The Bottom Line Benefits Of Employees Who ‘Fit’ Jonathan Canger, Ph.D. TMP Worldwide/Monster HUGO Assessment Group The USF HR ROI Conference January 17, 2003 Tampa, FL

Agenda The Big Picture Model – The Roles of H R Person-Organization Fit Processes for Selecting For Fit Where Does Selecting For Fit Fit? Estimates Of ROI Vs. Reality What Else?

The Big Picture (Pfeffer, 1994) In 1972, How Would You Predict The 5 US Companies With The Largest 20-Year Return? ( )

The Big Picture (Pfeiffer, 1994) Conventional Wisdom Says: (a la Michael Porter, Competitive Advantage) 1. Pick The Right Industries Barriers To Entry Substitute Products/Services Power of Suppliers Power of Buyers Rivalry Amongst Existing Players 2. Pick Companies With Dominant Market Share

And The Winners Were….  Southwest Airlines (21,000%)  Wal-Mart (19,800%)  Tyson Foods (18,100%)  Circuit City (16,400%)  Plenum Publishing (15,700%) None of Which Would Have Made Porter’s List

“ The point here is not to throw out conventional strategic analysis … but simply to note that the source of competitive advantage has always shifted over time. What these five firms have in common is that for their sustained advantage, they rely not on technology, patents, or strategic position, but on how they manage their workforce. Jeffrey Pfeffer, Competitive Advantage Through People, Harvard Business School Press, 1994

Human Resource Roles A Model

Future/Strategic Focus Day-To-Day/Operational Focus

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess 1. “Administrative Expert” Managing The Firm’s HR Infrastructure

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess 1. “Administrative Expert” Managing The Firm’s HR Infrastructure 2. “Employee Champion” Managing Employees’ Contribution

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess 1. “Administrative Expert” Managing The Firm’s HR Infrastructure 3. “Change Agent” Managing Transformation And Change 2. “Employee Champion” Managing Employees’ Contribution

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess 4. “Strategic Partner” Aligning HR and Business Strategy 1. “Administrative Expert” Managing The Firm’s HR Infrastructure 3. “Change Agent” Managing Transformation And Change 2. “Employee Champion” Managing Employees’ Contribution

Where Do You Focus? Where are you expected to focus? Where can you do the best job? What does the organization need? Where can you have the biggest impact? What’s your history with the roles?

Sample Results – HR Roles Survey Highest Rated Items (3.7 or Above) WHAT HR IS DOING HR participates in delivering HR processes (3.89) HR spends much of its time listening and responding to employees’ issues (3.89) HR helps this organization take care of employees’ personal needs (3.70) HR SHOULD BE MEASURED BY its ability to efficiently deliver HR processes (4.3) its ability to help the organization anticipate and adapt to future issues (4.22) its ability to help meet employee needs (4.03) its ability to help make strategy happen (3.84)

Sample Results – HR Roles Survey Lowest Rated Items (Below 3.1) WHAT HR IS( NOT) DOING n HR spends much of its time on strategic and business issues (2.69) n HR participates in the process of defining this organization’s business strategies (2.70) n HR is seen as a change agent (2.73) n HR help this organization improve operating efficiency (2.95) n HR helps this organization adapt to change (3.03) n HR spends much of its time supporting new behaviors to keep the organization competitive (3.03)

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess 4. “Strategic Partner” Aligning HR and Business Strategy 1. “Administrative Expert” Managing The Firm’s HR Infrastructure 3. “Change Agent” Managing Transformation And Change 2. “Employee Champion” Managing Employees’ Contribution Is SB

Focus On Selection / Talent Acquisition Sets The Upper Limit On Organizational Performance Can’t Develop Everyone For Everything Turnover Is A Certainty War For Talent Will Rise Again

Rethinking Selection Traditionally, organizations have selected employees based on applicants’ KSAs and job requirements. This has led to a focus on: – Cognitive ability – Specific knowledge and skills relevant for a particular job

Rethinking Selection In addition to predicting performance in a specific job, new goals include predicting: – Satisfaction (Judge et al meta-analysis: r between job satisfaction and job performance is.30; 52 for complex jobs!) – Tenure – Contextual / Citizenship performance – Effectiveness in teams – Effectiveness in diverse jobs

Do You Want To Be An Employer Of Choice?

Can You Afford To Be An Employer Of Choice?

