Predictive Analytics in Talent Management: Harnessing Talent Data to Predict Performance and Retention
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1 Predictive Analytics in Talent Management: Harnessing Talent Data to Predict Performance and Retention By: Liza Manalo-Mapagu CEO, HR Avatar Philippines
2 Liza Manalo- Mapagu, CEO HR Avatar Asia Previous Posts Managing Director of Assessment Analytics Consulting Director of Strategic Consulting Services Assistant General Manager of Eduquest, Inc. Director of Center for Educational Assessment and Research, Human Resource Development Center at the De La Salle-University-College of Saint Benilde Head of Evaluation of De La Salle University-Institutional Testing and Evaluation Office Education/Affiliations A BS Psychology graduate from University of Sto.Tomas Master s Degree in Measurement and Evaluation at De La Salle University Ph. D course in Research and Evaluation at the University of the Philippines. Member, Society for Human Resource Management Member, Society of Industrial and Organizational Psychology
3 Name Designation Company How do you feel today?
4 Who We Are HR Avatar Philippines is a management consulting firm which specializes in talent assessment as a strategy for human capital optimization. We provide an end-to-end assessment solution integrated in the various talent management strategies from acquisition, onboarding and training, on to succession management.
5 End-to-End Talent Management Solution
6 Exclusive Distributor of HR Avatar Solutions in Asia
7 Presentation Agenda What is Human Capital Risk (HCR)? How Can Talent Analytics Address HCR? How can technology drive application of talent analytics in your organization?
8 Almost everything that can go wrong in a business has a human capital component. David Creelman Risks associated with human actions are given only little attention until something bad happens. Unfortunately, when one of these risks contributes to a loss, it can be very costly in terms of brand, reputation, morale, or revenue.
9 What is Human Capital Risk (HCR)? Human Capital Risks can be defined as events and employee behaviors that occur both within and outside the workplace that can affect employee productivity and/or otherwise affect the organization s operational and financial results. Aon Hewitt, Pacific
10 Types of Human Capital Risks Failure to attract required employees Selection of the wrong person Undesirable turnover Unsatisfactory performance Absenteeism Accident/injury Legal compliance issues Fraud Loss of knowledge
11 The Cost of Talent Issues What are the business problems? 1. Customer Complaints 2. Turn Over Rate 3. Customer Retention Rate What is the cost of the problem? 1. Bad Hires and Turn-over Rate. Php 155M 2. Customer Complaints. 1M 3. 70% Customer Retention Rate. 20M 176M
12 Risk management is an important task. But even though human capital makes up a significant if not the most significant portion of an organization s assets, it typically gets less attention when managing risk.
13 One of the reasons why HR departments have been limited in their capacity to address human capital risks is the lack of data. To be accepted as a strategic business partner, HR Departments must be able to measure the value
14 Talent Analytics is the application of sophisticated data mining and business analytics techniques to human resources (HR) data.
15 Business Value Stages of Analytics Predictive Analytics What can happen? Analysis & Monitoring Why did it happen? What is happening now? Reporting What happen? Complexity
16 Types of Analytical Models PREDICTS PREDICTS PREDICTIVE ANALYTICS Predictive Analytics Current Data PREDICTS Future Analysis & Monitoring Past Data REPORT INFERENCIAL ANALYTICS Drawing Conclusions or Inferences Reporting DESCRIPTIVE ANALYTICS Representation of Data and Summarizing
17 Steps in HR Analytics Hindsight Insight Foresight Gather data by Reporting Make sense of data by Analysis and Monitoring Develop predictive models
18 Talent Analytics presented the second largest overall capability gap for organizations
19 What is generally measured/tracked today? Employee Engagement Retention/Turnover % employees with dev plan Internal hire %age Level of Level of Expertise and Competence 63% 52% 48% 45% 37% 31% 30% 27% 27%
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23 The cost of a Talent walking out the door Organisational Knowledge Lost Performance and motivation impact on direct report Time lag to competence the cost of employee turnover is one-and-a-half the amount of employees monthly salary..and the cost is even more ahigher with first year hires Lose talent to The PWC Saratoga Review, 2008 competitor Wasted Recruitment Spend
24 Attrition is getting worse A growing number of new hires -- as well as topperforming employees -- are choosing not to stick around for long. 22.6% in % in PwC Saratoga U.S. Human Capital Effectiveness Report
25 Big Data: Driving HR Analytics STOP REPORTING! START PREDICTING!
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27 Predictive Analytics Defined Predictive analytics is the branch of data mining concerned with forecasting probabilities. The technique uses variables that can be measured to predict the future behavior of a person or other entity.
28 Predictive Analytics Defined Predictive analytics is the technology that learns from data to make predictions about what each individual will do from thriving and donating to stealing and crashing your car, The power to predict who will click, buy, lie or die.
