How to Avoid Bad Hires Through Reference-Checking

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Speaker: Mike Bartkus Vice President SkillSurvey, Inc.

Moderator: Ladan Nikravan

Associate Editor Workforce Management Magazine

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Ladan Nikravan Associate Editor Workforce Management Magazine

Mike Bartkus Vice President SkillSurvey, Inc.

Revolutionized Assessments for Business

How to Avoid Bad Hires through Reference Checking

SkillSurvey Pre-Hire 360™

The History of a Reference Check

• Historically – One of the most important steps – Hiring managers talked to previous managers

• How are they day to day? • Nuances? • What challenges do they have and what can I do to make them A+ players?

• Actionable Information – Will it help make a decision? – Will it screen out or have candidate rise to the top? – Will this information help this person succeed? – Will this information predict behavior?

Necessary for making informed hiring decision

Historical Phone Checking

History of Reference Checking Effectiveness

Actionable Information

Reference Checking Past 40 Years 1990’s 1970’s 2000 1980’s 2010

Can we make it relevant again? Should it be?

The Lawyers Get Involved

• The 1990’s and the new millennium – Legal issues arise – HR cracks down and bans reference checking

• What are the options? – Outsource the process – check the box

Results of Outsourcing

• 4 simple answers • Does it really help

make a decision?

Key Success Traits • Interpersonal Skills

• Teamwork

• Honesty

• Dependability

• Integrity

The Lawyers Get Involved

• The 1990’s and the new millennium – Legal issues arise – HR cracks down and bans reference checking

• What are the options? – Stop doing it?

• If you do attempt to check references: • Countless hours of phone mail tag, email tag, phone mail tag • Weeks and weeks of time

– All for no actionable information

• Bad Hire has an impact

• Various by organization and by job role

– Hard dollar cost – base salary, benefits, on board training, exit costs

– Internal team turmoil

– Customer satisfaction

– Compliance (Finance – SOX issues and the Fed’s)

• For sales roles – Cost of lost revenue

– Asset is time – time is lost forever

• For clinical roles – HCAHPS and reimbursements

Impact of a Bad Hire

Dependable Employees

Absenteeism is a chronic problem among U.S. retail employers • Conservatively costs $3,600 per hourly employee per year and $2,650 per salaried employee

per year • A company with 5,000 hourly employees has the potential to reduce costs by over $7.9 million

per year (3.2% of total payroll) • Results in lost productivity, high-cost replacement workers, and excess staffing

Results in reduced ability to meet demand leading to dissatisfied

customers

Employee Retention in Retail

Is Turnover Really a Fixed Cost?

Can we make an impact by identifying behaviors before they are hired?

Can HR Make An Impact?

The Results are in…….

0 10 20 30 40 50 60 70 80

Minimal

Moderate

Great

Percent

Dev

elop

men

tal N

eed

10 + years of statistics prove out - SkillSurvey References Perceive Candidates in the following categories

5-10 % High Risk Candidates

10-15 % Moderate Risk for Success Candidates

80-85 % Validated Low Risk

Risky Candidates: Can We Identify Them?

D’s and F’s are a must to avoid

Categorize the Candidates

0 10 20 30 40 50 60 70 80

Minimal

Moderate

Great

Percent

Dev

elop

men

tal N

eed

The A’s, the B’s, the C’s, the D’s, the F’s

5 % D and F’s

The D’s and F’s

We all know someone like this

Who hired this guy?

Are you kidding me?

- Not a team player - Gives 70% at best - Terrible with customers

The Hard Cost of Bad Hire – Real ROI

The U.S. Department of Labor currently estimates that the average cost of a bad hiring decision can equal 30% of the individual’s first-year potential earnings. That means a single bad hire with an

annual income of $50,000 can equal a potential $15,000 loss for the employer.

