Transcript Document 7851611

ROI: Demonstrating Your Value
Warren Bobrow, Ph.D.
All About Performance, LLC
[email protected]
What We Know About Selection
• Identifies people with the KSAPs to do a job
well.
• Presumption that the job and performance
metrics are relatively stable.
• Depending on the cut-score, we presume that
new hires are more effective than incumbents
and rejected applicants.
What We Don’t Often Know About
Selection
• Is there demonstrable value when
objective/dollar-based performance
metrics are not available?
• Are there situations where hiring the most
talented people works to our detriment?
– Seasonal/Temp employees
– Quick advancement
Selecting Seasonal Employees
• Telephone contact center
• Actually two different seasons, but big
ramp ups (700%) in each
• Season lasts about 6 months, including
training time
Questions In This Study
• Are selection systems validated on full-time
employees valid for seasonal ones?
• Do organizations shoot themselves in the feet by
hiring highly talented temps?
• What, if any, is the non-performance based
utility of using validated selection tools for hiring
temps?
The Validation Studies
• Jobs
– Customer & Tech Support
– Inbound Sales (registrations, upgrades, etc.)
• Conducted a Job Analysis
• Concurrent Validation on Full-Time Incumbents
• Predictive Validation on Seasonal Employees
– Cut-score not really used, so there was plenty of
variance
Validated Predictors
• Personality
– Agreeableness
– Conscientiousness
– Customer Service Orientation
• Aptitude
– Numeric and Verbal Reasoning
• Biodata
The Validation Studies--Concurrent
• Gathered 6 weeks of weekly performance data.
– Extremely reliable
• Developed 4 scoring bands
–
–
–
–
Highly Recommended
Recommended
Possibly Recommended
Not Recommended
The Validation Studies--Predictive
• Gathered weekly performance data for the
entire season.
– Extremely reliable
– Tracked turnover (voluntary and involuntary)
Validation Results
• Concurrent validity = .52 (p<.001)
• Predictive validity = .31 (p<.001)
• Methodological note:
– Correlations not corrected for test or criterion
unreliability
• There was some shrinkage (primarily due to the
biodata), but tests validated on full-timers were
valid for seasonal employees
Other Issues--Turnover
• Many organizations need seasonal/part-time workers.
• Very few workers want non-full time work.
– Always looking to go full-time some place else
– Not much organizational commitment, so will look for
similar work for higher pay.
– In a normal economy, as a group, may not be as talented
as those seeking full-time employment
• Are talented seasonal employees more likely to
voluntarily turnover than less talented ones?
Results--Turnover
Not
Recommended
Possibly
Recommended
Recommended
Highly
Recommended
Total
15
(11.0%)
21
(17.3%)
29
(30.8%)
26
(29.6%)
91
(20.8%)
Left
121
(89%)
100
(82.7%)
65
(69.1%)
62
(70.4%)
229
(79.2%)
Total
136
121
94
88
439
Stayed
Results--Turnover
• This data indicates that those who do better on
the test are more likely to stay (not get fired or
quit) through the season.
• Additionally, those who scored Not
Recommended or Possibly Recommended were
more likely to be fired than those who scored
Recommended or Highly Recommended (chisquared=17.3, df=3, p < .001).
• No differences in voluntary turnover.
ROI—Cost of Turnover
• Recruitment
• Selection
• Training
ROI Data Assumptions
• Turnover Assumptions
– 70% turnover for the high test scoring group
– 85% turnover for the low test scoring group
– 79% turnover if random selection
ROI—What Are the Costs of
Recruitment?
• Staff time
• Advertising
• Job fairs
• Background checks
• Drug screens
• Total of $862/position (client estimate)
ROI—Cost of Recruitment
• 9 more people/100 hired to be recruited
– Conservative estimate in that replacements
will turnover at the same rate and more will
have to be recruited
• 9 * 862 = $7,758
– $862 = Recruiting Costs/Hires
ROI—What are the Costs of
Training?
• Instructors
• Materials
• Facilities/meals, if any
• Lower initial productivity
ROI—Cost of Training
• In this case, training costs $18/hr per
trainee for 80 hours
– Cost per trainee is $1,440
– To train 9 more is $12,960
ROI—What Are the Costs of
Testing?
• Staff Time
• Room Rental
• Materials
• Cost Per Test
ROI—Cost of Testing
• Testing
– $20/person
– 41% passing rate
– Total additional cost of $252
ROI—Total Cost of Turnover
• Recruitment: $7,758
• Testing: $252
• Training: $12,960
• Total Per 100 Hires: $20,970
• Cost of testing to hire those 100: $3,618
• Net cost savings: $17,352
Caveats
• Every situation will differ in costs
– Testing cost in this example is very low.
• Some of these costs are hard (materials,
instructors) and others are soft (staff
time)
Conclusions
• The value of testing can go beyond performance
– Think scorecard or other key metrics
• Sometimes, these values are easier to quantify
than performance.
• As a profession we need to look for these
ancillary benefits when talking about our value.
Questions and Comments