Personality Assessments
I have always been suspicious of self-rated assessments, as candidates know the job they are interviewing for and can guess what to say or not say. Many studies, such as the one recently published in the International Journal of Selection and Assessment (They Don’t Do It Often, But They Do It Well: Exploring the relationship between applicant mental abilities and faking, Julia Levashina, Frederick P. Morgeson and Michael A. Campion), have shown that self-assessments are indeed faulty:

This research [on fake personality measures] consistently demonstrates that candidates are able to fake personality measures by recognizing the correct, job-related, or preferred answers, and artificially inflate their scores.

Scary, right? Well, it depends on who is doing the cheating. Many candidates who have gone without a job for six months or more will tell you that it is good to know how to play the system in order to get a job.

Biodata Assessments
Some organizations may agree that personality tests can be faked, yet still believe in the strength of their biodata assessment. Are they correct in doing so?

First, what is biodata? Biodata is a commonly used term in industrial and organizational psychology for biographical data. Biodata is defined as “… factual kinds of questions about life and work experiences, as well as to items involving opinions, values, beliefs, and attitudes that reflect a historical perspective.” The basis of biodata’s predictive abilities is the axiom that past behavior is the best predictor of future behavior.

Biodata has an advantage over personality or even interest inventories, as it tells you the past behavior of a person, and from there it can predict one’s future actions … assuming one tells the truth!

How Many Cheat?
A newly released study from Julia Levashina, Frederick P. Morgeson, and Michael A. Campion on real candidates in real job application situations will give us the answer.

And this is a serious study, as 17,368 applications were analyzed across many different job categories (general management, economic and political analysis, public relations, etc.) with an innovative but strong way to detect the fake. Also, it is important to note that “candidates were warned that their responses could be verified and that any attempts to falsify information could be used as a basis for not employing them.” Thus, it was not a laboratory experiment.

So, how many are fakes? How many among those 17,368 applicants were trying to fake their way in?

The researchers divided the applicants into three groups, which we have taken the freedom to name:

Complete liars: 173 candidates (1%)
Fakers: 1,389 candidates (8%)
Stretchers: 4,168 (24%)

In short, a third of the people you will see will pretend to have done many more things than they actually have. In practice it could look like this:

These examples look obvious, and are for the sake of fun and illustrating the point, but they are probably what you can read on a resume or hear during an interview. Some strategies can help you uncover the hoax. We will cover them at the end. But the question still remains: Does cheating work?

Does Cheating Work?

Statements used in the research assessments were not as obvious; they were experiences or behaviors important to successful job performance. These included interactions with others, adaptability, initiative or persistence, leadership. These are less easy to fake. For instance, when you first move into a new place, how much time do you spend exploring your new surroundings (5 = a great deal of time; 1 = very little time)? They were capable of cheating, but how well did that work in favor of the fakers?

The research on this is clear: all groups of fakers “obtained higher scores on the biodata measure.”

Interestingly, the research showed that people with higher levels of mental abilities fake less often, but when they do it they get significantly higher scores. In short, the clever fakers are the ones benefiting the most.

So, we can safely predict that once job seekers learn that stretching the truth on applications and interviews works in their favor, they will continue to do it more. Thus, if today we see one in three people stretching the truth, tomorrow we may see one in two.

Talent Acquisition Response

Of course I/O psychologists will combat these statements by saying that they use empirical rating versus rational rating procedures. In short, more is not always best and other techniques prevent the fakers from winning. Incorporating other testing strategies should therefore be the first step, but it’s best to not take a chance, so I advise complementing such techniques with the following three simple and cheap strategies:

1. For verifiable facts (i.e. Harvard MBA) perform a verification (academic, employment, etc). Not only will you avoid a bad hire, but you’ll prevent potential brand erosion and embarrassment.
2. For results or behaviors that require one to have expertise (i.e. “recoded and secured the whole encryption software”), if straight technical assessments aren’t possible, make sure that a technical person (on your staff or outside if it is very unique) is part of the interview team to cross check the candidate to validate the expertise. At a minimum, a telephone interview or video conferencing should be performed if a face-to-face meeting is not possible.
3. For results or behaviors where you can learn the jargon quickly (i.e. manage the on-time on-budget new ATS implementation), I recommend colleagues rate the candidate and or perform a reference check 2.0. These can be used as well for the previous section if you question the achievement level or the personality fit of a candidate, as technical competence is not always synonymous with performance and integration.

Armed with these tools, the next time you have three finalists in front of you, you will have the certainty of not picking the fake one.

Imagine you are on stage and in front of the cameras at the famous game show Who Wants to Be a Millionaire. The last question comes, and you know if you get it right you’ll leave the studio with a million dollars in your pocket. Yet, you have no idea what the answer is. You draw a complete blank. You know, of course, that you can rely on two types of support: help from the studio audience or from a friend who you believe knows the answer. What do you do?

In our world of experts and gurus, we have a tendency to rely on and believe in experts when, in fact, research has shown that in this case we should do the opposite. While experts are indeed right 65% of the time, the studio audience is right 91% of the time, so you should rely on the collective intelligence of the studio audience. How can collective intelligence be applied to talent management, recruiting, or even business?

First, let’s make sure we understand that collective intelligence is not science fiction, the latest fad, or a term that you will only read about here. In a 2007 research study, McKinsey asked corporations which of their Web 2.0 investments was the most popular. Collective intelligence came second with close to half of the companies using it or planning to use it. They defined collective intelligence as “any system that attempts to tap the expertise of a group rather than an individual to make a decision.”

