How to Predict Employee Performance

To put it in perspective, Schmidt, Oh and Shafers 2016 Paper found that the output of an above average employee is twice that of a below average employee. And the difference becomes more apparent the more skilled the position.

So how do we fill our organization with above average employees so that we maximize the return on our employees? Well, it all starts with hiring top performers.

And predictive analytics can play a huge role in this process. But the factors we use in today’s hiring process are terrible predictors of future employee success, according to the same Schmidt, Oh and Shafers 2016 Paper. Let’s look at some examples.

Experience and references

Raise your hand if you’ve ever used experience as a way to predict whether a candidate would be a good fit for a role at your organization?

How about references?

I’m guessing there are a lot of hands up right now. And you’re not alone. In fact, one of the  go-to resources for HR professionals, SHRM, wrote an article a few years back titled “Reference Checking: The Most Important Step in the Hiring Process.”

And on some level, it would make sense that these factors would be good predictors.

For experience, if you had to have a heart transplant, would you rather hire a surgeon who had successfully completed a dozen such surgeries over the past year or one who was fresh out of med school with no such surgeries under her belt?

For references, if you had to hire a photographer for your wedding, wouldn’t you want to talk to others that have used that same photographer for their wedding before committing significant sums of money for someone’s services on one of the most important days of your life?

But that which is obvious isn’t always true. Take, for example, the fact that most humans thought the Sun revolved around the Earth until Nicolaus Copernicus proved them wrong.

And just like Copernicus, I’m here to dispel your belief that experience and references are good predictors of employee performance. Because they aren’t. According to Schmidt, Oh and Shafer’s research, references only explain 7 percent of an employee’s performance and experience explains even less at 3 percent.

So what is good at predicting employee performance?

Top factors for predicting employee performance

The top three predictors, according to the Schmidt, Oh and Shafer research, are cognitive tests (26%), structured interviews (26%) and work samples (29%).

The common thread between these three is that each of these test how someone thinks and how someone problem solves. In contrast, references and experience are all about what someone has done or what someone says they have done. Just because someone says you have done something or just because you have done something, doesn’t mean you have the capacity to do a new job.

In a complex, ever-changing world, those that are able to adapt and problem solve are better equipped than those that succumb to repetition and consistency. And that’s why cognitive tests, structured interviews and work samples work so well at predicting performance.

From theory to application to conversation

So now that you know which factors to use to assess your candidates, the next question becomes, “how?”

For cognitive tests, there are a plethora of options. Here’s a comprehensive list of cognitive tests you can review to see what’s right for your organization.

For structured interviews, there are a few different ways you can set these up. The key is to remove all bias from the interview. That means asking the same questions to all candidates in the same order. It also means only having one interviewer in the room at a time. And it means assessing each candidate question by question as opposed to assessing all the questions for each candidate. For more details, Harvard Business Review wrote a great piece on the structured interview.

And lastly, work samples. The most common example of this is developers that are required to write code during the interview process. But this can apply to all disciplines. For example, for a marketing manager position, you may ask the marketing candidate to describe how they would overcome a situation where leads were down 10% month-over-month. Have them explain specifically how they would address certain parts of the marketing funnel like traffic and conversions. Or ask a customer service candidate how they would handle a call from an angry customer. There are plenty of work sample questions you can ask for every type of job you are hiring for. And it helps if you get the hiring manager involved.

All this should help you with predicting the work performance of your candidates. But one thing these tests cannot help with is actually finding quality candidates in the first place. And that’s why conversations with candidates at the top of the funnel become so important to your hiring process.

Conversations and prediction earlier in the hiring funnel

With application conversion rates on career sites sitting below 5% (Source: Appcast 2017 Recruitment Media Benchmark Report), it is more important than ever that recruiters find ways to engage with candidates at the point they are making a decision whether or not to enter your funnel.

And one way to increase this conversion rate is by providing your candidates with more options to engage in conversations. Engaging in conversations is important for two reasons. First, we have found that those candidates that engage in conversations are two times more likely to be qualified. So if you are looking for ways to predict your quality of hire at the top of the funnel, you’ll want to offer your candidates a way to start a conversation with your team.

Secondly, conversations are a way to speed up the hiring process. Why? Again, it relates back to predicting quality of hire. Whereas an application is really good at giving you experience and references (those factors not very helpful in predicting performance) meaningful conversations with candidates are really good at helping you assess for problem solving and adaptability (factors that are helpful in predicting performance). So when you engage with qualified candidates at the top of the funnel in meaningful conversations, your recruiters are naturally going to learn more about a candidate much more quickly and therefore move them through the funnel faster.

In the age of the candidate-driven market, the speed at which we engage with candidates in meaningful ways becomes the most important factor in predicting the impact our employees will have on the bottom line. That’s why meaningful conversations at the top of the funnel have become such a crucial part of the hiring process.

To learn more about how you can add conversations to your recruiting funnel, please click on the link below to schedule a 15 minute demo of Brazen’s chat communication software.

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