analytics have ushered in the dawn of an entirely new age of evolution for testing. The past decade saw the rise of test content being offered online. This created tremendous efficiencies for the use of testing, allowing it go mainstream. We spent a decade working out new and better ways to deliver tests and to use the millions of data points captured from candidates to make tests shorter and more powerful. This information also allowed us to really get to the truth when it comes to understanding how to predict performance at a variety of job types and levels.

We are now emerging from this intense period of growth and new understanding. The combination of clarity around human performance and new technology has led us to the doorstep of an era that I predict will see huge increases in the adoption of pre-employment assessment. What I saw at HR Tech really crystallized this vision for me. Here’s why.

We I/O psychologists have been operating with a business intelligence mindset for more than 60 years. We have continually tried to demonstrate the value of testing programs via validation studies looking at the relationship between test scores and job performance. I wrote an article for ERE on this very issue seven years ago explaining the basics of a business-intelligence-driven mindset and how it can clearly show the value of various HR practices, including assessment.

What I saw at HR tech this year was the prediction I made in my 2004 article come to life! Fast forward to 2011 and the major players in assessment have created a whole new way to demonstrate the value of assessments (as well as other related HR processes). I believe this mindset and the technology to support it and make it accessible will allow them to quickly show their clients the money. Once a firm is able to have this level of insight there will be no looking back for assessment tools.

Here are some of the things I saw that have led me feel so optimistic:

SHL is dedicated to “people intelligence” and supports this mindset with a brand new analytics dashboard tool that will allow its clients to model and understand many aspects of their hiring process all the way to how applicants are sourced and how their hiring processes stack up to a variety of reference points, including industry, geographic location, etc. This tool is essentially a wide-open data mining tool that allows a deep level of insight and analysis about the relationship between data yielded by the hiring process and organizational outcomes.

DDI has created a new platform that allows for the ability to track and evaluate data from individuals across the entire employee lifecycle. Data is capture in pre-employment mode and is managed longitudinally so that growth and potential can be tracked and evaluated.

Taleo has begun to focus on the concept of “talent intelligence” and has data available for its clients across the entire hiring process, allowing for deep levels of insight around the hiring process.

Kenexa has also created an impressive dashboard that allows for analytics across the entire hiring process, providing an easy way to examine talent pipelines all the way back to source of hire. Kenexa’s system also learns and allows for changes in the workflow process to adapt to various situations based on real-time data.

What I saw from the major players servicing the assessment market is a collective drive to help their clients clearly understand the value that any number of services can provide in actual outcomes that either represent, or can easily be paired with, actual dollars. In the past when we I/O psychologists were asked how we know assessments work, we would respond by saying “trust me.” While I know that we are sound in our understanding of value, it is hard to close the deal based simply on trust; thus, the adoption of assessment has been slow. Firms who are selling pre-employment prediction are now equipping themselves with powerful tools to break out of this quicksand and clearly model value propositions for those firms willing to listen.

Within 10 years, the collective value shown via the new breed of business analytics tools just now being offered in the HR space will lead the business of assessment to a whole new level of integration and adoption.

We still have our work cut out for us in convincing companies how important it is to take a business intelligence mindset within HR. It is high time that all companies serious about making their people a profit center should have a dedicated data analytics team within HR. The role of this team will be to work with various analytics tools, syncing them with internal data feeds and monitoring dashboards to answer questions and support business decisions, based on real live data. Prediction in the hiring process will be one core part of this, but it will go well beyond this. Early adoption of this mindset and the infastructure to support it will be a serious competitive advantage and soon those who don’t buy it will see their businesses losing ground rapidly to those who do.

In 2004 I wrote about the things I saw at HR tech this year in the hypothetical realm. In 2011 these fantasies are reality that is here for the taking.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Martin Snyder

    Charles I share your optimism and energy around BI, and enjoyed the chance to re-read your 2004 article, which I remembered well. I was power lunching only yesterday with a business owner who controls serious amounts of real-time USA and UK job seeker data. In his time, he has hired hundreds of people and been involved in most aspects of the talent chain. His two-word summary about assessment?

    “Doesn’t work”

    As you wrote, “it has been a continual struggle to get folks to buy into the value proposition it provides”. While you are pretty sure that BI is going to reveal the truth of that value proposition, I have a sense its going to more powerfully reveal its limits. It may be an idea that’s hard to push because it’s only been true in the real-world for limited kinds of roles, for a limited number of hiring agents.

    As I have said in person with you, and many times in this forum (hi WW), I think assessment works extremely well in high volume, low creativity (but not necessarily low skill) roles to greatly narrow a selection pool without undue opportunity cost. I think it fails badly in leadership and creative roles. The reason for that weakness is failure to recognize that in many cases, small group dynamics are more powerful motivators and inhibitors of human behavior than any individual attributes of a person being assessed. Until assessment is done on a holistic workgroup level, it will keep failing in the same way.

    Belichick does not think in terms of players: he thinks in terms of units.

    I think that simulation will strongly replace psychology as the essence of what pre-hire assessment means. Simulation as a principle is vastly powerful because it reaches the human mind in ways that language does not. Simulating the emergent conditions of creative and leadership jobs is always going to be a challenge, but our ability to create complex simulations AND tie results to outcomes will change the way human potential is developed, and then assessment will have the reputation it deserves.

    I think a brilliant insight from your 2004 item was this: “data that may have once been discarded or left unexamined has been given new life, because it can actually help organizations to systematically make more intelligent business decisions”. I can’t tell you how much time series data is being lost every day by SaaS and cloud vendors all over the world who are not financially able or astute to the value of maintaining snapshots over long periods of time.

    A BI mindset could be thought of as a Quant mentality. Nate Silver blogger for the New York Times, is a great example, and so is the wide expansion of the Moneyball story (when dramatized by Brad Pitt). What’s great about that mindset is that it’s automatically open to new ideas and revisions as the data tells the story.

    Speaking of technical brilliance, I think this exceeds anything I have seen this year:

    http://www.slate.com/blogs/browbeat/2011/05/03/subject_could_eat_object_all_day_that_s_what_she_said.html

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