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31 How can predictive analytics benefit your pre-employment hiring process by Jeff Furts
32 Benefits of Predictive Analytics for Talent Acquisition 1. Predictive analytics will help you improve your quality hire hiring process performance attrition data engagement survey data pre-employment assessment results, interview results, recruiting sources, personal data
33 Top 8 High-Impact Talent Acquisition Practices High Impact Talent Acquisition Bersin by Deloitte,
34 Benefits of Predictive Analytics for TA 2. Predictive analytics will help you source more efficiently and effectively Hiring managers can trace the hire back to the original hiring source and then link that to quality of hire.
35 Benefits of Predictive Analytics for TA 3. Predictive analytics will help you improve your speed of hire.
36 Assessment Methods - Validity 1 PERFECT PREDICTION Impossibly Good Work Sample tests Ability Tests / Structured Interviews Job Knowledge Tests / Group Exercises / Personality Questionnaires Assessment Centres (poorly designed and facilitated) References CV s/resumes / Years of Work Experience Academic Results / Years of Education Graphology / Age CHANCE PREDICTION Impossibly Bad Source: Journal of Occupational and Organisational Psychology (2001), 74, Robertson, I.T & Smith, M.
37 What do you want to predict? Job Fit Culture Fit Performance Retention Potential Trainability
38 How to use predictive analytics for predicting: Trainability High Performance Culture Fit
39 Competencies is at the heart of the human capital management cycle. Foster engagement Measure Quality of Hire Succession planning Retain Talent Reward Talent COMPETENCIES Acquire Talent Deploy Talent Assess for potential Talent matching Development needs Develop Talent Career pathing
40 A Competency is: a cluster of related knowledge, skills and attitudes that affects a major part of one s job (a role or responsibility) that correlates with performance on the job.
41 Types of Competencies Threshold Differentiating Core Technical (Spencer & Spencer, 1993)
42 Types of Competencies Threshold are essential characteristics required for all job incumbents to perform the job at a minimal level of proficiency. Example: Cognitive Ability, Language Proficiency, Positive Work Attitude, Basic Skills To predict: TRAINABILITY POTENTIAL
43 Types of Competencies Differentiating competencies distinguish superior from average performers. Example: Results-Orientation, Multi-Tasking, Selling and Negotiation, Customer Service, Quality Focus To predict: HIGH PERFORMANCE
44 Types of Competencies Core competencies are characteristics that must be possessed by every member regardless of their level of performance; they extend to all individuals in the organization. Core competencies support the organization's mission, vision and values To predict: CULTURE FIT
45 Types of Competencies Distinctive (Technical) competencies are position-specific KSAs. Example: Selling and Negotiation, Territory Management, Product Knowledge To predict: PERFORMANCE Also use for TRAINING NEEDS ANALYSIS
46 What are the BEST PRACTICES in applying Predictive Analytics?
47 Best Practice #1 Predicting HIGH PERFORMERS through establishing Success Profiles Concurrent Validation Studies (Internal Benchmarking Study)
48 Why will you set Success Profiles? This Performance Benchmarking Study aims: To improve the company s ability to: Predict top performers Hire talents within the competency standards of the company
49 Outputs of the Study SUCCESS PROFILES Provides the profile of the person whose competencies and performance are critical to the organization s current and future success. Provides the factors that differentiate performers from marginal employees.
50 Presentation of Data
51 Frontline Manager Overall Score Comparison between High and Low Performers
52 Frontline Manager Comparison between High and Low Performers
53 Frontline Manager Comparison between High and Low Performers
54 Frontline Manager Comparison between High and Low Performers
55 Frontline Manager Comparison between High and Low Performers
56 Best Practice #2 Identify the best predictors of performance through Predictive Validation Studies
57 Predictive Validity Predictive validity is the extent to which a score or test predicts scores on some criterion measure. Independent Variables (X=Predictors) Personal Factors Knowledge Skills Attitudes Job Satisfaction Engagement Dependent Variables (Y=To be Predicted) Job Performance
58 The conduct of Predictive Validation Study aims to validate: If there is a significant correlation between test scores (or any talent data) and performance, and The extent to which the talent data used can predict performance.