Collective intelligence, in its essence, is at the root of Google’s success. Google was ranked the best website over other search engines based on a collective view of its usefulness (links). In other words, it uses collective intelligence to feed its motor in helping people who are looking for similar content. If the biggest Internet success has been based on this principle, it is certainly time well spent for us to see if we can leverage this for talent management.

It is a banality these days to say that success in business is about finding the right people. When you are in the seat of a hiring manager, it is less about finding the right people than it is about detecting the right person among those who are presented to you. To a large extent, choosing a new team member (either by promoting internally or hiring from the outside) is one of the most important, if not the most important, decision business leaders make. How can collective intelligence help here?

Some may argue that we already use collective intelligence while we are hiring or promoting individuals, for we collectively involve many of our peers in the hiring process. We already tap into the incredible resource collective intelligence represents by conducting multiple interviews, peer reviews, validated assessments, and reference checks.

But is that true? Are we really leveraging the power of collective intelligence today? In order to answer that question, it is important to understand which factors are essential for ensuring a quality outcome for collective intelligence.

As many as 15 factors have been identified as having some importance in supporting the integrity of collective intelligence, yet we believe three are crucial for the world of talent identification:

1. Diversity. Not simply in terms of gender or ethnic background, but also when it comes to diversity of knowledge, experience, personality, cognitive style, etc.
2. Authenticity. This is understood as the ability for each participant to be free to express his or her real thoughts, and not to be engaged in a hidden agenda or deceptive tactics.
3. Discernment. Even if you assemble a diverse group that can be authentic, the results will be enhanced if you can improve discernment. In other words, enable participants to discern difference and relevance. This is often achieved by using a framework.

Now that we are armed with these three factors, let’s look at two case studies to see if we are really putting collective intelligence into action.

In the first case study, Sandra, a senior vice president of HR in a Fortune 2000 company, has just lost her vice president of talent acquisition to a competitor. Hard hit, she thinks about promoting Steve, who, for the last two years, has had great feedback. A director in the company, Steve was leading a couple of projects with high visibility and seemed to have delivered the goods quite nicely. Sandra asked other vice presidents about Steve and examined his performance review. Just a couple of days after announcing the departure of the old vice president of talent acquisition, Sandra announced Steve’s promotion. Six months later, Steve lost four of his six direct reports and Sandra began having second thoughts. What went wrong?

Steve is great at managing up, but he is an awful manager. As soon as his promotion was announced, the other directors looked for new jobs. The issue here was the lack of diversity in Sandra’s process. She never reviewed feedback from anyone with a title below vice president.

In the second case study, Mark is vice president of marketing and needs an execution-driven director to relaunch a product line. The deadline is set at 18 months and a department of 12 is waiting for a leader. After only two weeks, they already have a list of three final candidates. Mark wants to make sure he gets it right and asks for seven structured interviews to be conducted by other vice presidents, future direct reports, and peers. He wishes to obtain good assessments, four full reference checks on each finalist done more as a peer rating to increase accuracy, and all the background verifications from criminal to education.

After the first interview, Mark is bullish on Sarah, who has the Ivy League pedigree and has launched products multiple times, thus making her several short stays and steep learning curves at household brand names seen as positives. But only six months after Sarah was hired, Mark received conflicting reports. How can that be?

In this case, what went wrong was the situation Mark put himself into by pushing for Sarah and ultimately intimidating the other interviewers that reported to him to select her from the other candidates. They didn’t want to challenge Mark on something he was so enthusiastic about, which led to a lack of authenticity.

Moreover, when pushing to conduct four reference checks/peer ratings per finalist, Mark asked the administrative assistant in the recruiting department to speed it up, so she asked another assistant to help her. The result was that they contacted four peers for each candidate, but received very little substance in each of the reports, thus hindering one’s ability to effectively discern between candidates.

In conclusion, collective intelligence in its simplest form can be a very powerful tool, but it can quickly lead one down the wrong path if used improperly. Use diversity, authenticity, and discernment to optimize your chances of success. Those should be utilized in all your processes, and you should ask yourself if you respect those factors when receiving any type of recommendations.

That simple step can transform your talent management practice from “collective cover your ass” into collective intelligence!

In part one of this article we learned that selecting the right people for the right job is the most important talent-management decision you have to make.

We also asked why the internal-hire rate leads to successful placement about 90% of the time, while external hires barely reach the 50% success rate. It was concluded that the high internal-hire success rate can be partly attributed to the fact that internal hires and promotions are mainly based on performance and not experience.

External recruitment screening is based highly upon experience, as recruiters can only rely on anecdotal performance data.

This leads us to the paradox of recruiting: why does recruiting rely on less accurate criteria?

One reason for this paradox is the ease of gathering experience data versus performance data. The solution is found by understanding how internal mobility decisions are made.

In this part, we will look at how internal mobility decisions are made compared to external recruiting decisions. The differences, combined with the criteria upon which the decisions are made, will lead us toward finding a solution to the paradox.

Two Key Differences: External Vs. Internal Recruiting Decisions

The first obvious difference in the two recruiting processes is the time a candidate has been exposed to the recruiting company. Most companies make decisions about candidates after only having been exposed to them for a couple of hours and under artificial circumstances: interviews.

This is different than being exposed to a candidate who has already been working for the organization for the last 18 months (often the minimum required by many organizations before one can advance). It is also reinforced by the fact that the best way to screen a candidate is to see how they are behaving on the job. This is one reason why work-sample assignments or temp-to-perm positions are very effective ways to recruit people.

In contrast, the external hire process can be very risky thanks to the oft-forgotten first-impression-distortion factor. Some people can be very likable at first, but later fall short on delivery. Others can seem reserved but end up being top producers. Time on the job is, therefore, the best way to assess people.

