Who makes better hiring decisions, man or machine?

Despite two-plus decades of innovation, billions of dollars spent by organizations on HR/Recruiting technologies, and (adding in this one), 139,927,434 blog posts on the topic, hiring still remains stubbornly difficult, is often lengthy and costly, and all too often results in disaster.

There are potentially dozens of individual reasons why this sad state of affairs persists in 2016, but I want to talk about just one in this post - the question of whether or not hiring could be improved if we relied upon people (mainly hiring managers) less, and machines, (automated job fit assessments and similar instruments) more. The source of the rest of the data in this post is from a 2015 NBER Working Paper titled Discretion in Hiring by Mitchell Hoffman, Lisa B. Kahn, and Danielle Li.

In the paper's abstract, the authors set out to answer a simple question:

"Who should make hiring decisions? We propose an empirical test for assessing whether firms should rely on hard metrics such as job test scores or grant managers discretion in making hiring decisions."

A pretty good question for sure.

Who (or as we shall see soon what), should have the final, or at least the most influential voice in determining which candidate to hire for a given role?

According to the authors, hiring is hard and prone to error for two primary reasons. One, resumes, profiles, even interviews are usually not perfectly complete and able to reveal with a high degree of confidence and accuracy who is the best candidate for the job. And two, the people the firm entrusts to make hiring decisions are simply not that good at making these decisions.

They start with imperfect information, then apply (sometimes subconsciously), there own views, preferences, and biases that may not be congruent to the organization's goals to the decision process.

Bad information + inaccurate, possibly biased decision makers = way too many bad hires.

So what might a remedy be to combat the 'bad information' and 'bad decision makers' challenge?

How about improving the information, (not very controversial, surely), and removing the decision makers (possibly more controversial, as most hiring managers will claim they like to, you know, hire).

More from the NBER paper on what they did and what they were able to find:

In this paper we evaluate the introduction of a job test, and develop a diagnostic to inform how firms should incorporate it into their hiring decisions. Using a unique personnel dataset on HR manager, job applicants, and hired workers across 15 firms that adopt job testing, we present two key findings. First, job testing substantially improves the match quality of hired workers: those hired with job testing have about 15% longer tenures than those hired without testing. Second, managers who overrule test recommendations more often hire workers with lower match quality, as measured by job tenure. 

This second result suggests that managers exercise discretion because they are biased or have poor judgement, not because they are better informed. This implies that firms in our setting can further improve match quality by limiting managerial discretion and placing more weight on the test.

Less manager input/discretion in hiring led to better hiring outcomes. Across the board in this study.

A few caveats worth mentioning, (and you should, if you are so inclined, read the entire paper here).

This study was performed across a dataset of 15 firms hiring for high volume, lower skill kind of roles - think something like data entry, call center, that kind of thing. The kinds of jobs where it is relatively easier to come up with an accurate job test/assessment, and ones where the primary measure of hiring success is often retention.

Also worth noting is that the researchers controlled for other measures of employee success like productivity, i.e., they were able to determine that when hiring managers overruled the job test scores in making hiring decisions that they were not in fact sacrificing longer tenure for increased near-term efficiency.

Essentially, for this category of low to mid-skilled service roles, the researchers were able to show that all things being equal, additional managerial input and discretion into the hiring decision process only served to lead to worse hiring outcomes.

I will close with one more line from the study's conclusion section:

In our setting it provides the stark recommendation that firms would do better to remove discretion of the average manager and instead hire based solely on the test.

But that conclusion only holds true for the 'average' manager, right?

I'm sure your managers are way above average when it comes to making hiring decisions.

Right?

Discretion in Hiring, Mitchell Hoffman, Lisa B. Kahn, Danielle Li, NBER Working Paper 21709, November 2015

Your annual reminder that LinkedIn is not where most people live and work

Recently, LinkedIn released its list of The 25 Skills That Can Get You Hired in 2016, their assessment based on recruiter, jobseeker, and LinkedIn member activity and profile updates of the 'hottest' skills that their data suggest will be the ones that offer workers the best chance of getting hired or promoted in 2016. Here is the list of these 'hottest' skills as per our pals at LinkedIn:

Pretty impressive set of skills indeed. From Data Mining to Cloud Computing to Mobile Development and User Experience Design - the list hits just about all of the current and certainly 'hot' trends in technology and business in the last few years. And as LinkedIn rightly state in their analysis of this data, these skills are likely to remain in demand for some time, at least a few years for sure.

But as I wrote on this blog about 12 months ago when LinkedIn published their list of 'hot' skills for 2015, it is pretty easy to be beguiled by these kinds of lists, particularly when juxtaposing the LinkedIn set of hot skills with the Bureau of Labor Statistics data about what kinds of jobs people actually do, (at least in the USA).

From our pals at the BLS, here is a chart from May 2014, (the latest period when this data is available), which shows occupations with the largest employment in the USA. Take a look at the data, then a few quick FREE comments from me after the chart.

