The world is changing and so is recruitment. Many progressive companies have decided to replace resumés and cover letters in their recruitment process, and instead, they decided to apply other innovative ways such as case-based screening to recruit in 2021, but why?
An extensive Korn Ferry report shows that by the year 2030, many industries can record a talent shortage of up to 85 million people resulting in about $8.5 trillion in unrealized annual revenues. “The lack of skilled workers needed to drive business strategy could be the defining issue of the age, threatening the GDP of nations as well as the profitability of organizations,” says Alan Guarino, vice chairman of Korn Ferry’s CEO and Board Services practice.
As a result, finding a skilled and talented employee for your company can be a continuous challenge in the upcoming decades. In an effort to avoid this scenario, hiring managers must find the best way to generate and detect the talent nets.
“Governments and organizations must make talent strategy a key priority and take steps now to educate, train, and upskill their existing workforces,” says Yannick Binvel, president of Korn Ferry’s Global Industrial Markets practice.
Selection methods throughout the years
Let’s look at it from the ground up. Companies are using many ways to assess future employees. For instance, by employer interviews asking about previous job experience, education, and interests, job tryout procedure, work sample tests, etc. The purpose of all is to predict future job performance, also referred to as predictive validity. Schmidt & Hunter (1998) conducted an impressive meta-analysis where they looked through 85 years of research findings, evaluating the predictive validity of different assessment tools. Screening methods were evaluated on a scale from 0 to 1. The highest score received, the higher is the ability to predict future job performance.
Why is predictive validity so important? “Use of hiring methods with increased predictive validity leads to substantial increases in employee performance as measured in percentage increases in output, the increased monetary value of output, and increased learning of job-related skills.“ (Hunter, Schmidt, & Judiesch, 1990)
One of the most common: the employment interview
In fact, the ability of the structured employment interviews to predict a future job performance scored 0.51 in conducted meta-analysis. The interviewer is usually asking questions substantiated by a careful analysis of the job in question. However the employment interviews could also be unstructured, and their predictive validity is only 0.38. The reason is that the interviewer is often asking every different applicant different questions.
In addition, applicants are not sure about the assessment process. Furthermore, employment interviews measure a combination of previous job experience, educational background, interest, etc. Let’s take a closer look at the analysis of those factors.
A) Job experience
The predictive validity of previous job experience is 0.18. Five years of experience may be good, but are we talking about 5 years of continuous progress or 1 year of experience that has been repeated 5 times?
Apparently, during the first 5 years of these (mid-level, medium complexity) jobs, workers continually acquired additional work knowledge and skills that improved their job performance. But this transition was almost complete by the end of five years, and further improvements in job experience led to little increase in job knowledge and skills (Schmidt & Hunter, 1998). These results indicate that work experience at the start of a career would predict job performance only for the first 5 years on the job, even under ideal circumstances.
B) Educational background
The ability to predict job performance by analyzing educational background scored 0.10, in the conducted meta-analysis by Schmidt & Hunter (1998). It is important to remember that education is undeniably an inseparable determinant of the level of work that can be done by the individual.
For example, the study shows that for the standard semi-skilled job, the length of obtained education may vary from 9 to 12 years. The results showed that the job performance of those with 12 years is only slightly better than those who took the education of 9 or 10 years. (Schmidt & Hunter, 1998).
Many recruiters believe that interest is an important indicator of one’s level of job performance. But is it really so? Likewise, as education, the predictive validity of the interests is also 0.10. The habit is to think that people whose interests match their profession are believed to perform better. The validity of 0.10 shows this is considered to be true to a limited extent. The study shows, that interests usually influence which jobs people will be interested in and for which job they will apply.
Job tryout procedure
Another screening tool is the job tryout procedure. The predictive validity of this screening method scored 0.44 in the conducted analysis. (Schmidt & Hunter, 1998) The process of this concrete screening method is to observe and evaluate the applicant’s performance while performing the work tasks.
Usually, the applicant is being observed for a certain period of time, for instance from 6 to 8 months. (Schmidt & Hunter, 1998) However, hiring people who are minimally screened can lead to unrealized revenues and further economic losses, resulting from low job performance. In addition to that, this screening method is expensive in itself.
Work sample tests
Work sample tests also referred to as Cases, provided the best assessment in a conducted meta-analysis by Schmidt & Hunter in 1998. The predictive validity of Case-based screening is 0.54. The combination of both, the work sample test and the GMA (General mental ability tests), obtained a score of 0.63!
So, what is the work sample test? Work sample tests, or Cases, are models of the job that must be performed by the applicants. The matter of the case is designed to match the tasks that are similar to those that are undertaken at the job.
For example, a candidate who is applying for a sales-related work position will be solving the case based on the sales-oriented business problem. As well as the person applying for the open marketing position, who will be solving a marketing-oriented business case. Another example could be presented when hiring skilled workers for more technical positions. For instance, an applicant must repair a series of defective electric motors.