The best proof of this is the probation period. Why are probation periods standard procedure at most companies? Perhaps because it is often revealed that the individual who joined your organization is not the one you interviewed.

The second difference between the external and internal hire process is that more people are often included in the internal recruiting decision.

The number of interactions an individual had prior to an internal move is significantly larger than the traditional couple of interviews performed for the external process. While working for a company, a candidate is often exposed to a multitude of people, while during a recruiting assignment, they are only exposed to a couple of interviewers for a limited period of time.

Take for example, McKinsey, a company that relies heavily on talent for its core business. This company does not rely on just one or two expert interviewers to conduct its core interviews.

Why? Perhaps because they understand one fundamental truth about decision making: the collective intelligence, sometimes called the “wisdom of the crowd,” reigns for this type of decision.

We can put this in colloquial terms: “two heads are better than one.” The collective intelligence concept has been popularized recently and goes against the traditional belief that only experts know best. The collective intelligence emphasizes that for certain types of decisions, the collective opinion of educated individuals is way more accurate than that of a single expert.

In summary, we understand that performance-based criteria are what you need to focus on in order to hire more successfully. The best way to assess one’s past performance is to have several people involved, each having worked with the individual for a good amount of time.

What about jobs that have clear performance indicators, such as sales or call centers? Do we recommend a focus on performance that has been assessed by many people over a certain period of time for all types of jobs? The answer is yes, because it is your time to get a better grasp on the last (and one of the most difficult) components of a successful hire: the cultural fit.

Strategic talent management is about making one decision and making it right. Today I am going to show you how this key decision can be improved by incorporating a new way of thinking and some new techniques into the decision-making process.

Having the right people in the right job can make or break your organization. While it may sound simple and clich?, it is and remains the key strategic talent management decision any manager will make.

It is also the one creating the most reward or pain! In its simplicity, it remains a tough task to perform unless you understand what I am going to uncover in this article.

There are two processes most organizations use to select individuals for a job. The first is called the recruiting process. This process serves to select someone new for the organization. The second process is commonly referred to as the internal mobility process. This process serves to select and place someone who is already working within your organization.

Over the years, many companies will experience internal mobility decisions leading to higher success rates compared to external hires. This specific topic, when applied to the CEO, often makes headlines. Several sources have often been quoted that the internal hire rate leads to successful placement about 90% of the time, while external hires barely reach the 50% success rate. The core question is, “Why?”

This core question is fundamental. Clearly understanding why the internal-mobility process has a higher success rate than the external-hire process will help you recognize and understand why this happens.

Further, as we understand the causes, we can then learn to improve the success rate of the recruiting process.

Improve Your Hiring Success Rate

Today I will look at which criteria primarily affect internal mobility versus the recruiting decision. This will help us identify the key difference that is responsible for the huge discrepancy in the success rate. In part two, I will look at how these decisions are made and whether there is a difference between recruiting and internal mobility.

Let’s look at the criteria a recruiter or hiring manager considers when hiring an external candidate versus an internal one.

The first qualifier a recruiter is looking for in a candidate is relevant experience. For instance, if you are looking for a marketing professional to help your organization promote its products, you will look for someone who has previous experience as a marketing professional, and preferably in your industry. Similarly, if you are looking for a legal professional to help you negotiate contracts, you will seek someone who has experience in that field.

Logical, yes? Actually, it is not as logical as it may seem when you look at the data.

Although it does help for the candidate to have some industry-relevant experience, experience without performance is doomed to fail. In other words, if you have been negotiating contracts for the last 10 years as part of the legal team, you may wish to tout that relevant experience, but you may have only been average at it.

This is what constitutes the main difference between an internal move and an external one. When you move someone internally, he or she rarely gets rejected due to lack of experience in that field because, by essence, it is a lateral move.

Consider this example: A couple of years ago, our company was looking for a legal person to be involved in contract reviews and negotiations. We reviewed many external candidates who were highly qualified lawyers with the right experience, but we finally chose someone from our marketing department!

Yes, you read that correctly, marketing. It helps that she had a law degree, but it was even more important that her track record with the company was very good. To my knowledge, she is still in place, was a great hire, and became a top performer.

What would have been the likelihood of finding someone to hire from outside of the company who had the same professional record? Close to zero. It would have been a leap of faith not having experienced the performance she delivered in the other department.

Choose Performance Over Experience

The motto for optimal strategic talent management should be: “Do not confuse past activity with past achievement.”

Just because you worked for a couple of years in a specific role doesn’t mean you were great at it. The core reason why past experience is preferred over past performance in the recruiting profession is simply because it is easier to identify experience than performance. Yet organizations are not the only and biggest victims of this faulty process; individuals are also to blame. We are all prisoners of our past experiences, and human nature pushes us to keep doing what we know. This cycle is called inertia.

Even though we sometimes wish to do something else, it is very hard to change careers because organizations look for experience first and whether one can perform in that field. Individuals who can’t demonstrate any of these qualities have very little chance of being considered unless they are internal candidates in the right company.

Because performance is so hard to monitor, many settle for experience, and have only anecdotal signs of performance. By doing that, recruiting departments are, in fact, increasing risk and not decreasing it. Indeed, most studies show that internal mobility placements based on performance are about 60% more likely to be successful than external recruitment based on experience.

By now you probably agree that performance-based hiring, as it is often called, is the way to staff your company. However, now we have a new problem because we expect that the “performance” comes from a field where they have built experience. At the same time, because experience is so much easier to find, we often settle for only anecdotal indications of their performance.

