ROI and the Talent Acquisition Pipeline Jonathan M. Canger Verizon Wireless USF HR ROI 2007 Conference Tampa, FL February 15, 2007

1. Industrial Revolution (late18th Century) - First factories with large #s of workers. Labor viewed as a ‘commodity’ 2. Scientific Management /Engineering (Late 19th Century) - Frederick Taylor ‘time and motion’ / industrial engineering studies. 3. Industrial Psychology (Early 20th Century) - Hugo Munsterburg applied new science of Psychology to workplace. - World War I & Testing – US Army ‘Alpha’ and ’Beta’ classification tests. 4. Human Relations Movement (1920s) - Western Electric ‘Hawthorne Studies’; Morale & Satisfaction Research. 5. Globalization & Technology (1980s) - Downsizing; M&A ‘s – People as largest ‘expense’. 6. HR as a Business Partner/Driver (1990s-today) - Workforce 2000, Demographic Shifts, Globalization, Technology - McKinsey ‘War for Talent’/ ‘Employer of Choice’ - Pfeffer, Huselid, Ulrich, Watson-Wyatt – ‘HR drives business success’ A Biased, Condensed History of the World (of HR)

1. Some Very Successful Companies have Some Dubious HR Practices 2. Some Not-So-Successful Companies Received HR-Related Awards 3. Companies Known For the Most Extreme HR Programs Almost All Died 4. Some Successful Companies Cited Their Need to ‘Cheapen’ Their HR Practices 5. Some Firms Completely Outsource HR 6. Some Firms Don’t Have HR Today we’ll focus on an area that’s been shown to be related to business success in the Watson Wyatt and other HR-ROI research studies AND one in which I/O Psychology has been working for decades: Employee Selection ‘Not So Fast…’ View From MBA’s

I/O Psych Selection Metrics Not The Language of Business Validity (relationship between scores on test and scores on job performance or turnover) Expectancy (change in ‘% superior’ or some other category of employee) Utility ($ value of change in an employees’ performance)

Testing is only one step in a process… Telephone Prescreen Telephone Interview HR Structured Interview Computer Based Simulation Supervisor Structured Interview Job Offer Background Check & Drug Screen Staffing Process

…which Is fed by Sourcing... Telephone Prescreen Telephone Interview HR Structured Interview Computer Based Simulation Supervisor Structured Interview Job Offer Background Check & Drug Screen SOURCING Staffing Process

..whose output (new employees) is oriented and trained… Telephone Prescreen Telephone Interview HR Structured Interview Computer Based Simulation Supervisor Structured Interview Job Offer Background Check & Drug Screen On- Boarding TrainingOrientation SOURCING Staffing Process On-boarding Process

…and finally delivered to the business… Telephone Prescreen Telephone Interview HR Structured Interview Computer Based Simulation Supervisor Structured Interview Job Offer Background Check & Drug Screen On- Boarding TrainingOrientation SOURCING Staffing Process On-boarding Process

…to subsequently do things which create value or havoc. SOURCING Telephone Prescreen Telephone Interview HR Structured Interview Computer Based Simulation Supervisor Structured Interview Job Offer Background Check & Drug Screen On- Boarding TrainingOrientation 1.Stay or Leave 2.High or Low Job Performance 3.Good or Bad Citizenship Performance 4.Low vs. High Absenteeism & Tardiness 5.Good vs. Poor Customer Service 6.Follow or Ignore Policies and Rules 7.Embrace or Block Change 8.Recommend or Badmouth Company’s Products and Services 9.Recommend or Badmouth Company as a place to work Staffing Process On-boarding Process Performance Outcomes

Each Step Has Costs, and Impacts Subsequent Steps and Outcomes SOURCING Telephone Prescreen Telephone Interview HR Structured Interview Computer Based Simulation Supervisor Structured Interview Job Offer Background Check & Drug Screen On- Boarding TrainingOrientation 1.Stay or Leave 2.High or Low Job Performance 3.Good or Bad Citizenship Performance 4.Low vs. High Absenteeism & Tardiness 5.Good vs. Poor Customer Service 6.Follow or Ignore Policies and Rules 7.Embrace or Block Change 8.Recommend or Badmouth Company’s Products and Services 9.Recommend or Badmouth Company as a place to work Staffing Process On-boarding Process Performance Outcomes

Pre- screen 84% pass rate Phone Interview 61% pass rate Computer Simulation 47% pass rate Supervisor Interview 59% pass rate HR Interview 67% pass rate Job Offer 92% acceptance rate Background Check 74% pass rate $10$25$30$33 $20$100 $10,000$21,000$15,360$7,980$4,635$1,900$8, An Example of the Cost Side of The Equation If 1,000 candidates are delivered from sourcing The above process will yield 64 new employees to on-boarding, at a cost of $69,575, or $1,087 per hire Note: Above number are for illustrative purposes only. They do not represent actual Verizon Wireless Results

Re-engineered Process Computer Biodata Screen 49% pass rate Phone Interview 52% pass rate Enhanced Simulation 66% pass rate Joint Interview 61% pass rate Job Offer 93% acceptance rate Background Check 86% pass rate $ $25 $12, $30 $7, $66 $11, $20 $2, $100 $9, Note: Above number are for illustrative purposes only. They do not represent actual Verizon Wireless Results

Re-engineered Process Computer Biodata Screen 49% pass rate Phone Interview 52% pass rate Enhanced Simulation 66% pass rate Joint Interview 61% pass rate Job Offer 93% acceptance rate Background Check 86% pass rate $ $25 $12, $30 $7, $66 $11, $20 $2, $100 $9, If the same 1,000 candidates are delivered from sourcing The new process will yield 81 new employees to on-boarding, at a cost of $42,528, or $525 per hire – And if you only needed 64 (vs. 81) employees, you can save more $$$ by reducing sourcing costs, too. Note: Above number are for illustrative purposes only. They do not represent actual Verizon Wireless Results

Affecting the Performance Outcomes: The ‘Deep Dive’

Which Enhances Outcomes And Reduces Hiring Needs SOURCING Telephone Prescreen Telephone Interview HR Structured Interview Computer Based Simulation Supervisor Structured Interview Job Offer Background Check & Drug Screen On- Boarding TrainingOrientation 1.Stay 2.High Job Performance 3.Low Absenteeism & Tardiness 4.Good Customer Service 5.Recommend Company as Place To Work Staffing Process On-boarding Process Performance Outcomes New Biodata