Question for the attendees: Can you think of one person your team hired recently where you made a mistake? Hiring manager override gone bad? Example – RN $60,000 x .3 = $18,000

• Finding the B’s and C’s

• Seems to be many in pool

• The interview: – Seemed ok, better than most

– Something nagging

– ….3 months later – C – player

– I knew it

The B’s and C’s

"I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to 1. Given that, you're well advised to go after the cream of the cream. ...A small team of A+ players can run circles around a giant team of B and C players.“ --- Steve Jobs

A’s B’s and C’s

The B’s and C’s are Hard to Identify

Large Percentage of Candidate Pool

0 10 20 30 40 50 60 70 80

Minimal

Moderate

Great

Percent

Dev

elop

men

tal N

eed

The A’s, the B’s, the C’s, the D’s, the F’s

15 % B & C’s

80 % A’s

B Player is Singled Out and Hired

B Player is Chosen • Some gaps • No show stopper issues • Onboarding plan • Know the issues before

day 1

Less than one minute

85% Response Rate Confidential Reference Feedback

Two Days or Less

Identify Avoid

Validate

Skeptical?

The Real Cost of Bad Hire – Cream of the Cream

• Hiring for Mediocrity

• Driving to the A player on every candidate

• Cost of B’s and C’s – HCAHPS

– Customer Satisfaction

– Sales

– Avis – we try hard to be the best (#1)

• Must focus on the A’s

• Identify those who can be B+ players

What is the Problem?

• Most candidates do a nice job presenting themselves during interviews – All are team players – All show up for work and don’t text, sit on Facebook all day – Most are ethical and always do the right thing

• Most candidates are well rehearsed in the question/response mode – Books, job seeker sites – Experience interviewing all the time

• Your only view today is from the candidate’s perspective – Really need a true 360 review from those who saw the behavior in the past

Phone interview

Face to Face

Personality / Behavior Assessments

Resume

From Candidate Perspective – Today’s Approach

I’m terrific

I work really hard, weekends too!

I interview well

I’m a Team Player

Recruiter Candidate

Phone interview

Face to Face

Personality / Behavior Assessments

Resume

From Reference Perspective – Today’s Approach

She’s terrific

I would hire her again, yes!

She works hard

She’ a Team Player

Recruiter Reference

Phone interview

Face to Face

Personality / Behavior Assessments

Resume

A New Perspective – The New Paradigm

Dependability

Interpersonal Skills

Personality

Work Ethic

Teamwork

Integrity

References

Recruiter

Comparison Online Solution Typical Phone Check

More references 5+ business references 50% of which are former or

current Supervisors

2 to 3

Faster 1 to 2 days 5 to 10 days

Guide Hiring Managers Previous managers assisting in leading interview

No

Pauses a hiring decision 5% - 10% of candidates < 1% of candidates?

Passive sourcing tools 5 references per candidate – warm leads

Not Applicable

Compliant/Legal Risk Supports compliance with EEOC and OFCCP

Uncertain/Inconsistent

Why You and a Better Process?

• Improve – Quality of Hire – Hiring Manager’s Interview Effectiveness – Efficiency – Passive Sourcing

• Drive – Compliance and Consistency

• Elevate Recruitment’s Role

Improve Hiring Manager’s Interview Effectiveness

• Lack of consistency for hiring managers • Managers looking for differences in candidates • Probing questions driven by previous managers’ comments

Patient Satisfaction - HCAHPS

Behavioral Interview Questions

Improve Efficiency – Time and Money

Recr

uite

rs S

ourc

e Ca

ndid

ates

Screen to top 3 candidates

• Improve efficiency – time and money • Six Sigma

From 60 work weeks to 4.8

0

10

20

30

40

50

60

Telephone SkillSurvey

Work weeks to reference check

2,272 job candidates

Solution resulted in a 92% Reduction in Time Spent reference checking

Exclusive Case Study: Improved Efficiency – Time and Money

Passive Sourcing by the Numbers

Job opening

100

Candidates

300

References

1,500

An organization has 100 job openings

3 candidates apply on average for each job = 300 candidates

3 candidates SkillSurveyed and provide 5 references each = 1,500 potential contacts

65% of the 1,500 contacts opt in to learn about future career opportunities. 1,500 x .35 = 525 + passive candidates

1 2 3 4

Talent Pipeline and Funnel • Multiplier Effect Based on

Number of Candidates Screened • Builds Automatically

Industry Professionals with Whom To Network and Source

• “Great People Know Great People”

• “Warm Lead” vs. “Cold Lead”

Science Compliance Risk

Risk and Compliance Management

Increase Compliance and Consistency

• It is all about the science - Validity of survey questions – Do the questions validate what you are actually asking? – Do the questions help predict future behavior? – Are the questions being asked in a way that reduces risk?