This almost always compromises the quality of the outcome. That is the paradox of strategic talent acquisition! The salvation could come if we can capture performance data without being so cumbersome that it is impossible to put in practice.

We will examine this in part two tomorrow when we analyze how hiring decisions are made for internal moves versus external recruiting.

An excellent recruiter knows candidates’ expectations. They know what they like and what they dislike.

Do you know what the main complaint of your candidates is?

Pause a second and ask yourself: Among all of the candidates I dealt with in the past, what was the most important issue they had? What was constantly last on their list of things that we do well? Where was their frustration the highest? Or consider further: among all the people that apply to our organization and the many I never spoke to, what would be the most common issue?

As more companies today spend huge amounts towards employer branding with even TV ads like Wal-Mart and Cisco, it is important to understand this. Surely it would be effort wasted to try to influence job seekers’ perception with a huge creative budget but not fix their main frustration point.

What They Want

Several methods have been developed to convey what candidates expect during an interaction with an organization. CareerXroads’ Gerry Crispin and Mark Mehler review career websites and focus on four factors that influence the candidate choice.

1. An effective targeting or the ability for a candidate to know that your organization is looking for people like them.
2. A clear engagement statement or why as a candidate I should come to work for your organization.
3. Relevant information that backs up your engagement statement.
4. The sense that I am respected as an individual during the hiring process.

A while back, we did a study at Taleo Research on false perceptions about job seekers. From a survey of more than 1,500 job seekers, the study showed that 80 percent expected some salary and benefits information, 58 percent wanted to know about corporate culture, 23 percent were concerned about their anonymity, 77 percent of students wanted a specific section for college candidates, and 88 percent wanted details about how to apply.

But these things are not the most important issues job seekers are facing today. The single most important frustration that candidates have today is the lack of good feedback. In our survey, 99 percent of the job seekers wanted an acknowledgement of their application.

Today, in the 2006 Staffing.org survey of 879 job seekers (employed in Internet technology, research and development, product development, and sales professionals), follow-up communication was the most requested improvement highlighted. Yet 82 percent of job seekers surveyed were either dissatisfied or very dissatisfied with the follow-up communication.

To the question “what point in the hiring process needs the most improvement?” 47 percent said communication and follow-up. This was a lot higher than job description (19%) or interview scheduling (5%). The flip side of this is even more blunt. Zero percent identified communication and follow-up as the most favorable step in the hiring process!

There are two options to addressing the problem: either go back to your heavy workload and ignore it, or try to do something different about it.

Take Action

What can be done? First, recognize the fact, and don’t say, “Well, we are different. We don’t have this problem.”

There’s no question: today’s relationships with potential employees are poor at best. The new survey by CareerXroads (soon to be released) shows that in 2006, only 59 percent of the best companies to work for acknowledge the response of an application, and a meager 5 percent give an update at the end of the process that the position is closed out and that the candidate was not chosen.

Recognize that this is an opportunity for a great branding experience to distinguish your company dramatically. If you’re in a retail business, it’s also a tool for brand-building and customer perception toward your general products, as many studies have shown that employer brand and company brand are not discrete.

If you are a recruiter with no talent management system to help you, mass-mailing will probably be your best friend to minimize the casualties. Remember, candidates like to know that you received their application and prefer to know they are not short-listed than not receive anything.

Those functionalities can all be automated. In some systems you can even delay automatic responses to make them seem that they were done by real humans. Nonetheless, during the subsequent stages of the hiring process, you still have to push the buttons to make sure you send the personalized communications. It is a small discipline that goes a long way for candidates.

Ideally, candidates that went all the way to interviews would like to know more. In a perfect world, you should transform this interaction into an exchange that can be a learning experience for the candidate. This must be done for internal candidates; otherwise you are creating disgruntled employees and preparing your next unwanted turnover.

If you are in charge of a recruiting department, you can monitor that your team practices the tactics described above. You can generate reports on those. Even more important, you can design a process that ensures great communication and superior success of your department. One of the key practices is to segment the candidates. The top three finalists are probably all very good and should be treated differently than the people who did not make the first cut.

If you have a sourcing team, short-listed candidates should be in the team’s database, especially if you have recurring needs in those positions. Personalized feedback for the finalists will build future results. These finalists are your next top candidates and your best advocates and sources of referrals.

Sourcing

As the demand for talent intensifies, attention is again turning towards effective candidate sourcing methods. Many corporations have focused on retaining the high-value talent they already employ and are boosting the internal mobility initiatives in order to heighten employee satisfaction and reduce turnover through digital means. New web-based applications have even emerged that “webify” the standard concept of referral networks. The Internet and referrals represent the two most important sources for new talent and are supported by a digital medium. Agencies today often interact with organizations through portals that make this a digital medium as well, and of course job boards became a standard online classified medium. Nonetheless, the requirement for new external talent remains, and for growing organizations is under pressure.

Regardless of the balance of talent supply and demand, the need for speed and efficiency in managing candidates is clear. Notably, one key portal ó the corporate website careers section — has progressed. Throughout the economic turbulence and Internet technology developments, the corporate careers website has steadily grown in use and importance. It is today the main portal for candidates to interact with a corporation. According to our research, in 2000, 73% of Fortune 500 companies already had a direct link from their website home page to the careers section. In 2005 that number has barely increased to 79 percent and it is considered a standard practice. Although data does not indicate a major change, a closer analysis reveals an important evolution, specifically in the preferred method for accepting job applications.

