talent acquisition

ANkur hooDA

Hiring your A-team

What's the key to maintaining a sustainable advantage in today's economy? Read on to find out…

The traditional ways to create a "sustainable competitive advantage" are quickly eroding. Relying on traditional barriers of entry is no longer an option for companies to preserve their market positions given the pace at which the global economy is operating and changing. Netflix is a perfect example that illustrates changing rules of the game. Netflix offered Blockbuster a majority stake for about $50 million in 2000 and got rejected by Blockbuster. Over time, Blockbuster went bankrupt while Netflix's market cap reached $100 billion in 2018. So why did the $6 billion company Blockbuster got beaten by Netflix? What did Blockbuster lack that Netflix have? What's the key to maintaining a sustainable advantage in today's economy?

In a word: talent

A common approach in building winning teams is to recruit slightly above-average talent and bring out the best of them by investing in their training & development. Let's call this The Karate Kid approach1.

But Google, Netflix, and a few other companies are taking a starkly different approach by shifting their talent budgets from Learning & development to identifying star performers during the hiring stage—let's call this Moneyball approach2.

In his book Work Rules! Laszlo Bock3, who led recruiting and people operations at Google, forcefully argues against the practice of allocating more resources on training than recruiting (Figure 1) and advocated the Moneyball approach. He reasoned the effectiveness of the majority of corporate training programs and thus questioned the value of time/money invested given their incapability in significantly improving the skills of the participating employees. Instead, advocated that spending training budgets on recruiting will yield better results.

Average spend per employees at US Companies. Based on data from Bock, Work Rules!

606

456

Training Spend ($) RecruitingSpend ($)

If talent identification is more economical than talent development, massive investment in the selection process can pay off. Google and Netflix adopted this approach and succeeded in using this insight to create a sustainable advantage over their competitors.

Many companies have taken this lesson to heart and are building up their talent acquisition analytics teams to improve the accuracy of hiring predictions. Yet, many organizations use traditional methods like the unstructured interview to select their workforce.

Researches have highlighted that the Success prediction rate of an Unstructured Job Interview is roughly the same as flipping a coin. Analysis of 85 years of research by Frank Schmidt and John Hunter illustrated unstructured interviews can predict only 14 percent of an employee’s performance4 .

Atta Tarki in his book Evidence-Based Recruiting5 substantiated General Mental Ability (GMA) tests as the single best predictor of job performance (Figure 2). It assesses a candidate's ability to learn, understand instructions, and solve problems. Other strong individual techniques include job knowledge tests, integrity tests, and tryout stints such as internships. These measures have a high correlation with on-job-performance6 enable to measure, standardize, and replicate many of the outcomes and qualitative methods offer richness and depth of the insights. When assessing candidates, both methods ought to be used as complementary tools.

On par with General Cognitive Ability tests, Structured Interviews (26 percent) is an equally reliable predictor as a selection tool, wherein candidates are asked a consistent set of questions with clear criteria to assess the quality of responses. Structured

Predictive validity for job performance of selection tools. Based on data from Schmidt, Oh, and Shaffer 2016

General mental ability test Job Knowledge test Integrity tests Job tryout procedure

Grade point average (GPA) Work sample tests Emotional intelligence tests

Situation judgement tests Job experience Extroversion

0.48 0.46 0.44 0.65

0.34 0.33 0.32

0.16 0.09 0.26

Laszlo Bock in his book Work Rules also describes Work Sample Test (29 percent) as the best predictor of job performance and General Cognitive Ability (26 percent) tests as the second-best predictor7 .

Selection methods can be qualitative/quantitative. The quantitative methods interviews are further classified as Behavioral and Situational. Behavioral interviews involve asking candidates to describe prior achievements and matching those to current job requirements like “Tell me about a time... ?”. Situational interviews present candidates with the hypothetical situation

related to like “What would you do if…?” However, while deploying Structured interviews as part of the selection tool, it is imperative to consider The Invisible Gorillas of Interviewing8.

Interviewer’s personality, expertise, and experiences shape his approach to leadership and how he/she selects talent. How an interviewer selects talent is called their “hiring style.” Hiring styles come in four types. 1. Tackler – Characterized by speed and decisiveness,

Tackler likes candidates who can get results and condense timelines. Looks for evidence of that drive in candidates 2. Teller – Spends time in communication and selling the opportunity.

Shares information and gauges the reaction of the employee. Hires candidate who can get inspired based on teller narration 3. Tailor – Prize collaboration. Spend time in building rapport in an interview, promote the exchange of thoughts.

Takes decision based on how candidate collaborates 4. Tester – Methodical and fact-oriented. Values data over storytelling. Prefers candidate who demonstrates logical evidence to do a task if required looks for details that affirm the candidate ability to do the job

Although, none of the styles is bad. However, overreliance on any dominant style can tilt focus towards one part of reality, creating distortion. A more expansive and realistic perspective is available if the hiring team is composed of people with diverse hiring styles than a team with one or two styles. Selecting a hiring team that leverage all four hiring styles and integrating evidence-based selection tools can help to have slightly higher odds of hiring a star performer and slightly lower odds of being a mis-hire.

So where do organizations start to embark on this journey? • Assign one of the five best people to talent acquisition. • Define what "good" means in terms of Quality of

Hire (competence, traits) • Articulate Explicit strategy - The Karate Kid or

Moneyball, i.e., will you try to increase the quality of employees through training and devel-

opment or by recruiting star performers? Or both?Redefine talent acquisition team's role to include education on screening techniques designed to predict on-thejob success and hiring styles • Never give up on tracking results and metrics. • Prioritizeandfocuson testing a few candidate evaluation techniques at a time All this is easier said than done, challenges include; • Difficult to bring discipline in Interviewers to follow a certain format for the interview or their feedback • Data will be questioned if it runs counter to the intuition of business leaders • Such high-quality bar for every job might be argued by Hiring Managers

Holding ground in face of pressure is crucial in the battle for quality.

Source:

• 3,7 - Book : Work Rules by Laszlo Bock • 8- Book : High Velocity Hiring by Scott

Wintrip • 1,2,5,6 - Book : Evidence-Based Recruiting by Atta Tarki • 6 -Schmidt, Oh, and Shaffer (2016).The

Validity and Utility of Selection Methods in Personnel Psychology: Practical and

Theoretical Implications of 100 Years of

Research Findings • 4- Schmidt, F. L., & Hunter, J. E. (1998). The validity and utility of selection methods in personnel psychology: Practical and theoretical implications of 85 years of research findings.Psychological Bulletin, 124, 262-274

AnkuR HooDA works as HR Business Partner with RPG Group (KEC International)