59 Predictive Validity of Employee Selection Criteria
60 Regression Summary Table for Job Performance Variables R2 Change of R2 1. Cognitive Interview Job Experience Education % of Prediction It can predict 24%
61 Best Practice #3 Use of assessment solution to predict: Trainability Potential
62 Types of Competencies Threshold are essential characteristics required for all job incumbents to perform the job at a minimal level of proficiency. Example: Cognitive Ability, Language Proficiency, Positive Work Attitude, Basic Skills To predict: TRAINABILITY POTENTIAL
63 How can HR Avatar help you in predicting: TRAINABILITY? PERFORMANCE?
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65 Wide Range of Assessments
66 Better Hires Through the Right Talent Data Does the candidate: Have the ability to learn and master all aspects of the job once hired? Attention to detail Analytical thinking Have personality traits that fit the needs of the job to ensure tenure? Expressive enough for sales? Conscientious? Etc. Have the right attitude towards work? Have a history of behaviors that correlate with consistency and tenure? Have the specialized skills or knowledge needed for the job? Cognitive Simulation Personality Inventory Personality Inventory Behavioral History Skills and Knowledge Modules
67 Job-Specific Animated Pre-Employment Tests Based on US Government Occupational Information Network (O*NET) Designed exclusively for quality of hire Each test contains: Animated work simulation (cognitive abilities) Personality inventory Behavioral history questionnaire An automatically scored essay* One or more job-related skills or knowledge tests* * Included when appropriate for the job.
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72 Sample Report for Engineer
73 Interpretation of the test
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75 Overall Weighted Score Individual Scores
76 Percentile scores
77 Interview Guide using Behavioral Event Interviewing
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84 Best Practice #4 Use of assessment solution to predict: Leadership Potentials Retention
85 How to use predictive analytics for predicting: Leadership Potential
86 WHO are potential candidates to the Talent Pool? High-Performers vs. High High-performers give immediate Potentials return on investment, with estimates averaging from more than 50% additional value, to as much as a 100% increase in productivity over average performers. iii Corporate Leadership Council, Executive Summary, February William D. Koch, Directions: Closing the Gap Between the Best and the Rest, Development Dimensions International, 2007.
87 WHO are potential candidates to the Talent Pool? High-potentials are typically defined as those demonstrating high-level contributions, organizational values, potential to move up to an identified position within a given timeframe, and potential to assume greater responsibility iii Corporate Leadership Council, Executive Summary, February William D. Koch, Directions: Closing the Gap Between the Best and the Rest, Development Dimensions International, 2007.
88 Most high-performers are NOT highpotentials BUT all high-potentials are high-performers.
89 Assessment of Leadership Potentials
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91 Types of high-performers who fail to become high-potentials Engaged Dreamers have high motivation, but only average ability. Unengaged Stars have aspiration and ability, but do not fully believe in their work or organization. Misaligned Stars have ability and organizational commitment, but lack the drive and ambition for success at the next level.
92 How do we assess High Potentials? Intellectual Interpersonal (Personality) Engagement Aspiration
93 How can HR Avatar help you identify your Leadership Potential and Readiness?
94 CareerTrack Packages According to HR Initiatives Talent Mobility Talent Audit o High Potential Identification o Competency Level/Gap Identification Training Needs Analysis Process-People-Technology Solution through HR Avatar Online 360 Feedback Full Outsourcing of Assessment and Dev t Center (ADC) ADC Technology Transfer Competency Modelling (Differentiating plus Leadership Potential Factors)
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97 Sample Report
98 Distribution of High, Medium and Low Potentials Company Y
99 Distribution of High, Medium and Low Potentials Company Z
100 Ingredients of Talent Audit Performance/Results: measures 1. Performance metrics 2. Track record Past Results Competencies e.g. 1. Behaviours 2. Skills Potential Competencies Potential e.g.: 1. Motive 2. Personality 3. Values 4. Cognitive Business Strategy
101 SUMMARY: MEASUREMENT RISKS IMBALANCED ASSESSMENT Too much focus on: Results Who will you get? Achieved in the past.but may not be able for the challenges ahead Competencies Knows how to do it.but doesn t get the results Potential Could do it in the future.but might not be ready to do it now
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103 Best Practice #5 Maximize the value of giving feedback and validation of talent data with the talent.
104 The talent a human being
105 Feedback and Validation Feedback Selection Process Development
106 Developmental Feedback Do they recognise they have a development need? Do they appreciate the impact their behaviour has? Do they recognise the benefit of changing their behaviour? Do they know how to change their behaviour?
107 Feedback and Exploration Feedback process Explain Dimension Explain Position Qualify Probe Explore Impact Link Summarise 112
108 113 Johari Window Known by others Tell Unknown by others Known by self Open/Free Area Hidden Area Ask Unknown by self Blind Area Unknown Area Objective assessment and feedback help to maximise the learning opportunity that can be offered by the organization. Expanding open/free area thus revealing a greater appreciation of individuals potential strengths and limitations. 1 Self-awareness/ feedback solicitation 2 - Self-disclosure / exposure 3 - Shared discovery
109 In Summary: Organizations are now challenged to manage Talent Risks These risks can only be managed if we produce the RIGHT TALENT DATA Predictive Analytics is a solution to prevent the risk from happening or minimize the negative of the impact of the talent issue Predictive analytics offers tremendous opportunities to use historical data in a way to predict future behaviour.
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