GMA SHRM HR Link

Performance-Based Hiring: Know What You're Going to Get!
By Bob London, President of GlobalQuota
Email: bobl@globalquota.com

What is Performance-Based Hiring?

Trait-factor job placement approaches of the early 20th century focused on developing a variety of tests to match the individual to maximize job performance. The goal of testing was to concretely measure key job skills to ensure that a job candidate would be able to perform the work. Typing tests that measure words per minute and accuracy, are a great example of performance-based testing that is still used to qualify a candidate for administrative positions. Modern day performance-based hiring still tries to directly determine the skill performance abilities of the candidate as part of the hiring process. Depending upon the job position, performance assessments may consist of: (a) reviewing professional certifications, (b) "how-to" or practical skill-knowledge tests, (c) submission of prior work samples, (d) work simulations, or (e) direct work performance observations during probationary periods.

When to do Performance-Based Hiring?

Not every job position lends itself to performance-based assessments. Jobs that have physical tasks (e.g., welder or nurse), or a strong personal skills component (e.g., sales account executive) are great for performance assessments. The Return-on-Investment (ROI) for implementing this technique is gained by hiring: (a) high performing candidates, (b) less time for the new hires to be productive, (c) less training issues, and most of all (d) the reduction of training and hiring financial loses due to turnover.

Since one of the areas we all know about is sales, let's consider the sales person as an example. Most companies live or die by the profitability of their sales teams. Having a quality, performing sales staff is critical. However, assessing the skills of a sales job candidate can be challenging. Often, these folks are very savvy job seekers with great impression management skills, and will practice their responses for the interview. The hiring interviewer needs to be suspicious that what they see is not what they may get! Behavioral interviewing can help collect fact-based performance information, such as the total dollar value of sales sold each year. But, a sales person could have gotten lucky with a single deal, or inherited an existing client base to reach or exceed their quota. This information doesn't really help to determine the true sales skills of the job candidate. Short of being able to peer into a magical looking glass to watch someone perform, it's very difficult to guarantee selling skills. Like the typist, sales people can be given knowledge tests, and simulated work scenarios to test their execution abilities in order to help determine qualifications as a job candidate.

STEPS: Job Analysis, Defining Areas to Assess, and Assessment Techniques

Step 1. Understand the Job: First, decide whether it's appropriate to use a performance-based hiring technique. You need to have a well-defined job description that identifies the skills needed for the job. As mentioned, jobs with physical performance components such as welding, taking x-rays, public presentations, phone skills are good candidates for performance assessments.

Step 2. Know the Return-on-Investment: ROI means that if you spend money on developing, deploying, or outsourcing the performance-based test you will get something back in return that you value. ROI could be quantitative, such as in net savings from reducing turnover, or qualitative such as hiring better performing employees that require less training or can do a better job. Performance-based testing can be great for assessing seasonal customer representatives that take phones orders during holiday seasons. Walt Disney uses a variety of interviews, testing, and performance-based hiring techniques to match job candidates to their positions (referred to as "right-fit casting") in an attempt to improve job performance and reduce the turnover costs.

Step 3. Select Tools: Be sure to select assessment tools or techniques that are valid, reliable, and can actually measure what they purport to measure. For example, don't use a personality test if it does not directly test a job skill knowledge or ability. Also, consider that simple is better from a testing standpoint.

Step 4 Testing: Define a testing protocol that is repeatable. Testing should be under controlled conditions and be related to the types of skills being assessed; give the candidate the best possible chance to perform. All candidates should be treated the same.

Step 5 Reporting and Using Test Results: Hiring decisions are multi-faceted. Performance-based testing can be used to support other interviewing information, but should not be used alone to make a hiring decision. Some candidates will not perform well under any testing conditions, but might be great employees when not under the microscope.

Going back to our sales person example; hiring quality sales people means being able to assess their sales knowledge, experience, and ability to perform in the field. These three assessment areas should be framed as hiring questions to be answered: (1) knowledge - what does the candidate know about the sales process and techniques?, (2) experience - does the candidate have a sense of timing, and do they understand what actions to take with a client?, and (3) skill execution/ability - how will the candidate actually interact with a prospect or client? Below is short list of specific skills to test along with some suggestions for assessment methods for the three areas.

Some Examples for Sales Candidate Assessments:

Job Skills to Assess	Examples
Communication skills	Simulation - tries to answer, "Can they use open ended questions?"
Sales process knowledge	Paper/Web test or behavioral interviewing - tries to answer, "What are your steps in the sales process?"
Temperament	Myers-Briggs Type Indicator (MBTI)
Sales discovery knowledge	Paper/ Web test or behavioral interviewing - tries to answer, "What are your steps in the sales discovery process?"
Client sales strategy skills	Paper/ Web test, or behavioral interviewing - tries to answer, "What are your key considerations in the defining a sales strategy for a client?"
Client solution solving skills	Paper/ Web test, or behavioral interviewing - tries to answer, "How do your create a solution for your client?"
Customer objection management	Simulation - tries to answer, "Can they deal with strong client emotions in a supportive and persuasive way?"

Quick Word on Role-Play Simulations as a Technique

Role-play work simulations are very effective for skill assessments in some areas. Simulations can use live role-play scenarios for sales people, capture them on video, and the video scored. One benefit of this technique is that the hiring manager gets to see the candidate in action. For testing a larger audience, complex human-interaction scenarios simulations can be done using video or audio clips on PCs, with multiple choice questions or open-ended questions for the test. The PC can automatically score and report the results. New video and virtual reality simulation technologies are slowly being used to improve training and work performance assessments in several fields, such as health, law enforcement, and the military. These techniques look to lower the costs and assessment time, while improving skill performance information. Technology trends in simulations should provide interesting hiring and training options for the HR professional in the future.

Where in the Hiring Cycle?

Performance assessments can be built into the traditional hiring cycle, or can be handled as an exceptional hiring strategy for specific cases. Usually, you advertise, sort through the resumes, and make an initial selection of candidates. Performance assessments can be used before the in-depth interview for sorting through the qualifications of a large group of candidates. This might be the case where you're qualifying and hiring customer service representatives. The alternative is to use performance assessments with just a few candidates after the in-depth interview to verify specific "in-the-field" skills, and let the hiring manage get a better view of the candidate that he or she is about to hire.

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