Hiring: Hunch Based versus Computer Modeling

A recent article in the Wall Street Journal ( Sept. 20th, 2012 article link is below), talks about how algorithms and computer modeling are now used to hire personnel. It does not mention interviews and validation of assessment (or test) results which are critical components to a final job offer and/or promotion, and implies that resumes, education and experience are not considered or not weighted very heavily.

Algorithms Run the Workplace - Companies Trade In Hunch-Based Hiring for Computer Modeling

The companies that we worked with, many of them large BPO/Call Center companies, as well as the training we conducted, emphasized the importance of assessments in better defining "job fit" through Benchmarking, which has been proven over many years to significantly increase employee retention and heightened job performance. However, equally important is observing the distortion value (a measure of how consistently a candidate answers the questions during the assessment/test) and validating the results by asking Behavior Event Interview (BEI) questions and conducting background checks!

The reason for using assessments is to consistently evaluate candidates in a time-sensitive manner, and in an unbiased way. This is critical as it has been proven that people decide on a candidate within the first 4.3 minutes of an interview, which means that the interviewer is strictly going by "gut" instinct unless he/she is well trained to overlook first impressions.

Most of the large BPO/Call Center companies generally desire to test, interview and make a job offer within 8-10 hours. The reason, especially at the height of mass hiring and new client ramp-ups, is to quickly identify good candidates, make an offer, and get an acceptance within one day, so that these candidates are not lost to other companies. These methods are employed by many industries, large and small and who may not be needing to meet such strict time requirements.

Good assessments should take into account: Learning Index (IQ), Behavioral Index (EQ) and Areas of Interest that the candidate has. If there is good alignment with the position and the company, this good "job fit" will greatly enhance success, both for the candidate and the hiring company.

ATS (Applicant Tracking Systems) are used to manage large numbers of applicants, help identify those who do not meet the minimum requirements and filter them out, while keeping track of those who move on through the hiring process, and also help prevent the same candidate from applying multiple times within a given time frame to the same company for multiple positions.

In the above article there is mention about commuting time being a criteria. However, especially for overseas operations, many times candidates learn of this "select-out" criteria, and merely list a relative's address that is nearby the facility. An interview and especially a background check will quickly help to identify if the candidate does indeed live within the prescribed radius of work.

A couple of scenarios which are used are:

So, while assessments are excellent in evaluating candidates, they should only be weighted at 1/3 of the total value in the hiring process, as validation of the results through a BEI interviews and good background checks, are critical.

Are you following these key principles?

Improper vetting of Data on a Resume leads to Resignations at Yahoo!

As mentioned in a couple of earlier blog posts, making sure that the references check out and information on Resumes/c.v.'s is accurate before hiring someone, is critical and essential. This impacts the corporation on multiple levels:

1) Making sure that there is good "Job Fit" by contacting people who have worked with the individual before and how they have performed, and in "assessing" behavioral traits that fit with the position's benchmark, based on top performers.

2) Ensuring that the Ethics and Moral values of the person are consistent with the company's values, as this person's interaction with all levels of the company's personnel will have some effect, regardless of position within the company, from sanitary engineer on up.

3) Finding a replacement can take time and interrupts strategies or activities being handled by the individual in question and can set back the initiatives, by months to even years.

4) It affects the morale of of the company and personnel. The higher the position of the person or people in question, the broader the impact and negative affect on the company. In this most recent case at Yahoo!, which has been struggling to compete against Google, it casts ongoing credibility issues for the company, both internally and with shareholders. Morale and Credibility Issues follow Yahoo!

And:
5) In this case, it has affected not only the career of the individual who embellished his credentials, but also, regrettably another Board member.

Have all the shoes fallen yet? Only time will tell! There should be policy changes put into place to prevent a occurrence, that is clear.

Scott Thompson CEO of Yahoo! Resigns

Patti Hart of Yahoo! Resigns Over CEO's botched Academic Records

BPO Attrition/Turnover 20-60%, Retention Initiatives and Recruiting Issues

A Behavioral Event Interviewing 2-Day Workshop which I held, conflicted with attending a CEO forum where the President of Asia Pacific, Mr. David Rizzo of TelePerformance, spoke. An article was written about the gist of his presentation which is at the end of this article.

