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Go Beyond Your Gut: A Case for how Predictive Analytics can improve Hiring Results

Posted on October 6, 2014 in Posts by admin

Dan Stravinski serves as Senior Vice President, Human Resources at Berkshire Group and has written for notable industry publications about HR practices. He offers insight on how predictive analytics software can identify high-performers as well as fit best into the company’s culture.  

 
Berkshire Communities had a turnover problem. Among its leasing consultants an average of 70% were not retained the following year. Internal studies had shownthat pre- and post-turnover occupancy loss associated with leasing consultant turnover was costing its properties over $45,000 in lost revenue each time a leasing consultant left the company voluntarily. This figure does not include the cost associated with hiring a new person, covering the job in the interim, training costs, etc.

Berkshire also had an opportunity. Using predictive analytics and data based decision-making, the company felt it could improve the performance of its leasing consultants by hiring new leasing consultants with the characteristics of our most successful current employees in this job.

To do this, we chose to use a talent science tool provided by PeopleAnswers which was recently acquired by Infor. Berkshire worked with PeopleAnswers to identify the key characteristics of our most successful leasing consultants, behavioral data points which were then used to create a hiring profile for use when filling open leasing consultant positions at our 100+ properties located throughout the United States.

After five years of using the PeopleAnswers pre-hire assessment, turnover has been reduced by half and leasing consultants hired from the top two fit score categories signed over 30% more leases per prospective resident visit than employees hired from the bottom two categories.

Another telling result was that when individuals were hired based on the subjective assessment of the hiring manager despite low fit scores, the person hired was a low performer and were either fired or left of their own accord.

The use of tools like the PeopleAnswers pre-hire assessment is one example of using data and analytics to improve the return on your human capital investment. People hired using this tool not only remain with the company longer, thus reducing lost revenue from dips in turnover related occupancy, but they also secure more leases.

The use of these tools is not for the faint of heart. It takes a lot of work and requires the right kind of data as an input to the process. Normally the use of pre-hire assessments works best when you have many people in the same job. The process of developing a hiring profile involves identifying both high performing and low performing employees. It sounds easy, but this process must involve more than “a gut feeling” as to who is a high performer. Performance ratings don’t work because of the inherent challenges in coming up with a consistent, valid and reliable performance rating across many managers, and even by the same manager. A number of possible metrics were reviewed for possible use in the creation of a profile of a top performing Berkshire leasing consultant. These included secret shopper scores, performance appraisal ratings, move-ins and closing ratios. Berkshire ultimately chose closing ratios (gross leases/net visits) to separate high performers from low performers based on objective data. Performance appraisal ratings were too subjective, shop scores were not consistent enough among secret shoppers and the number of data points for each individual was sometimes insufficient and number of move-ins did not take into account variations in number of prospective residents handled by each leasing consultant. Although not perfect, the use of closing ratios addressed each of these issues and was a known and trusted metric at Berkshire.

Employees in both high and low performing groups (they didn’t know which group they were in) were asked to take the standard PeopleAnswers assessment. This assessment measures 39 different dimensions testing for intellect, drive and motivation, work style, interpersonal style, leadership/management style and culture fit. Once this data was gathered, PeopleAnswers analyzed the results to determine where the respective groups scored on each dimension. Where there was a clear distinction in the scores between high and low performers, that dimension was identified as a key predictor of a high performing employee. When creating a hiring profile, those dimensions that had a clear distinction in scores between high and low performers were given the greatest weight when compiling a score for the candidate taking the assessment.

Pre-Assessment GraphicRolling out new tools and processes is never easy. To ensure that hiring managers took ownership of the PeopleAnswers/Infor assessment, a communication session was held with affected management. An in-depth review of the methodology involved in creating the tool was provided. The concept of creating a tool that would allow us to predict whether a candidate possessed the qualities of our top leasing consultants based on the profiles of top-performing Berkshire employees, using Berkshire data gave people comfort that the tool would be helpful. As experience was gained using the tool, we were able to show that top scoring leasing consultants were able to close over 30% more leases than leasing consultants scoring at the low-end. In addition, the tool makes a hiring manager’s job easier by providing behavior-based interview questions to be asked in areas where the fit with Berkshire’s leasing consultant profile was questionable. Recruiters and hiring managers would find it difficult to conceive of not using this tool, given its effectiveness.