• Sample question – What high school did you go to?

• SkillSurvey reference feedback shows no differences between sub-groups – Helps support your efforts to remain EEOC and OFCCP

compliant

• Standardized process

• Clear ROI for Finance and Budgets – Quality of Hire – Turnover – Efficiency – Passive Sourcing

• Elevate Recruitment’s Role

Why You and a Better Process?

1 minute

5 minutes

10 minutes

2 seconds

Survey Availability Job Level ►

▼Job Family Entry- Level

Hourly Clerical Professional Supervisor Manager Executive

General

Production

Sales

Marketing

IT

Operations Customer Service

R&D

Admin

Finance

Legal

HR

Engineering

Education

Healthcare

Step 1: Enter Candidate Data

Step 1a: Select Survey

Send email to candidate

Sample Libraries: Finance

Other Libraries: IT

Other Libraries: Customer Service

Other Libraries: Healthcare

Step 1a: Select Survey

Send email to candidate

From: org name Recruiting Sent: Thursday, November 06, 2008 12:57 PM To: Patrick T Subject: org name Selection Process Information

Dear Patrick T, Thank you for your continued interest in the Major Account Sales position with org name. As already explained to you, a critical step in the selection process is reference checking. org name uses web-based reference checking for this purpose. Please click on the link below. It will open a web page where you will input your reference. You will also be able to review a sample of the questions being asked and the email that will be sent to your references. Your references will be emailed a reference survey and their responses will be submitted directly back to SkillSurvey. No one will see your references' individual responses because all responses are electronically aggregated together to produce one summary report. Note that all references will be responding as individuals, not as representatives of any company or organization. Please click on the following link (URL) to begin: http://eref.skillsurvey.com//CandidateUtilities/EOC.aspx?

Step 2: Candidate Enters References Automated Email From Recruiter to Candidate Explaining the Process

Step 2c: Candidate Confirms References and Signs Legal Waiver

Proof of Consent “…I hereby release any such

person, their company, and any affiliated officers, directors, agents, and employees from any and all claims I may have arising out of the disclosure of such information…”

The Surveys: Job-Specific, Behaviorally-Based Questions

Job-Specific, Behaviorally-Based

Would you like to learn more about job openings at Your Co name?

Drive Warm Candidates to Career Page

Step 4: Aggregate Reference Responses into Actionable Intel

Validated Candidate – Good Fit

Validated Candidate – Good Fit

Pause or Avoid this Candidate – Low Scoring

Professionalism

Interpersonal Skills

Patient Satisfaction - HCAHPS

Verbatim Comments

Verbatim Comments

Passive Candidate Database

• Clear ROI for Finance and Budgets – Quality of Hire – Turnover – Efficiency – Passive Sourcing

• Quickly Implement and Easy “Win” for HR • Elevate Recruitment’s Role in the Organization

Why?

Sample Clients

Sample Clients

SkillSurvey Usage and Growth

About Us: SkillSurvey

• Providing Reference Solutions since 2002 • Inventor of web-based reference checking

– Patent pending

• 37,611 Candidates in June 2013 – June 2012 – 30,621 – Over 1,000,000 candidates entered since 2008 – Over 5,000,000 people experienced the SkillSurvey process

• 750+ customers • 319 surveys in current inventory – 23 different job families

– Cynthia Hedricks, PhD, Chief Analytics Officer – 92 Surveys for Healthcare roles, 22 Surveys for IT roles, 12 for Sales roles, 10 for

Customer Service roles, 22 for Finance roles, 15 for Retail roles, 13 for Education

Contact SkillSurvey

www.skillsurvey.com Mike Bartkus, Vice President mbartkus@skillsurvey.com

610-947-6300

Mike Bartkus Vice President SkillSurvey, Inc.

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