After enrolling at Harvard Business School to obtain her MBA following several years working as a neuroscientist, Frida Polli was struck by one thing: How little had changed in the approach used by companies to recruit on campus in the intervening years.
“It really hadn’t evolved at all,” she says. “There didn’t seem to be much objectivity to the process.”
In one example, says Polli, a friend was extended job offers by two of the three top consulting firms that recruited on campus. When the third firm that initially rejected the student found out she’d been offered positions by the other two, it changed its mind and decided to extend her an offer, too.
“It was very clear that the way in which these companies were going about deciding who to hire was very subjective,” says Polli, who went on to co-found and lead Pymetrics, a start-up that uses analytics to bring more objectivity to the hiring process.
Polli is far from alone in her criticisms. The way in which most companies screen and assess candidates for entry-level positions, in particular, may be a disservice to both parties, new research suggests.
“Since application and resume reviews are typically the first line of screening for job applicants, many candidates never even get to the interview,” says Mercer’s Barbara Marder, senior partner in its career business. “For individuals who’ve historically encountered obstacles to entry-level employment, there are even greater barriers in getting past resume and application reviews, as these methods are based on subjective evaluations.”
By contrast, the study’s authors say that relatively few employers are relying on screening methods for entry-level applicants that are more effective, such as selection tests (used by 42 percent), personality tests (13 percent), cognitive ability tests (10 percent) or online simulations (only 2 percent).
“Entry-level hiring is ripe for disruptive change, and companies that incorporate more objective methods with scientific support can reap solid gains,” says Sameer Gadkaree, senior program officer for employment and joint fund programs at the Joyce Foundation, a Chicago-based nonprofit that works to expand opportunities for low-income Americans.
College as a Barrier
The Joyce Foundation engaged Mercer to conduct the study because it’s tracking a couple of trends among low-income workers that “worry us,” says Gadkaree. One of them is the increasing reliance by employers on the bachelor’s degree as a screening tool even for jobs that didn’t require a degree in the past – an obvious hindrance to the nearly 60 percent of Americans who don’t have one, he says.
Another concern is the difficulty many low-income applicants say they encounter in trying to land an interview with an actual person, he says. “We wanted to learn more about how technology is being used in hiring and the implications of that.”
The study reveals that although non-cognitive skills such as reliability, dependability and teamwork are rated more highly than cognitive skills by hiring managers – even though technology is playing such a prominent role in the economy today – the screening processes commonly used by organizations don’t allow for these competencies to shine through, says Gadkaree. “Good applicants are getting screened out, which results in higher turnover and avoidable costs.
“We know there are tools out there that are better at screening more objectively for these criteria,” he says. “We’d like to see more companies make use of tools, such as situational judgment tests, that can get at these qualities and make it easier for low-income workers to land entry-level jobs.”
Rework America, a new organization led by President Obama’s former chief of staff, Denis McDonough, is trying to make it easier for those without a college degree to land a good job. Its Skillful Initiative, which is being piloted in Colorado and will soon be expanded to another state, is designed to help companies struggling to fill critical positions find qualified talent in places where they wouldn’t ordinarily look.
“Our intention is to create a skills-based labor market, in which employers explain the skills and competencies needed for a certain position so a candidate can say ‘I have those skills,’ “ says Andi Rugg, executive director of Skillful Colorado, based in Denver.
Companies in Colorado are struggling to find qualified candidates amid a historically low state unemployment rate and are eager to try new things, she says. The Skillful Initiative works with companies to break their jobs down into specific skills and competencies and then find people who are good matches based on those criteria. The intent is to get firms to look at the labor market more holistically, rather than using degrees and certificates to screen out candidates, says Rugg.
One firm had tried without success to find a combustion engineer using a traditional hiring process in which it would only consider applicants with one type of certificate, she says. But after working with the Skillful Initiative to implement a skills-and-competencies-based approach for finding talent, it ended up hiring a diesel mechanic instead.
“By looking at the job through the skills and competencies lens, they determined that diesel mechanics could fill this role and they went from zero applicants to lots of applicants, and they found a diesel mechanic who proved very successful in the job,” says Rugg.
A major problem with screening and assessment, as it’s practiced today, is that while most decision makers admit skills assessments are important, less than half of organizations use them, says Jim Link, CHRO of Randstad Sourceright.