It raises some troubling issues about the Outsourcing Industry and hiring in particular, and brings out a few questions about the industry and indirectly some of the same issues for other industries, assuming that the article accurately reflected his presentation.

He addresses the need to focus on retention initiatives while continuing to grow! Very commendable.

It is still surprising that he reports that retention rates range from 40-80 percent after at least 6-8 years of high growth in the Business Process Outsourcing (BPO) industry in the Philippines. This means that attrition/turnover is the reciprocal, amounting to: 20-60%. The period of time covered was not reported. But, in the past, about 3 years ago, BPA/P ( The Philippine association for BPO's) had reported turnover from 20-100 percent per year, and that many times half of these numbers were due to people leaving and the other half, people being "asked to leave." Therefore, there has been some improvement (dropping the 100% turnover down to 80%), but not great.

Mr. Rizzo mentions the reasons for the present turnover is due to several reasons:
1) Overnight hours which people are not used to working,
2) Stress caused by customers who may be too challenging to handle because they are angry,
3) Employees find the work too technical,
and
4)  the Company is unable to meet the employee's expectations.

This is amazing given today's technology and methods for Pre-hiring:

Issue #1) Overnight hours which people are not used to working: there are video introductions that can help to address this issue and can be used as "knockouts"  to prevent further interviewing and hiring these kinds of people. Granted, recent graduates and some people may not know if they handle the hours, but it is likely that most know their limitations or the candidates can talk with someone they know in the industry. Also hiring people who have already worked in the industry, these people will know if they can handle the hours.

Issue #2) Stress caused by the customers: many companies use videos to simulate real-life situations and also tests, both verbal reply and written, to find out how a candidate will handle this kind of angry customer. Again these are "knockout" issues before going any further in the pre-hire process and give the candidate a good view about what the position will entail, as well as, if the candidate will like or want to work there.

Issue #3) Employees find the work too technical: there are many skill tests to find out what the candidate may know or at the very least by using assessments, if they have technical capabilities and interests.

Issue #4) The Company is unable to meet the employee's expectations: It would be helpful to better understand exactly what kind of expectations are not being met, since this article is not specific. Once the expectations are known(as they probably vary by company), these can be covered up-front in the Pre-Hire process.

Most of these issues can be uncovered or addressed through good programs of: application and ATS(Applicant Tracking Systems), assessment and skill testing, Behavioral and Critical Incident Interviewing and good benchmarking around each job, based on top performers. These steps will help to "weed out" those that will not make it longer term, all of which should significantly help in reducing turnover, especially in the ranges mentioned as being 20-60 percent.

In past years, the BPO industry identified that one of the major problems they had was not identifying leadership in their pre-hiring process, as there was a gap between hiring good agents and their being able to handle the front-line position. Now, many times companies try to identify 10% of their incoming candidates who also have a good job fit with the front-line manager benchmark also. This process allows them to develop succession planning and training for the next level potential managers early on in the employees' career and development. [Benchmarking around top and bottom performers, can be done and takes a matter of minutes, with the right tool.]

Obviously, good "on-boarding programs" can also help to address these issues by providing a good introduction to the company and the specific requirements of the job, so that new hirees can "opt out" on their own early, saving the company training costs and more investments that will happen in the ensuing months.

Lastly, Mr. Rizzo made the statement: “We are not going to let price pressures get in the way of investing in our people. After all, happy employees translate to happy customers”. This is true to a point, especially in growing "employee engagement." But the reality also arises, in that incurring too many costs CAN affect your competitiveness globally! Hiring Right is probably be the best solution, while providing facilities and benefits, are more like the icing on the cake.

It is hoped that the industry can really address these unsupportable turnover/attrition rates, because these rates lead to extremely high costs. When you consider the rule of thumb that turnover costs run from 3 months to 2.5 years worth of a person's salary, is the company sustainable long-term?

Only time will tell!

Contact center firms urged to invest more
By Louella D. Desiderio (The Philippine Star) Updated March 17, 2012

MANILA, Philippines - Contact centers in the country will have to invest more in programs focused on their employees to encourage them to stay in the company and provide better service to customers, a top executive of a contact center service provider said.

Speaking at the Asia CEO Forum held on Thursday, David Rizzo, president for Asia Pacific of Teleperformance said that investing in retention activities need to be done by contact center firms that intend to continue to grow their business given the number of employees choosing to leave the industry and the high competition among firms in finding workers.