Online Response Only

In 2000, only 27% of the Fortune 500 directed all candidates wishing to respond to job positions posted to the corporate careers website to a purely online response mechanism. But in 2005, 77% of the Fortune 500 do not give jobseekers the option of responding offline to job positions posted to the corporate careers website.

Figure 1. Fortune 500 companies with online job postings and online-only applications

Today, a fully integrated front-end/back-end approach prevails, with close to 80% of Fortune 500 companies not offering the choice to apply any other way than online. This is a clear sign that organizations have streamlined their processes to an integrated digital channel. The vast majority are avoiding steps such as fax, traditional mail, and scanning resumes into their digital software, which slow down the application process. Companies are aware that the inability to act quickly on offline applications can lead to the loss of quality candidates to the competition. Corporations can gauge the real dollars saved by avoidance of costs associated with the processing (handling and scanning) of paper resumes. Savings equal the volume of paper the corporate careers website ordinarily generates multiplied by the processing cost per resume. Since the volume of applications for many large companies exceeds one million, this is certainly substantial. Additionally, the online-response-only practice increases the speed of the hiring process (thus reducing the opportunity costs of unfilled positions) by eliminating the wait for candidate data to return from a cumbersome resume scanning process.

Evolution of Digital Medium

Remarkably, in 2000, 76% of the Fortune 500 were already displaying jobs online — but only 27% were accepting exclusively online applications to online job postings. It took five years to reach the same level of digitization for job posting and the medium for response. But can this be the only portal to accept applications of new talent? It often depends from one industry to another. Probably the industry that could find that practice the most challenging is the retail sector, where candidates often walk in to apply.

A previous Taleo research study on the top 100 retailers, We’re Always Accepting Applications, showed that indeed they were usually behind in the adoption of the careers website as a medium for application. However, some use other alternatives to the traditional ineffective paper process, such as the kiosk or a terminal-like application that enables the candidates to apply. If candidates can’t even use a kiosk, we have seen digital pens and digital paper as options. Those are pens that record the writing on an application form and translate it into a computer through a docking station. If the website is not the only place to apply, all applications can still be in a digital format for you to manage effectively. Moreover, sometimes all those technologies can be reduced to a simple card directing the candidates to go to the website from home or another public Internet access point. Those have been effective with some retailers whose employees are mainly younger.

Five Years Forward?

What will the next five years bring? The trend in the Fortune 500 to an entirely digital recruiting process is evident when one considers the number of companies for which the online channel is now the only way to express interest in a job position posted to the careers website. The goal of digital recruiting is to transform the recruiting process into a paperless, consistent business process. The Internet represents a revolution in talent management not so much because it is the single largest source of candidates ever, but because the information stream coming from that source has the potential to be put into a uniform electronic format. Many companies are posting notes like this one from Merck:

Figure 2. Statement from Merck

The benefits to a corporation of online response derive from the efficiencies accrued from the digital formatting of candidate information. In short, the conventional resume format will disappear within five years as a means to manage talent. The resume will transform into a biography, often online, that will serve as an introduction. As Fortune 500 corporations became more fluent in capturing candidate qualifications in a digital format and not just advertising online, the future will concentrate on competency profiling and data mining refinement. To accomplish this, the basic requirement is the format of the candidate information and the platform and database in which it resides. Although digitizing the resume is a positive step towards a more efficient process, capturing candidate qualifications in a systematic and structured way powers a more effective staffing process and provides the basis for all associated talent management activities such as workforce planning and performance management.

Data-Rich Systems

Increasingly over the next five years, corporations will focus on key data predictors. Online applications will be combined with online assessment tools, providing a more accurate method of identifying the right candidate and driving additional value. Talent management will be viewed holistically and include talent inventory and development, talent sourcing and retention, talent monitoring, and assessment. Systems that support talent management will align with and become central to corporate goals. This evolution is made possible by the switch from analog information (paper resumes) to digital candidate applications triggered by the medium of the Internet. As a practitioner today, the key for success for the next five years is to have a system that enables the foundational platform to categorize skills, competencies, and assessment to deliver the core building blocks for an integrated talent management solution. Questions such as “How do you categorize the skills of your candidates?” or “Is there more than a questions filtering tool?” or “How do you go deeper than contextual search on resumes?” are key to making sure you won’t be obsolete soon!

We’ve proven that Baldrige and Six Sigma complement each other well. The analogy we use is that of an orchestra: Six Sigma takes the trumpet player and makes her a world-class trumpet player, but in isolation that doesn’t necessarily make the orchestra sound better. Baldrige looks at how all the elements are working together to make beautiful music. Put another way, Baldrige helps identify where we need to go, and Six Sigma makes the improvements happen.

But who is in the orchestra to begin with? These quality initiatives grew out of manufacturing at a time when it was the predominant industry in the U.S.; hence, they are process focused. All acknowledge the importance of employees, yet none of the major quality initiative programs address what may be of utmost importance in today’s economy: the quality of hire. The quality of the hire comes before the employee can be part of any team or participate in improving any process. Talent Definition A quality of hire program begins with talent definition. To drive quality into a selection and recruiting process, the company must first define what quality is for each position in the company. The selection process must be grounded on the foundation of a proper specification of the requirements of the job. The staffing department must work with hiring managers to set out the criteria that will bring about success at a job. These include:

• knowledge, skills, and abilities
• attitudes and motivation
• cultural fit, both with the organization and with its customers

The more specific the criteria, the better the company is able to calibrate the selection process and measure for a quality outcome. How to Measure Quality of Hire Once set, these criteria for the ideal candidate for a position inform all aspects of the recruiting process for the position, from the writing of the job description and the criteria employed by an online pre-screening function to the measurement of the quality of the hire. The criteria of selection and of performance must be aligned to ensure that the staffing process reliably selects qualities and characteristics that promote high-quality performance on the job. The comparison between pre-hire requirements and the new hire’s actual performance on the job may be made by:

• Surveying the hiring manager
• Consulting annual performance reviews
• Measuring worker productivity and tenure directly

Close the Feedback Loop Similar to the standard manufacturing quality programs, a program of measuring quality of hire also must provide a means of evaluating the effectiveness of change initiatives as a company seeks continuous improvement in its staffing process. The ultimate best practice for staffing to improve the quality of hire is to use quality of hire data to optimize the staffing process. Such an optimization involves a rigorous “loop back” of quality-of-hire measurements to changes made in the staffing process. Optimization is a challenge for most companies: metrics must be accurate and dependable, and staffing procedures must be standardized in a consistent and repeatable process. Without a staffing process that is measurably repeatable to begin with, optimization will not have a starting point from which to improve the process. The challenges of defining and measuring quality of hire pose high enough of a barrier to some companies that they do not make the attempt. Still other staffing departments do not measure quality of hire because the company’s priorities lie elsewhere, such as with cost containment. However, great financial benefit to the corporation’s bottom line is attainable through focusing on quality.

• Loss of productivity
• Loss of customers
• Shrinkage
• Loss of brand equity
• Separation costs
• Replacement costs
• Legal liability

Risk of Not Using the Best Technology The choice and implementation of a new staffing management system is fraught with risk. Delaying until a clear technological winner may seem to be a passive, no risk approach. But postponing the implementation of a staffing management solution actively risks corporate assets. Keep in mind:

• The competition is moving forward.
• An inefficient recruiting process risks losing top talent to rival companies.
• The company may lose top recruiters demoralized by the lack of leading technology and vision.
• Dissatisfied hiring managers may perceive their HR department and recruiters as ineffective, old school technology laggards.

You may know the benefits of improved technology and have even calculated the ROI, but you must carry this forward to make the business case and get approval. Risk of Alienating the Internal Customer Hiring managers are your customers inside the organization. A lack of responsiveness and poor quality hires result in poor hiring manager satisfaction, and ultimately risk alienating your internal customer. This can add fuel to executive consideration of the ultimate risk: outsourcing the staffing function. Risks and Rewards Staffing professionals are faced with many kinds of risk, legal liability arising out of EEOC suits, the risk of a bad hire, the risk of alienating hiring managers as a result of poor service, and the risk of having the staffing function outsourced altogether. What is the recommended course of action in the face of these risks? Design a systematic staffing process that will allow you to:

• Tailor your process according to the job and location to reap maximum quality of hire
• Capture EEO data
• Use reporting and metrics to keep internal customers and possible outsourcing initiatives accountable

With a systematic hiring process in place, staffing can be in a position to reap the rewards that come with contributing to the strategic business plans of the corporation and mitigate the risks.

• Aligned with business goals: Corporate business targets and HR strategies need to be synchronized and then translated into the tactics HR implements.
• Actionable: Too often, HR measures for the sake of measuring. A good metric must provide information that can be acted on, and must have implications for a clear plan of action.
• Consistent: A good metric must be consistent in what it measures and how the data is gathered. The data and methodology must be defined at the outset, and remain consistent; otherwise the value of its comparison is useless.
• Tracked over time: A good metric must be tracked over time, to provide information on the trend in the metric, not simply its state at one moment in time.

Metrics in a Centralized Model Adherence to corporate metrics is commonly mandated in a centralized staffing environment, often to track compliance to a standardized process. Therefore, metrics can focus on the steps of the process in great detail, with the aim of driving incremental improvements in performance. A shared, centralized database can easily be the source of data. A perennial issue, afflicting centralized and decentralized staffing models equally, is that reporting is often an afterthought. If recruiters have to stop what they are doing and fill in data after the fact, then there will be issues with the quality and integrity of the data. Reliable metrics are possible only if the reporting infrastructure is integrated with the recruiters’ daily work. The danger in a centralized environment is to measure and report on too many metrics, simply because the data is available. Be careful not to be too focused on the data. With too much data, it is difficult to know what is wheat and what is chaff. Metrics in a Decentralized Environment Much of the discussion of centralization and decentralization of staffing functions has a subtle bias against decentralization, implying that it is less rigorous and a second-class business practice. But a decentralized model is sometimes a necessity, depending on the business model. For example, a retail company with numerous small outlets typically employs a decentralized structure, suited to the lightning-fast hiring process typical of such environments. Introducing metrics is one way of increasing rigor and raising visibility of a decentralized staffing function. If a centralized staffing function is faced with an embarrassment of riches for metrics, a decentralized function typically is faced with a desert of data. HR generalists and hiring managers commonly are carrying out the staffing work; collecting and reporting data takes them away from the real work of the day. Again, the reporting platform has to be integrated with their daily work, or else the data will be missing, inaccurate, or worse ó made up. By definition, there are few shared processes in a decentralized staffing function. Each division may devise its own procedures. Without shared processes, you cannot craft metrics that measure specific steps of a process. What you have to focus on instead is the output of the process. Find outputs that are common across all divisions, and define consistent and actionable metrics for those milestones. The challenge then becomes working backwards from the outputs into what little data you have to identify ways to improve. Imposing a limited number of standard metrics on the branches of an otherwise decentralized staffing function is a move towards centralized control. Be careful, however, not to impinge on the very reasons why decentralization makes sense for your organization, such as freedom to react to local market conditions. The Role of Technology An enterprise staffing management solution provides the ability to capture and report enterprise-wide metrics. The efficiencies of a shared candidate database and the powerful reporting capabilities of an enterprise solution make a compelling case for centralization. The same technology, though, also enables more effective decentralization as it provides visibility across an enterprise into the demand for and supply of candidates, as well as real-time collaboration among HR generalists and hiring managers. Metrics are the key for HR to become more visible in the organization. In either a centralized or decentralized staffing structure, the requirements for metrics are the same: do not measure for the sake of measurement; keep metrics to a minimum; and measure output and what is in alignment with the strategic goals of the organization.

