The Bottom Line Benefits Of Employees Who ‘Fit’ Jonathan Canger, Ph.D. TMP Worldwide/Monster HUGO Assessment Group

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

2. 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?

3. The Big Picture (Pfeffer, 1994) • In 1972, How Would You Predict The 5 US Companies With The Largest 20-Year Return? • (1972-1992)

4. The Big Picture (Pfeiffer, 1994) Conventional Wisdom Says: (a la Michael Porter, Competitive Advantage) • 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

5. 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

6. “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

7. Human Resource RolesA Model

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

9. Future/Strategic Focus Process People Day-To-Day/Operational Focus

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

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

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

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

14. 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?

15. 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)

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

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

18. 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

19. 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

20. Rethinking Selection • In addition to predicting performance in a specific job, new goals include predicting: • Satisfaction (Judge et al. 2001 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

21. Do You Want To Be An Employer Of Choice?

22. Do You Want To Be An Employer Of Choice? Can You Afford To Be An Employer Of Choice?

23. 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

24. 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

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

26. 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.

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

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

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

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

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

32. Assessing ROI For Selection • Been Around For A While (Taylor-Russell Tables - 1930s) • 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)

33. Effect Of Validity On % Satisfactory Workers

34. Effect Of Quality of Candidates On Test Impact

35. Effect Of Per Cent Of Candidates Hired (Selection Ratio)

36. 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

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

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

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