Person-Organization Fit Definition: Person-Organization (P-O) fit is the congruence of an individual’s personality, beliefs, and values with the culture, norms, and values of an organization

Why Worry About Fit? Jennifer Chatman (1991) showed that assessing the congruence between a candidate’s values and the prevailing values of the organization predicted: – Job satisfaction 1 year later – Intent to stay with organization 1 year later – Actual turnover 2.5 years later

Preferences & Values Experience & Skills Knowledge & Abilities Personality & Work Style “ Can Do ” “ Could Do ” “ Prefers To ”“ Tends To ” P-O Fit Involves the ‘Soft Underbelly’

How Do You Do The Matching? Successful Person Profiling – Find candidates who are similar to the people who fit well in the organization now, in terms of their personality and values Organization Culture Profiling – Assess the current culture or prevailing values and find candidates who would like that environment.

Example1 – Personality Profiling --Candidate vs. Successful, ‘Good Fit’ Incumbent. Conscientiousness Emotional Stability Openness Extraversion Agreeableness

Example2 – Candidate Organization Preferences vs. “As Is” Organization. Preferences & Values Experience & Skills Knowledge & Abilities Personality & Work Style Organization Practices & Values Experience & Skill Requirements Knowledge & Ability Requirements Behavioral & Work Style Requirements CandidateOrganization

Example2 – Candidate Organization Preferences Vs. “As Is” Organization. Newcomer Integration Mgt–Employee Relations Continuous Learning Information Exchange Casual Atmosphere Profit Orientation Individ. Expressiveness

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess 4. “Strategic Partner” Aligning HR and Business Strategy 1. “Administrative Expert” Managing The Firm’s HR Infrastructure 3. “Change Agent” Managing Transformation And Change 2. “Employee Champion” Managing Employees’ Contribution Where Does Selecting For Fit Fall in The Model?

Future/Strategic Focus Day-To-Day/Operational Focus PeopleProcess 4. “Strategic Partner” Aligning HR and Business Strategy 1. “Administrative Expert” Managing The Firm’s HR Infrastructure 3. “Change Agent” Managing Transformation And Change 2. “Employee Champion” Managing Employees’ Contribution

Assessing ROI For Selection Been Around For A While (Taylor-Russell Tables s) Tables Already Built That Predict The Average Increase In Performance Expected, Per Cent Increase in Satisfactory or Superior Workers, etc. Also Have Formulas To Predict Dollar Utility of Selection Procedures (Brogden, 1948; Cronbach-Glesser, 1965)

Effect Of Validity On % Satisfactory Workers Per Cent Satisfactory with No Test (50% Hired) Per Cent Satisfactory Employees Per Cent Improvement in Satisfactory EE’s No Test50%0 Test with r =.360%20 Test with r =.670%40 Test with r =.880%60

Effect Of Quality of Candidates On Test Impact Per Cent Satisfactory with No Test (50% Hired) Per Cent Satisfactory Employees When Test with r =.5 used Per Cent Improvement in Satisfactory EE’s

Effect Of Per Cent Of Candidates Hired (Selection Ratio) Selection RatioPer Cent Satisfactory Employees When Test with r =.5 used Per Cent Improvement in Satisfactory EE’s 100%500 80% % %7856

Why Don’t We Use Utility / ROI Analyses More? Not Familiar With The Models Need To Collect Data Complexity (Formulas / Number of Variables) Frequently Yield Unrealistic Results Managers Aren’t Swayed By Them

So What’s The Bottom Line? 10 Suggestions 1. Keep The HR Roles Model In Mind; Try To Impact As Many Quadrants As You Can; Prioritize 2. Use Technology To Enhance Your Below-The-Line Quadrants (or consider outsourcing) 3. Use Multiple Metrics, and Involve Decision Makers In The Design Of Any Metrics (Execs, Finance, Ee’s) 4. Align With Company Strategy And Objectives And Look At Larger, Organization Wide Outcome Performance Data, even If ‘Contaminated’ 5. Use Concurrent Validation Studies – “If we implement this procedure, we’d have 10 more Marys and 10 less Bobs”

So What’s The Bottom Line? 10 Suggestions 6. Consider ‘Fit’ Initiative – Become an Employer of Choice for The People That Fit, not for everyone. 7. Learn The Business and What Competitors are doing, and tell Management 8. Distribute The Watson-Wyatt Study, along with your summary, to your executives 9. Build Your Own Version of Watson-Wyatt Study – What predicts Tenure & commitment in Your Organization? – and combine with EOS 10. Partner With Finance, but Learn From Sales & Marketing

The Bottom Line Benefits Of Employees Who ‘Fit’ Jonathan Canger, Ph.D. TMP Worldwide/Monster HUGO Assessment Group The USF HR ROI Conference January 17, 2003 Tampa, FL