“Our Workplace Trends Guide finds that 58 percent of companies don’t use skills assessments even though 80 percent of hiring decision makers believe they’re important for the hiring process,” Link says. Many organizations cite the extra time they can add to the process as a reason for not using them, he adds.
“Yes, skills assessments can increase time-to-hire, but they also increase the processes’ effectiveness,” Link says, citing research by McKinsey that shows integrating behavioral interviewing, skills assessment and background checks will lead to improved business outcomes through better hires.
HR leaders can present a compelling business case for investing in these tools by using data that’s easily found, says Link.
“One of the most interesting numbers you can look at, and most companies don’t, is profit per employee,” he says. “You’d be hard pressed to find that number in any analytical report, and yet it’s not that hard to calculate. It’ll vary by industry, but it’s important to look at so you can determine how successful you are at hiring the right people and ensuring their potential.”
The screening process is in dire need of disruption, says Link. The Netherlands-based Randstad has created an “Innovation Fund” to help start-ups develop new applications for the HR profession, including screening and assessment tools. The fund, totaling 50 million euros (approximately $60 million), makes four to five investments per year ranging from 1 million to 5 million euros. Those investments have included Checkster, which uses “the science of collective intelligence to improve the hiring process,” and Pymetrics, which uses gamification to assess candidates’ cognitive and emotional traits.
Mercer is also an investor in Pymetrics, says Marder, who oversees a team that looks for innovative ways to identify and develop talent.
“There’s no self-reporting with their gamification tools, unlike personality tests, so the data you collect is objective,” she says.
Pymetrics uses its platform to identify the cognitive and emotional traits of high-performing employees in a given role to create a “fingerprint” for companies to use in assessing new hires, says Polli. The idea is that by having this fingerprint, companies will make more objective decisions in the initial screening process and move away from relying on resumes, she says.
“The resume is the weakest link in the hiring process,” says Polli. “We hope to replace, or at least augment, the resume and make the process more objective and fair.”
Marder says she’s “fascinated” that so few HR professionals express full confidence in their organizations’ screening processes.
It reflects the belief that people who could be great fits are getting screened out, she says.
So why are so few companies using scientifically proven assessments? Marder believes sheer inertia is partly to blame.
“Many companies tend to just do what’s been done before and sometimes it requires someone to introduce a new idea and say, ‘We need to try this to get better results,’ “ she says.
Fear of litigation is another reason, Marder says. “The litigation risk around certain types of assessments has made some companies gun shy about using them, even though they actually provide the best and most predictive results,” she explains. “What’s interesting is that while legal challenges to these tests generate a lot of publicity, the entire screening process itself can be subject to legal challenge.”
Marder notes that it’s easier for plaintiffs to say, “ ‘I didn’t get hired because these test results knocked me out of consideration,’ rather than challenge the entire process.”
Nearly every commercially available assessment has undergone validity testing, which provides a measure of protection for companies that use them, she says. Furthermore, she adds, gamification-based assessments offer an additional layer of protection, given their utilization of objective algorithmic measures.
“If you have tools that better predict who’s going to be a good fit for these roles, turnover should go down dramatically and you’ll have big cost savings,” says Marder.
The SHRM/Mercer study also reveals what consultant Suzin Sciabarasi says is a “lack of hiring competency” at many organizations today.
“They haven’t spent the time necessary for teaching their people how to interview effectively,” says Sciabarasi, senior HR consultant at Austin, Texas-based VCFO. “And, interviewing and performance reviews tend to be the bane of most hiring managers’ existence.”
An effective interviewer knows how to do two things, she says: Assess a candidate’s job competency and assess his or her soft skills.
Simulations are also excellent ways to determine whether a candidate has what it takes to thrive in a position – especially for recent college grads and others with little to no work experience, says Sciabarasi. “Give them several scenarios and see how they react to them – I don’t know of a better way than that to find out how people think.”
By creating a strong assessment process for entry-level jobs, says Sciabarasi, HR can help ensure an organization’s long-term prosperity.
“Entry-level roles are a wonderful place to size up whether you’ve got critical thinkers and people with mental agility, but you’ve got to do a super job at the front end to ensure the folks coming in have the necessary intellectual horsepower,” she says.