Did you catch some differences between what gets people hired, at least people who are on LinkedIn, and the kinds of jobs that are held by the largest numbers of people in the USA? These Top 10 occupations make up about 21% of overall US employment, in case you were wondering, down only 1% from last year in case you were wondering.

Wonder how far down on the BLS list (and you can check the full list of occupations as defined by the BLS here), you have to go before you run in to 'Cloud and Distributed Computing' and 'Statistical Analysis and Data Mining', the top 'hot' skills for 2016 as per LinkedIn?  

I will save you a click and let you know that all the occupations that the BLS rolls up into 'Computer and Mathematical Operations', (where most of LinkedIn's Top Hot skills would likely map), account for about 3.8M workers, that is just under 3% of all the jobs in the country, just about the same as it was last year. Sure, it is trendy to think that the LinkedIn skills represent the future of work, and perhaps they probably do, but they don't really represent the 'present' of work, not in a substantial way anyway.

LinkedIn is a fantastic business, a staggering success, and not at all like the real world where the overwhelming majority of workers reside.

Have a fantastic day. And don't spend so much time on LinkedIn.

Technology, process, or message - which one should come first? #OOW15

I am out at Oracle Open World for a couple of days this week and have been reminded (in a good way) of just how massive both this event is and the breadth and depth of the technologies and applications that fall under the Oracle banner. This event is really more like 10 events in one, with all the various technologies and application domains, (sales, marketing, finance, HCM, etc.), all having their own segments, content, and dedicated demonstration areas. It is just a huge event.

One interesting nugget from my first day out at Open World was an observation that was made in a session I attended called 'Connect Sourcing, Recruiting, and Onboarding for Better Not Just More Candidates', that was given by Ann Blakely and Jim Fox from the consulting/advisory firm BakerTilly. It was a solid session with many smart and practical steps that organizations can take to better design, optimize and rationalize the steps in a classic talent acquisition process flow.

But to me the most interesting aspect of the talk was the way that the typical 'People/Process/Technology' relationship was described. Typically, and in most of the 3,490 times I have seen someone discuss the concept, the importance of aligning each element (people, process, and technology), and making sure that each one individually is given adequate attention and resources, each one is treated more or less equally. In a nutshell, people, process, and technology are all kind of viewed as the same, or equal elements or sides in some kind of HR tech equilateral triangle. 

Which is cool, or at least better than the classic mistake of leading with technology or becoming a slave to pre-existing (and often inefficient) processes at the expense of the other elements. Usually no one seems to make the 'mistake' of placing too much value or emphasis on the people side of the triangle, which is both odd and illustrative I guess.

But to get back to the presentation yesterday which was fully in the context of improving the overall talent acqusition function, the speakers looked at the 'people' side of the classic 'People/Process/Technology' triangle and instead referred to it as 'Message.' But more importantly than just the semantic change, the speakers emphasized that in talent acquisition the 'message' itself - the Employer Value Proposition, the brand values, the ways in which the company wants to portray and position itself in the talent market, all of these things, that the message should more of less define the processes and then lead you to finding and deploying the right technology.

It was more or less, a call to lead with 'people' as opposed to lead with one of other sides of the triangle, (which we know never really works out), or even to treat them all at least conceptually equally. Figure out the message, essentially who you are, what you stand for, what you truly believe are the core values that will make you an attractive employer, and build everything else out and up from there.

It was a cool idea, and one that for me, I know I have not heard advocated much in the past, maybe not at all.

Let the 'people' and the message drive how you design the processes and how/where/what technology will be leveraged to support it all. I am coming to think more and more that HR tech and tools that put 'people' first will be the ones that win in the long run....

Like I said, a really cool idea shared in one small room of a massive event.

Have a great Wednesday!

Need to fill a technical job? It helps if you are in one of these four cities

Some really interesting and detailed data on jobs, job seekers, employment opportunities and the interplay among all the moving parts of the recruiting game in the recently released report from Indeed titled Beyond the Talent Shortage: How Tech Candidates Search for Jobs.

There is plenty of fascinating information in the report, but the one element I wanted to call out was the really pronounced and increasing preference by tech candidates for only four popular work locations - San Jose, San Francisco, Seattle, and Austin. According to the Indeed report, "In 2013, interest in the 18 software-related jobs we analyzed was 3.3 times greater in San Jose, San Francisco, Seattle, and Austin than in the US on average. In 2015, interest in those cities was 3.6 times greater."

The below chart from Indeed shows how these job seeker preferences for the 'Big 4' tech hubs compared to the US overall have increased over time:

So the Indeed data just puts some numbers behind what you have probably known for some time - if you are recruting technical talent and are not located in one of these Big 4 hubs, you're likely entering the competition already in a losing position. The Indeed data shows that while cities all across the US, heck, all over the world, are seeing increases in open technical jobs, that tech candidates are only honing in their efforts more on the Big 4 tech hubs.