1. Aligned with business: In a Corporate Leadership Council survey, 62 percent of respondents cited “to better align HR strategy with corporate strategy” as the number-one goal for HR. More than half the respondents in a Towers Perrin study considered “shifting HR’s role to help address critical business issues” as the most significant challenge for HR leadership. Clearly, HR alignment with business goals is a priority to measure and improve upon, but it is also difficult to achieve. First, corporate business targets (direction set by the CEO) and HR strategies need to be synchronized, and then translated into the tactics HR implements.
2. Actionable and predictive: A good metric must provide information that can be acted upon. Too often, HR measures for the sake of measuring, without really thinking, “What do I do if the metric is lower or higher?” A clear plan of action and causality relation is a key element for successful metrics tracking. A metric that merely measures finite or completed actions, not ongoing activity, is only of forensic interest. Metrics must be regarded as a trend and must trigger appropriate action. The issue with many data points is that they are usually lagging indicators ó in other words, they show what happened in the past. A metric that, when analyzed, can forecast the direction actions should take in the future is called a leading indicator. Presenting leading indicators that can drive aligned action is where strategic HR is going.
3. Consistent: A good metric is consistent in what it measures. Comparisons are made of equally weighted criteria. Cost per hire, for instance, has been a popular HR metric. Yet a SHRM/EMA Staffing Metrics study identified more than a dozen components included at widely varying degrees by different companies to calculate cost per hire. Make sure that the data included in any metric you use is defined at the outset and remains consistent. Otherwise, the value of its comparison is useless.
4. Time-trackable: A good metric must be able to be tracked over time. It is not a snapshot of an activity at one moment in time. One example is the number of job applications received per week. That metric can be tracked and graphed to see both the weekly trend, as well as a monthly, quarterly, or longer interval, and forecast whether there will be a shortage or not. The frequency of reporting for a metric varies with different metrics. We recommend that the time-to-fill metric, for instance, should be reported weekly. Metrics addressing longer-term evaluations, such as hiring manager satisfaction or new-hire performance, could be tracked quarterly or annually.
5. Peer comparisons: In addition to analyzing internal performance, good metrics should be able to be compared to external benchmarks among a peer group. That peer group may be another business unit within your company, another company similar in size or location, for instance, or an industry benchmark. A metric viewed only as an internal measure may not reveal the need for improvement until tracked against an external benchmark. Conversely, that metric may show superior performance when viewed in a wider context. A good peer comparison metric allows for additional analysis of benchmark performance. Benchmarking by quartile can be another beneficial indicator of relative performance.

Common Mistakes The utilization of metrics in your staffing management process requires commitment and resource allotment, so it is important to do it right. As your staffing department endeavors to become more metrics-driven, beware of errors in the design and use of metrics. Common mistakes include:

• Metrics for the sake of metrics (not aligned)
• Too many metrics (no action)
• Metrics not driving the intended action
• Lack of follow up
• No record of methodology
• No benchmark
• Underestimation of the data extraction

The Way to be a Strategic Player Good metrics are the way to become a strategic player. Gathering, analyzing, and presenting pertinent information to upper management is the single strongest means HR has to meet the goal of providing critical input on strategic business issues. With good metrics and the technology to track them, the raw data and information from standard reporting can be analyzed further. Ad-hoc reporting can drill down to produce deeper knowledge on specific initiatives. Statistics can be computed to feed models, make predictions, and drive decisions and actions based on intelligence. Staffing management process and performance optimization based on powerful intelligence drawn from good metrics will deliver proven value and real ROI, and make you become an invaluable strategic player within your organization.

*International Migration Report, 2002. UN Department of Economic and Social Affairs. New York, 2002.

1. Hiring need identified
2. Post position to interactive media
3. Post position to non-interactive media

The list of potential candidates consists of those who respond to the sourcing stimulus. Delays inherent in waiting for the candidate population to react to the marketing stimulus contribute significantly to prolonging the overall cycle-time of the conventional recruiting process. If the exposure in the media is not sufficient, then as a last resort company may turn to a fourth step:

4. External agency search

The company may receive hundreds of resumes via postal mail and email, some of which may explicitly cite the requisition number. Those that do not must be manually matched up with the requisition, or else they join the thousands of other, largely ignored, unsolicited resumes the company has on file. Typically, once the hiring need has been filled, resumes of unsuccessful candidates are stored for a period. Storage of paper resumes presents a tremendous barrier to retrieval. In some ways, it is cheaper for the company to re-source for each new requisition rather than taking weeks to sift manually through filed resumes looking for candidates with the right skills. Hence, the full cost to attract a candidate must be incurred again for every new hiring need. Many large corporations have adopted resume management systems to handle the volume. However, this merely automates an older process, since it relies on non-scalable keyword searches. Matching keywords is an imprecise activity requiring human intervention to ensure accuracy. New Paradigm A structured candidate relationship database opens up new sourcing options. Hiring before you post means making use of developed pools of talent, within the corporation and without. With candidate relationship databases, sourcing is really transitioning to the following step-wise strategy:

1. Hiring need identified
2. Invite from employee pool
3. Invite from external candidate pool
4. Search internal mobility pool
5. Search external candidate pool
6. Post position to corporate website
7. Post position to commercial job sites
8. Post position to non-interactive media
9. External agency search

This escalation strategy moves from the lowest cost to the highest cost source, with the opportunity to fill the vacancy at each stage. As each source is exhausted, the strategy advances to the next source. Of course, this is not meant to say that the steps follow each other chronologically, rather that there is this order of business priority. Talent Inventory The value of candidate relationship management is the transformation of sourcing expenditures into inventory. With the automated matching of talent supply and demand, the recruiting process can move past a “one-off” activity in which each candidate is identified, screened and assessed, and hired or discarded. In the new paradigm, candidates touched by both past and present sourcing activities, are automatically accessible to communicate with for a hiring need. The cost of acquiring each candidate is significantly reduced as the existing proprietary corporate candidate database gets mined. The results of past sourcing dollars flow forward to be leveraged for all future demand. External sourcing no longer needs be started anew for each new staffing need. That’s how you can hire before you post!

1. Customer service. Identify the level of customer service your recruiters are providing to your hiring managers. Is it only resume collection, or is their role full pre-selection, validation, and background checking? Cutting the number of recruiting staff will affect successful delivery of the service your hiring managers have come to expect. Hiring managers will in essence be penalized, since they will have to assume more of the work that is currently in the staffing process. As the recruiting workload shifts more to the hiring manager, your organization as a whole will feel the impact negatively as well. The increased resource allotment of hiring managers’ time towards staffing will cause them to be less productive in their core roles.
2. Recruiter equivalent. To create a metric, you must be clear on the definition of each variable in your formula. For a recruiter efficiency metric you need to define what a recruiter is. At iLogos, we prefer to speak in terms of the “recruiter equivalent” as the sum of the recruiters and the administrative assistants. This is more meaningful than just counting the number of recruiters. Instead, the recruiter equivalent is a composite number that represents the true cost of processing manpower for each talent transaction. It enables an apples-to-apples comparison, a way of more accurately measuring labor allocation rather than defaulting to a simpler, but less precise, data point as is too often used in our industry.
3. Industry specific. What industry are you in? Industries have different and often specialized staffing issues. Healthcare, for example, is in a talent crunch. With many hard-to-fill positions, recruiters working in healthcare companies manage a high number of requisitions. As you create the ratio and build the case for your recruiter efficiency metric, recognize the specifics of staffing conditions in your industry and its current recruiting environment.
4. Strategic priorities. What is the level of efficiency you are expecting to achieve? Here you want to consider both your corporation’s as well as your staffing department’s strategic priorities. Think broadly in terms of corporate goals, revenue targets, and value creation. For instance, are high corporate opportunity costs necessitating a hiring cycle time of less than 30 days, or is a 90-day time to fill acceptable? Again, the parameters around your staffing department’s delivery of service must be clear.

Once these steps are taken, you can go to the next level and develop a historical view of your level of efficiency. You may choose to view your results by business unit or by location. At iLogos, we also benchmark recruiter efficiency results against external data, analyzed by industry. Your recruiter efficiency metric can be used to start comparing the true service delivered by your team. Then, according to your planning, you can project how your team should be optimally sized and determine if you have to cutback, reassign or make new hires.

1. Achieving recruiting and retention excellence
2. Creating a total reward and accountability orientation
3. Establishing a collegial, flexible workplace
4. Opening up communication between management and employees
5. Implementing focused HR technologies

Excellence in all practices is associated with a 47% increase in market value. Analysis was also able to quantify exactly how much an improvement in each area is expected to increase a company’s market value. For instance, excellence in recruiting and retention is associated with a 7.9% increase in market value. Correlation or Causation? When two phenomena are positively correlated, it is tempting to say that one causes the other. But the problem with drawing a conclusion concerning a cause-effect relationship is that one can never be sure which of the two phenomena is the cause and which is the effect. Can we really say that better staffing creates better financial performance, or is it rather that good financial performance makes better resources available to HR, which in turn produces better staffing? The first year of the Watson Wyatt HCI study could only say that the two are clearly linked, and so could not answer the skeptical suggestion that the research only uncovered the more simple truth that strong financial performers excel in HCM practices, instead of the more interesting result that following superior HCM practices actually brings about improvements in the bottom line. Now in its second year, the Watson Wyatt HCI study is in a position to bring more clarity to the issue of whether effective HCM practices actually cause better economic performance. With data from a group of companies at two different points in time, the Watson Wyatt researchers are now able to show that not only are superior HCM practices correlated with financial returns, but they are also, in fact, a leading indicator of increased shareholder value. A “cross-lag panel analysis” shows that the relationship between past HCM practices and future financial performance is stronger than the relationship between past financial outcomes and future HCM practices. These results strongly suggest that better HCM practices actually create better financial results. Putting HCI Results To Use One mandate of HR is to think about retention and make sure that processes are in place that enable employees to remain in the company. For instance, an internal job posting system would make employees more aware of internal opportunities. It would enable every employee to be more aware of his or her opportunity for advancement within the company. As a consequence, an internal job posting system would reduce turnover. As it happens, Watson Wyatt’s HCI research demonstrates that HCM practices that improve retention have a positive impact on market value of 3.2%! Furthermore, improving services to employees and managers by implementing new technology has a positive impact of 2.3%. No better justification could be made to a CEO or CFO. The Watson Wyatt Human Capital Index makes it clear: staffing is a mission-critical component of the success of your firm. If you are challenged, you can articulate the justification for superior HCM practices with strong data and analysis.