1© SHL 2012November 19, 2013

Verifiable business results in HR consultancy

Prepared for “Zilele Biz” [2013-11-13]

2© SHL 2012November 19, 2013

Making HR measurement strategic

• It does not require claims, but actions

• Requires a melange of Financial and Technical reasoning and

expertise

◦ Financial: because any strategic metric finally should be resolved

to a cost-benefit analysis

◦ Technical: because measurement is impossible without

understanding the construct measured

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Established HR measurement models on ...

• e.g. Cascio & Boudreau (2008)

• We can now measure very well Cost & Gain for:

◦ Absenteeism

◦ Employee separations

◦ Employee Health & Welfare

◦ Employee Attitudes, e.g. Engagement

◦ Talent Investment

◦ Development programs

◦ Selection & Staffing

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An example: Efficiency of personnel selection

• What methods can and will be efficient?

• When are tests useful?

• Can I assess how many misdecisions (mishires) I will do with a

specific selection array?

• Can I improve on this? When is it worth it?

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Terminology

• Base Rate (success rate)

◦ The proportion of current job incumbents recruited without the use

of tests who perform well in the position

• Selection Ratio

◦ Proportion of applicants who are selected

• Test Validity

◦ Relationship between test scores and job performance

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Terminology clarified in an example

• 100 applicants for 20 customer service positions

◦ (Selection ratio is 0.20)

• 60 out of these 100 applicants (60%) are likely to perform well

◦ (Base rate of 0.60)

• If applicants were selected at random we would expect:

◦ 12 are likely to be successful in the job (60% of 20 selected)

◦ 8 are likely to be unsuccessful (40% of 20 selected)

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The Taylor Russell table

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VALIDITY

SELECTION RATIO

.05 .20 .40 .60 .80 .95

.0 .60 .60 .60 .60 .60 .60

.1 .68 .65 .64 .63 .61 .60

.2 .75 .71 .67 .65 .66 .61

.3 .82 .76 .71 .68 .64 .61

.4 .88 .81 .75 .70 .66 .62

.5 .93 .86 .79 .73 .67 .62

.6 .96 .90 .83 .76 .69 .63

.7 .99 .94 .87 .80 .71 .63

.8 1.00 .98 .92 .83 .72 .63

.9 1.00 1.00 .97 .88 .74 .63

1.00 1.00 1.00 1.00 1.00 .75 .63

Estimated ratio of applicants hired who can be expected to be successful on the job.

This table is based on a current random selection success rate of 60%

LOW HIGH

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Quality of selection measures (Robertson and Smith, 2001)

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+1 PERFECT PREDICTION

.63

.60

.54

.51

.51

.41

.40

.35

.26

.18

.10

.02

0

-0.01

Ability and Structured Interview

Ability and Work sample

Work Sample Tests

Structured Interviews

Ability Tests

Job knowledge Tests

Personality Tests

Biodata

References

Years Job Experience

Years Education

Graphology

RANDOM PREDICTION

Age

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How can I improve?

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HIGH

LOW

LOW

• Validity

• Current success rate

• Selection ratio

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When can I not improve (or it’s not worth it)

• There are very small numbers of applicants

• Current success rates are high

• Individual differences in job performance are small

• Job success is not critical, failures can be tolerated

• Anybody can prove successful

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Questions?