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Competency Benchmarking for Recruitment and Beyond.
James Houran, Ph.D., President, 20|20 Skills™
Friday, 23rd May 2008
 
In The War for Talent, McKinsey and Company3 declared that "talent is the most under-managed corporate asset of the past two decades." It is astonishing this shortcoming persists since these authors further noted that "talent driven companies of the Fortune 500 experienced nearly 82% greater profit than their competitor." 

Fortunately for organizations that wisely invest in organizational development, modern advancements in online assessment and evidence-based action plans can facilitate talent management in a way not possible in recent decades2.

A review of a recent initiative by Papa Gino's illustrates how competency benchmarking using standardized assessment can easily and substantially enhance talent management. In particular, its Human Resources Department desired competency maps of General Managers (GMs) who were high performers, as defined by the company's annual performance evaluation metrics. HR selected groups of the top and bottom scorers on the employee evaluation and then compared the groups' scoring patterns on the 20/20 Skills™ assessment.

This pilot exercise allowed Papa Gino's to conduct an internal validation of their newly launched 20/20 Skills™ assessment program and simultaneously begin to understand the skill sets that characterize high performers in its unique corporate culture.

Findings and Benefits…

Papa Gino's achieved two key outcomes from its pilot benchmarking exercise. First, in the short-term, the company gained an evidence-based formula for identifying candidates with strong potential for being high performers in its culture.

Consistent with the wealth of research on competencies that predict performance in the service industry, an Analysis of Variance (ANOVA) found that mean scores across all ten competencies on the 20/20 Skills™ assessment significantly (F1,51 = 6.275, p < .02) distinguished high and low performing GMs within the Papa Gino's culture. As shown in the Appendix, univariate F-tests on the individual subscales revealed that three competencies showed particular significance:

Transformational Leadership, Group Process (team building) and Applied Problem-Solving. From a selection perspective, HR now pays closer attention to candidate's who have strong scores on all three variables.

Second, in the long-term, the company also discovered ways to bolster their selection and development approaches. The same basic formula for identifying high performers also can be used to guide coaching and training programs and succession planning. For instance, Creativity scores were nearly identical for the high and low performing groups.

Moreover, the group of low performing GMs actually had higher scores on Ethical Awareness. These two findings could indicate an opportunity for Papa Gino's to increase employee performance by selecting GM candidates with stronger Creativity and Ethical Awareness scores than those of current incumbents. Likewise, the low and high performing GMs might well improve their work performance with targeted training or coaching related to Creativity and Ethical Awareness.  

That said, Industrial and Organizational Psychology experts would point out an alternative interpretation. For example, in some workplace cultures patterns of high and low scores on specific competencies might be the recipe for success. In Papa Gino's case, GM's at the restaurant level may be successful because they are strong at executing established company initiatives.

Thus, Creativity is a competency that could be more relevant to higher level positions than GM's. Further, exceptionally high Ethical Awareness scores at Papa Gino's may be an example of "too much of a good thing" and subsequently lead to rigid, "black-and-white" thinking.

Thus, the effectiveness of Papa Gino's top GMs could stem in part from an ability to perceive the world as "gray" and therefore make better decisions because various relevant factors are sought before final decisions are made. In other words, the benchmark data might be informing HR to find GM candidates who are "situationalists."

Modern assessments provide detail in data that is not possible with traditional assessments, and this allows HR professionals to extract better and clearer insights from benchmark data. As for the resolution to the issues of Creativity and Ethical Awareness in GMs at Papa Gino's, the HR department is keeping that a proprietary secret. After all, successful companies do not advertise their specific secrets and strategies for success!

Benchmarking Your Organization: Important Points…

Whatever the size or nature of your organization, the ideal is to move your business from one of "excellence to significance." Reaching this goal involves understanding that talent is the foundation of business success in the service industry.

The example of Papa Gino's demonstrates that benchmarking can be done beneficially without implementing large and costly projects.  And the results have wide-reaching HR applications that impact work performance and ultimately the organization's bottom line.  To that end, below we give helpful guidelines to maximize the effectiveness of your benchmarking:

Select an assessment that was designed and validated to be relevant to the service industry, and only choose instruments that conform to the Standards for Educational and Psychological Testing1 and the Uniform Guidelines on Employee Selection Procedures (UniformGuidelines.com). In this way organizations can trust that the results are unbiased with respect to the demographics of test takers. This helps to guard against issues of bias and adverse impact as required by the Equal Employment Opportunity Commission (EEOC).

Benchmark employees on skills, not personality traits. Skills are applied constructs, while personality traits are often abstract. Examples of such skills for most job categories are available for free at the US Department of Labor's "O*Net Online" at: http://online.onetcenter.org/.

This resource exemplifies that personality traits are not synonymous with skills or competencies. Further, members of the Society for Industrial and Organizational Psychology recently published a new study4 showing that personality measures are generally poor predictors of work performance. As such, organizations that use such tools are arguably at legal risk, e.g., non-compliance with EEOC Title VII discrimination standards.

Large sample sizes are not necessary to conduct valid benchmarking exercises. For example, the 20/20 Skills™ assessment is highly reliable, and it will therefore detect significant differences based on relatively few test cases. Additionally, its items have previously been calibrated on large samples. Accordingly, the feedback and "Action Plans" it generates are reliable and valid at the individual and group levels.

Consult with Industrial and Organizational Psychology professionals when interpreting and applying benchmark data. And always include a professional with strong expertise in the use and interpretation of the assessment used for benchmarking.

Successful organizations are constantly proactive in the war for talent.  A standardized skills assessment with industry-specific content and unbiased scores is one of the most efficient, reliable and effective weapons at your disposal. As an example, independent research indicates that the anticipated first-year, average ROI for organizations using 20/20 Skills™ is about $74,500 for each new management hire. This assumes that the value of "high performance" is $100,000, with a 2:1 selection ratio and tenure of five years. Impressive ROIs are also documented for line and middle management hires.

Also, we have repeatedly found that even a modest follow-up or benchmarking study is well worth the effort and relatively small costs involved. Such studies often reveal the particular strengths and weaknesses of your current HR practices, while pointing to new areas of human behavior and performance that will be valuable when hiring new personnel and managing your current talent. The value of assessment and benchmarking clearly transcends recruitment. Together, they are investments that provide a strong competitive edge by driving your most valuable asset – human capital.

References

  • American Educational Research Association, American Psychological Association, & National Council on Measurement (1999/2002). Standards for educational and psychological testing. Washington, DC: Author.
  • Houran, J., & Lange, R. (2006). State-of-the-art in measurement in human resource assessment. HVS Journal. 28th Annual NYU Hospitality Industry Investment Conference, New York, NY, June 4-6. 
  • Michaels, E., Handfield-Jones, H., & Axelrod, B. (2001). The war for talent.  Boston, MA: Harvard Business School Press.
  • Morgeson, F. P., Campion, M. A., Dipboye, R. L., Hollenbeck, J. R., Murphy, K., & Schmitt, N. (2007). Reconsidering the use of personality tests in personnel selection contexts. Personnel Psychology, 60, 683-729.
For more information on the best practice 20/20 Skills™ assessment and general organizational development services, contact:

James Houran, Ph.D.
2020 Skills™ Assessment
jhouran@2020skills.com
516.248.8828 x 264

www.2020skills.com       
Appendix:  Descriptive and F statistics for Papa Gino's Benchmarking Exercise (n = 53)
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