The use of data driven assessments allows a company to mitigate the risk associated with a bad hire. It turns formerly “soft” judgments into those made assisted with hard data. The ability to predict the likelihood of success is step forward in the sourcing of talent.

Berkshire reviewed a number of pre-hire assessment products to determine which one would be best to use. There are many products that operate on the same basic model as that described for PeopleAnswers. Berkshire was interested in an assessment tool that contained a basic test for numeric and verbal reasoning as a proxy for intelligence as well as one that could be taken in approximately ½ hour. Online availability, ease of use and administration for both the candidate and Berkshire, as well as ease of interpretation for the recruiter or hiring manager, was also critical. The PeopleAnswers product met these criteria better than others tested at the time.

It is imperative that the pre-hire assessment tool chosen is easy to use from a candidate standpoint. If it takes too long, or is difficult to access, you may drive otherwise qualified candidates away. If the assessment requires significant training on the part of hiring managers and/or recruiters to interpret results, the expense associated with maintaining a cadre of qualified users of the assessments will be high. Also, the administrative effort involved in maintaining this group of trained users will be excessive in the face of turnover and the movement of people from one role to another. When considering assessment vendors, also determine the ancillary uses for their product and the after purchase support they provide.

The reports provided by PeopleAnswers require minimal training, as full explanations of every dimension and result provided on the assessment report are available at the click of a mouse. Each assessment contains multiple levels of results ranging from a “thumbs-up” icon indicating the candidate matches your hiring profile, to a detailed examination of the candidate’s results on each of the 39 dimensions and what they mean with regard to potential behavior on the job.

In addition to easy to interpret results, behavior-based interview questions are automatically generated to allow the hiring manager to probe more deeply in any area of potential concern. Berkshire uses assessments on several different multi-incumbent jobs (e.g., property managers, assistant property managers, leasing consultants, etc.). Once an individual takes the assessment, it will show whether the candidate is a good match for other jobs for which hiring profiles exist. This is useful in determining whether someone will be successful in each of the jobs on a potential career path. A full explanation of the uses to which an assessment report can be put is beyond the scope of this article. Make sure you understand what your chosen assessment tool will provide.

With regard to level of support after the sale, will your vendor assess the effectiveness of their tool at no additional cost? Will they create revised hiring profiles as your workforce changes? It’s important to understand that the characteristics of your most successful employees may change over time. For example, Berkshire has shifted its strategy from investing primarily in value add opportunities to investing in more core type assets. The type of staff managing a “B” class property is different than that required when managing an “A” class property catering to a highly demanding clientele. Our role profiles had to be changed to reflect this. In addition, it is prudent to determine whether the pre-hire assessment you’ve chosen is working. Make sure your vendor will conduct the studies necessary to document whether the use of their tool is making a difference. In Berkshire’s case, PeopleAnswers conducted a full analysis and was able to demonstrate that in the case of leasing consultants, those with high fit scores delivered over 30% more leases than those scoring lower on the assessment. In both of these cases the work was done at no additional cost. Not all vendors operate this way, so be careful of the additional costs you may incur with a more à la carte approach.

It’s important to note that PeopleAnswers Talent Science is only one tool Berkshire uses when making hiring decisions. A close examination of experience, educational background, in person presentation, and other job-related factors must be considered when making the final hiring decision. The pre-hire assessment is one tool in the recruiter’s toolbox, not the only one.

If you are willing to put in the work necessary to create effective hiring profiles and have the data necessary to do so, it’s worth your while to let data provide objective insights to help you hire the people most likely to be next high performers in your organization.