 “It is very critical to focus on retention initiatives to ensure not having to replace the employment pool while growing at the same time,” he said.

He said that employees in contact centers leave for reasons often related to the job.
He cited that some employees opt to leave the business due to the overnight work hours which they may not be used to or the stress caused by customers who may be challenging to handle.
He said that customers who receive an incorrect bill, for instance, may be hard to deal with particularly when they start complaining and taking their anger on the call center agent.
Some employees, he also said, leave the job because they find the work too technical or unable to meet their expectations.

He noted that in the industry, the employee retention rate ranges from 40 to 80 percent.

Given the limited supply of talent available in the market and the high competition among contact center firms for supply of workers, he said, investing in programs that keep employees satisfied with their job becomes even more important.

He said that contact center firms can for instance, provide spaces for recreation in the workplace such as gym, sports facilities and karaoke rooms, which their employees can use.
Contact center firms, he also said, can offer employees who cannot work overnight a daytime shift.
Career management programs, he said, may also be developed by contact centers for their employees.
He said that while investing more in employee-engagement programs may mean additional costs for the company, it is expected to yield results favorable to the company since its workforce is its main asset.

 “We are not going to let price pressures get in the way of investing in our people. After all, happy employees translate to happy customers,” he said.

Contact Center Firms Urged to Invest More - by Louella Desiderio 

ETHICS, Drugs and Morality: How they affect Communication, Productivity and Everyday Life- Part IV

The recent study about Ethics (Higher social class predicts increased unethical behavior-from the Proceedings of the National Academy of Science of the United States) was mentioned in yesterday's posting, but it merits greater attention, as it is as recent as January 2012. Also, many times, higher social class people tend to be in higher positions, for a variety of reasons, some warranted and some not. This study was mentioned in a recent Canadian TV newscast also.

The importance of this study is of interest because it states that the higher the social class, the greater the increase in unethical behavior. So, this supports why both pre-hire assessments should be used to help screen and identify these behaviors before hiring certain individuals, or at the vary least, the need to validate the results. Establishing benchmarks can be easily done around these issues. For non-profits these behaviors may be even more critical.

Even if these people are hired, then the company should use this information as Training Needs Analysis and possibly implement more frequent reinforcement in the beginning years of employment for these individuals. Or during the onboarding process, highlighting sections in the employee manuals, and if ethics is part of core values, then highlighting this also.

The significance of the study is important as it may also be a partial explanation as to why recently there have been so many abuses of fraud, stealing and and deception in high profile news stories. Only through Board oversight can the C-Suite and senior level employees be supervised. The rest of the organization should be supervised by watch-dog employees and HR scrutiny.

Below is the abstract from the above mentioned study. The link is in the first sentence above.

Higher social class predicts increased unethical behavior

1      Paul K. Piffa,1,

2      Daniel M. Stancatoa,

3      Stéphane Côtéb,

4      Rodolfo Mendoza-Dentona, and

5      Dacher Keltnera

+ Author Affiliations

1      aDepartment of Psychology, University of California, Berkeley, CA 94720; and

2      bRotman School of Management, University of Toronto, Toronto, ON, Canada M5S 3E6

3      Edited* by Richard E. Nisbett, University of Michigan, Ann Arbor, MI, and approved January 26, 2012 (received for review November 8, 2011)

Abstract

Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals’ unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.

ETHICS, Drugs and Morality: How they affect Communication, Productivity and Everyday Life- Part III

When asked WHY, after conducting pre-hire assessments of candidates, and drug screening prior to hire,  the client still has issues with employees who have been long term employees in the areas of ethics, drugs and morality...

The reason is relatively simple…

These are issues that need to be re-enforced over the years regardless of how we have been raised, taught and/or shown. Our personal situations change over time, and there are temptations and challenges that we are confronted with that test our resolve in these areas. Personally, I have observed that mid-life crisis years (male and female) increase the pressures on individuals and a number of people have changed or relinquished their values to regain where they had envisioned themselves to be at this stage in their career or life. Many times, this is because they possibly have felt that they have not attained the success they had expected to achieve at this stage of their life, or financial challenges have arisen at a stressful period of time, and many other reasons.

This is why it is essential that companies have reinforcement programs to remind existing employees of policies and standards that need to be followed. In a fortune 100 where I worked, after a several hour session of re-enforcement each year, we had to sign anti-trust and ethics standards each year.