So while in the past, and especially in times of recession, candidate interest would have been primarily driven by the availability of jobs, the increasing candidate interest in these 4 tech hubs suggests further concentration on the part of job seekers on these locales. 

What can/should you be doing if indeed, (pardon the pun), you have difficult technical jobs to fill and you are not located in one of the Big 4 tech hubs? The analysis from Indeed offers a few decent suggestions:

1. Get yourself to one of the Big 4 citiies. This is the 'fish where the fish are' strategy, and of course it is easier said than done. But if these trends continue on their recent trajectory, it is only going to become more challenging to recruit tech talent to non Big 4 locations. It might be worth setting up a small, satellite office in one of these sought-after locations when compared to the opportunity cost of having important roles remain empty.

2. Let go of your 'Everyone needs to be physically at HQ' policy. Organizations have seemingly gone around and around on the value/importance of having everyone on the team physically co-located versus embracing more flexible work arrangements. And I suspect these conversations and shifts in attitude will continue to go on pretty much forever. But if the talent you need has decided they (mostly) would rather be in Seattle or San Jose and you are in Pennsyltucky then you might have to make some kind of a compromise.

3. Figure out how to better 'sell' what your location does have to offer to candidates that generally prefer the big Tech hubs. A while back I wrote a post about 'selling' your non-glamourous city to candidates, and the things i touched upon then I think are more or less still true now. The Big 4 cities may have a lot to offer candidates, but (hopefully) your city does too. And it might also be time to take a cue from politics once in a while and go negative - those Big 4 tech hubs are not all wonderful, and your city might have the edge in things like cost of living, open space, even the presence of 'winter', which I am told some people enjoy.

There is plenty more interesting information in the Indeed report - take some time to look it over if you are at all interested on what their data shows and suggests about the market for technical talent.

Have a great weekend!

A reminder that even the world's most admired company has hiring challenges

Lots of words are spilled in the HR/Talent/Recruiting space that more or less read something like this - 'Oh sure, that (insert HR/Recruiting/Benefits program of choice here), might work for Google or Apple, but there is no way that applies to us, we don't have a sexy, well-known brand.'

Said differently, it is more or less commonly accepted that companies like Google, Apple, Nike, Goldman Sachs, etc., have incredible advantages in competition for talent by virtue of their brand equity, vast resources, employer brand reputation, and the like. If you are repping one of these companies from Fortune's World's Most Admired Companies list, you would think you pretty much could dial up anyone you need and they would be sold on the opportunity. And that is at least partially, if not mostly true.

But even the World's Most Admired Company for 2015, Apple, faces the occasional recruiting challenge. Yep, I know, hard to believe.  But apparently in the global fight for scarce data science talent, even Apple has some issues attracting talent. From a recent piece on The Stack titled Apple's privacy policies repel the data scientists it needs to create 'predictive' smart phones:

Just for once, it seems that Apple ‘can’t get the staff’. According to a Reuters exclusive, the Cupertino-based global device giant is falling behind in the race to create ‘predictive’ services for smartphones because its privacy policies are too protective of the end-user.

The report has crunched numbers on Apple job openings and talked to various industry insiders, many of whom agree that Apple lacks the best conditions to attract the very limited supply of data scientists necessary to leverage cloud-based services and anticipate the most minute demands of smartphone users.

The reason for the company’s difficulty in challenging the likes of Google, Facebook and Amazon for the brightest and the best new minds in data science and analysis seems to lie with its commitment to protect the privacy of its users. The report notes that data retention policies on user-centric information gathered into its Siri ‘personal assistant’ product is a reasonably generous six months, whilst information retained from the user’s exploration of Apple Maps expires after only 15 minutes

So it looks like the world's best talent in the field of data science doesn't like the fact that Apple keeps comparatively less data around upon which to practice their science. Companies like Google and Facebook in comparison, seem to offer these scientists more of a playground for them to challenge themselves with.

A couple really interesting points I think worth noting in this story, that are probably true for both the World's Most Admired Companies and for your shop as well.

1. The work, then challenge, and the opportunity to be your personal best in your field still trumps the 'Brand' or the reputation of the company in general. Apple might be the #1 company in the world to work for, but for this group of highly scarce and talented folks it is the work that matters more.

2. Often the factors that influence a candidate's decision about joining an organization sit well out of reach of the org's HR/Recruiting leadership. No matter how much influence the HR and Talent organization has at Apple, they are never going to impact Apple's customer data storage policies and practices.

3. For a big company like Apple with lots of resources, acquisition might be the best (and only) way to get the talent that they require. The related Reuters study notes that Apple's 'acquisitions of startups such as podcasting app Swell, social media analytics firm Topsy and personal assistant app Cue have also expanded Apple’s pool of experts in the field.'

Interesting times out there when even the most well-known, most valuable and most admired companies is facing recruiting issues. I guess that sort of makes the rest of us feel good, maybe a little anyway.

Have a great Wednesday!