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The Search for the Perfect Candidate, Part 4
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In the previous three articles in this series on the search for the perfect candidate, I made the case that three fundamental changes were required to hire more top performers:
Collectively, these changes can profoundly improve the effectiveness of a company’s recruiting and selection methods. We have not found one situation where hiring results have not improved at least 25%-50% as a result of implementing performance-based hiring as described. In this article, I will present the theoretical validation for the process recommended. In 1998, an article by Frank Schmidt of the University of Iowa and John Hunter of Michigan State University appeared in the Psychological Bulletin (Volume 124, No. 2). The title pretty much tells it all: “The Validity and Utility of Selection Methods in Personnel Psychology: Practical and Theoretical Implications of 85 Years of Research Findings.”
The authors examine 19 different selection procedures for predicting job performance and the impact of combining different processes together. Their summary conclusions are that the use of a test measuring general mental ability — in combination with a structured interview, a work sample test, an integrity test and a structured interview — dramatically improves the results of the job selection process. While the article would not be considered “easy reading,” there are some critical issues presented that impact how these tools should be used. Following is a table which summarizes the predictive validity of each selection method, plus the increase in using any one of the techniques in combination with a test for general mental ability (GMA).
| Selection method | Improvement on a coin flip (50/50) | Increase in combination with GMA test | Comments |
| GMA tests | 12% ? 62% | Alone 62% | General mental ability |
| Work sample tests | 14.5% ? 64.5% | 20% ?70% | Used to test skills |
| Integrity tests | 8.5% ?58.5% | 21% ? 71% | Measures counterproductive behaviors |
| Conscientiousness tests | 5% ? 55% | 18% ? 68% | Measures dependability |
| Employment interviews (structured) | 12% ? 62% | 20% ?70% | Pre-planned based on job and formal scorings |
| Employment interviews (unstructured) | 7% ? 57% | 15% ? 65% | No plan, any questions, no ratings |
| Job knowledge tests | 11.5% ?61.5% | 17% ? 67% | Requires job knowledge |
| Job tryout procedure | 9.5% ? 59.%5 | 17% ? 67% | Okay for entry-level positions |
| Peer ratings | 12% ? 62% | 17% ? 67% | Acceptable for internal moves |
| T & E behavioral consistency method | 10% ? 60% | 17% ? 67% | Compare job needs to past performance |
| Reference checks | 3.5% ? 53.5% | 16% ? 66% | Less useful in current legal environment |
| Job experience (years) | 1.5% ? 51.5% | 14.5% ? 64.5% | Has less value with more than five years of experience |
| Biographical data measures | 6% ? 56% | 13.5 ? 63.5% | Captured in GMA |
| Assessment centers | 7% ? 57% | 14% ? 64% | Costly and not much better than GMA |
| T & E point method | .5% ? 50.5% | 13.5% ? 63.5% | Not based on performance, too arbitrary |
| Years of education | 0.5% ? 50.5% | 13.5% ? 63.5% | Captured in GMA tests |
| Interests | .05% ? 50% | 13.5% ? 63 | No correlation whatsoever |
| Graphology | 0% ? 50% | 12% ? 62% | Handwriting is useless |
| Age | 0% ? 50% | 12% ? 62% | Slightly negative correlation |
This table summarizes how well each of the selection techniques predicts on-the-job performance. Column two shows this in comparison to a 50/50 coin flip. For example, a GMA (general mental ability) test improves random 50/50 odds to 62%. An unstructured interview by itself is 7% better than a coin flip, or 57%, and a structured interview by itself is 12% better than a coin flip, or 62%. Age, education, handwriting, and job experience don’t provide much predictive value. Other than the handwriting part, this is somewhat of a surprise. The point of the article is to demonstrate that using multiple selection tools, the odds of predicting on-the-job success increases. However, the results are not additive, since some of the impact of using one tool could overlap with another.
To address this, the authors used a statistical technique referred to as meta-analysis. This is shown in column two, where the results of each selection process were combined with the results of the GMA test. This yielded a combined predictive value. The biggest improvements were in areas using the structured interview, integrity tests, reference checks and job related tests. Using any one of these selections methods in combination with a GMA test improved the predictability of a new hire into the 65-67% range. Two other key points were made in the article which suggest that behavioral interviewing is not necessarily the ideal interviewing tool:
The Schmidt and Hunter study didn’t determine which were the best overall suite of tools to use for selecting new employees. I’ll leave the actual meta-analysis to determine this to Charles Handler and Wendell Williams, but here’s my common-sense suggestion as to which five selection tools should be used:
The Schmidt and Hunter study is of invaluable importance to anyone involved in deciding how to make better hiring decisions. Most companies use some ad hoc approach which roughly cover the five recommended techniques. Few companies, however, modify them appropriately to meet the needs of top people. This is where performance-based hiring has a distinct advantage. Not only it is theoretically sound; equally important, it was developed to address the unique needs of the perfect candidate.