But what about the Resumé?
We can’t forget about resumés. We probably agree that previous job experience and educational background are the parts of resumés, which recruiters care about the most. As mentioned before, the predictive validity of previous work experience is 0.18. In addition, the amount of education has an even lower ability to predict future job performance scoring the number 0.10 in conducted meta-analysis.
But let’s take a closer look at the job experience once again. According to the article by Talents unlimited, the overall result across the studies was a correlation of 0.06 between experience and job performance. “In short, this means that it has almost no significance in the big picture whether you have experience from the same industry or similar positions.“*
We agree that time is valuable itself, but can we really predict future job performance due to the time factor? Everybody has different ways of learning and different ways of using their skills. The time spent in previous work is not evidence of what kind of experience, knowledge, and skills we have gained during that time.
But what does all this mean? When there is a moderate complexity in the position you are trying to fill, the experience is not the parameter you should seek as a recruiter in the recruitment process.
But there is an exception when it comes to repetitive work or very specialized (high complexity) positions. For example, lawyers, special technicians, accountants, etc. The previous experience is equally important in both mentioned instances.
Why is Case-based screening the way to recruit in 2021?
As mentioned before, work sample tests performed the best in the conducted meta-analysis, based on the 85 years of research findings, by Schmidt & Hunter in 1998. But why is that? In the following section, we will take a closer look at the use of cases as an unbiased recruitment process.
The talent shortage is the No. 1 hiring challenge today. A study by the National Federation of Independent Business has found that 87% of HR professionals reported “few or no qualified applicants” for the positions they were trying to fill. Furthermore, Korn Ferry estimates that the global talent shortage could inflate salaries by $2.5 trillion by 2030.
1. Tackle the lack of talent
What is the meaning of those numbers? Firstly, the competition in the recruitment market will increase rapidly. Finding a talented and skilled employee for your company will become a challenge as we mentioned at the beginning of this blog post. Secondly, increase in salary spending. The talent shortage will result in a more competitive environment in terms of recruitment. Even though you will find the right applicant, be prepared to pay more money in order to afford them.
As a result, if you want to find talented candidates, you need to apply advanced talent search strategies and find an alternative way to recruit. The findings of the 85-year research made it clear, case-based recruitment is the best assessment tool to predict future job performance. But that is not the only advantage. By solving cases, related to the job they are applying for, candidates have the unique opportunity to showcase and apply their talents. Some may show off talents they were unsure of, and a resumé, for example, could not give candidates the place to show their talents – just to describe them.
2. Do the right hire
According to Career Builder research, 74% of employers admit they’ve hired the wrong person for a position. Unfortunately, a bad hire can cost a company upwards of $50,000, as reported by Career Builder. And why is that? Resumés are just a piece of paper. Some applicants simply don’t have writing skills to make their resumé stand out, some are just not sure about what information to include, and some of the applicants could include information that is not true to the whole extent.
According to the article by Innoflow:” This is absolutely critical for any organization because choosing the wrong person not only wastes valuable resources such as time, personnel, and money, but it can potentially have an impact on the long-term growth and expansion of a company if an employee is not an adequate fit for the role or for their colleagues.”
It is time to put resumés and cover letters on the shelf and start using case-screening methods with the long-run perspective. Candidates value the opportunity to showcase their preferences and talents. As well as they value screening without conscious or unconscious biases from the HR managers. Moreover, according to the article by Hr-guide, examinees further claim that the work sample tests are more favorable in their eyes, due to the relationship they possess to the job they are applying for.
The best option to avoid a bad hire is a screening method that will actually show you what skills and knowledge applicants possess in a fair unbiased hiring process. Give them a chance to show what they are capable of. As a result, it will be easier for you, as a recruiter, to see if they are the right fit.
3. See the fit
According to an annual recruitment analysis of the Danish job market conducted by Ballisager, 75 % of hiring managers and HR personnel think that the applicant showing how their competencies fit within the company is the most important thing in a cover letter. In fact, the cover letter just describes how applicants fit into your company. On the other hand, the case is the actual opportunity for them to showcase and prove their fit.
Employers must constantly make unbiased hiring decisions, but it is up to them to choose which methods to use in making them. We pointed out various methods as well as their most important goal, which is predictive validity. 85 years of studies indicate that case recruitment is the most accurate one bringing along several other benefits. And therefore, we think case-based screening is the way to recruit not only in 2021 but in years to come.
*(The blogpost from talents unlimited is based on a research article: Van Iddekinge, C., Arnold, J., Frieder, R. & Roth, P. (2019):” A meta-analysis of the criterion-related validity of prehire work experiences” Personnel Psychology, 72, 571-598″).