These kinds of programs need to be implemented yearly as they can then communicate changes in existing  programs, or address questions that employees might have encountered through the course of the year.

In January of this year, at the National Academy of Sciences of the United States, a paper was included with the title of:  Higher social class predicts increased unethical behavior . Maybe this is ONE reason why so many recent instances of CEO and Senior Executives violating laws or absconding with money, in one way or another.

Ethics in particular is a major problem. Obviously, the well publicized cases in the past of Bendix’s

Agee, Enron, and what you can find in this article: The Corporate Scandal Sheet

And a recent Wall Street Journal article: Behind a CEO's Departure: An Ouster or Resignation?

Best Buy: Best Buy Probes CEO Relationship

MF Global : Fast, Furious at MF Global

Allan Stanford: Prosecutor Sums Up: Stanford Lied for Decades

AIJ Investment Advisors (Japan): Japan launches probe of all advisory firms in wake of AIJ case

Russell Wasendorf of Peregrine said in a statement that he forged documents and lied to regulators.

Hong Kong Billionaires Charged With Bribery

If you are not addressing these regularly, then do not be surprised when employees "fall off the wagon"….so to speak. These examples above, are the high profile ones, imagine the lower level employees and the numbers that exist there. The retail industry is well aware of the theft and losses involved. Does your Employee Manual address these issues? Are they not part of your core values? Is this not a key element to building human asset value and sustainability? So if you are not doing assessments during pre-hire, don't you think you should? Once people are on-board, re-enforcement programs are required. 

So the question is: What are you and your company doing to address these issues on a regular basis?

Talent and Skills Shortages Number One Risk in Asia Pacific and 4 Other Risks

In the earlier post about Corporate Risks ( Global Risks to Consider and Recent Analysis by Lloyd's- Has Your Company Considered These? ) that need to be considered. It was identified that Lloyd's had ranked these Global Risks, but they also identified Regional Risks. The  image below came from the report that they assembled for 2011. It is very interesting that Talent and Skills is the Number One Risk for Asia Pacific, given the unemployment rate and educational levels in the region and the flood of youth coming up.

So, CEOs and Senior Managers need to seriously consider this, not only if they are planning to expand in the region, but also if new entries (start-ups) are being planned. It will require expert Succession Planning and Strategic Planning efforts to address this risk issue and the others identified, as well as Coaching, Mentoring, Training and Team Development for key corporate members to help fill this gap.

The BPO industry in the Philippines, identified several years ago, that while the industry could do a good job of hiring and filling entry level positions, when they promoted effective call agents, for example, these people did not have the managerial skills to handle a "Front-Line Manager" position. In many instances they were promoted to their level of "incompetence." So the bottle-neck to growth was not having identified and trained potential new managers soon enough to handle the high influx of new candidates for entry level positions.

Consequently, they changed their processes in Pre-Hire to identify 5-10% of the people considered for the entry level position(s), who had the right IQ and EQ to fit into their organizations, and who had good "job fit" with the Benchmarks/Job Pattern /Performance Modeling for not only the entry level position (significantly reducing turnover), but also for the Front-Line Manager position. They would "mark/follow" these people by observation and possible early training to assume the higher level position. This experience was possibly the early warning signs that Lloyd's seems to be now reflecting in their study, now.

For the Asia Pacific Region, Lloyd's identified the following 5 areas of major risks to be considered or addressed:
    1) Talent and Skills shortages
    2) Currency fluctuations
    3) Inflation
    4) Loss of Customers/Cancelled Orders
    5) Company Reputation Risk

As also highlighted in the area: CEO, Senior Manager, Leadership, Strategic Planning and Charisma , it is essential that CEOs, Senior Managers, and Corporate HR Managers identify at least 3-5% potential Leaders within each level of the organization (bench strength) in order to help address sustainability for the corporation. Without bench strength, just like for a sports team, while the top players are available and not injured, the team does well; but without the organizational depth and strength, it can result in high fluctuations in corporate performance over time.

The question remains: How Well Positioned Is Your Company for the Upcoming Forecasted Risks within the Region - Presently and for the ensuing 5-10 years? The future and investments are yours to make to position the company for growth and profitability! To ignore these risks could be at the peril of the corporation and organization.


Risks - Then and now: what has changed?