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MONEYBALL AT WORK: They've Discovered What Makes A Really Great Employee

IMDBHiring, management, and promotions have traditionally been based on things like résumés, what college you went to, and interviews that are fundamentally biased and opinion based.

That’s all changing.

As Dan Shapero, LinkedIn’s VP of Talent Solutions and Insights puts it, “Recruiting has always been an art, but it’s becoming a science.”

There’s better data, we have better technology, and it’s changing the workplace forever.

The things that lead to success and a great job aren’t always the things we thought.

Sabermetrics changed the game

For nearly 100 years, baseball teams were run based on statistics from the 19th century that didn’t have much to do with reality. Scouts and executives still clung to it.

That all changed with the rise of statistics and sabermetrics. Michael Lewis’ “Moneyball” made the concept famous, telling the story about how Oakland A’s manager Billy Beane created a winner on the cheap by focusing on data and what really works.

In the end, the game of baseball is about scoring more runs than the other team. The business of baseball is about doing that with less money.

Data lets you do both better. The impact of the book made the term “Moneyball” part of baseball and changed the game forever.

The slow death of the résumé

One of the hallmarks of “Moneyball” is that lots of old data, tools, and assumptions got thrown out. For example, runs batted in (RBI), batting average, and how many wins a pitcher has aren’t very useful statistics.

The same is true for the things that used to matter most to recruiters and managers. For example, the résumé, traditionally the be-all and end-all for employability, doesn’t matter as much as it used to.

They’re a relic of the dark ages of recruiting, where big recruiting firms had the only real databases of potential hires, says Peter Kazanjy, the CEO of TalentBin, a startup which scours the web for potential technology hires.

“There are a couple of problems with résumés that make them not great,” Kazanjy argues. “One, how the hell do you get access to them? And two, they’re not necessarily as data rich as you might expect.”

Since most people, especially the most in-demand ones, aren’t actively searching, a big hunk of the recruiting process happens before the résumé enters the equation.

“Résumés are actually curious constructs now, because for the most part, work and our work product is fundamentally digital,” Kazanjy says. “Sometimes you don’t even need [résumés]. The reality of what somebody is and what they do … is already resident on their hard drive or their Evernote or their box.net account or their Dropbox cloud.”

Much of that information’s private. But most people have enough of an online professional presence that it’s possible to build a surprisingly complete picture.

Companies are proactively using big data sources like TalentBin and tools like LinkedIn Recruiter to go out and find passives, learn more about them, and use contact points like a shared connection on LinkedIn, a colleague who went to school with a candidate, or data on their interests to make a more engaging approach.

In fact, the data and services LinkedIn sells to recruiters is one of its biggest businesses, accounting for 57% of its revenue and growing 80% year-over-year.

LinkedIn solved part of the supply and demand problem by making the résumé a public, rather than private document.

And now, it’s taken another step in going beyond the résumé by letting people post pictures, slideshows and other content on their professional profiles.

GPA, and even where you went to school don’t matter nearly as much.

The traditional career path, from high school to college to a good stable job had entrenched the name of your school and college grades as potentially disqualifying factors. According to the data, that’s a mistake.

Staying with the baseball comparison, how many major league ball players on minor league teams could you name? It isn’t where they played, but how they played, how they adapted and improved.

Guy Halfteck is the founder and CEO of Knack, a Silicon Valley startup which couples games with advanced data analysis to figure out what sort of characteristics make for successful and innovative employees. Clients include Shell, which uses the technology to identify potential innovators, and NYU’s department of orthopedics.

“If companies are trying to quantify success based on which school you went to and what’s the ranking of the school and your GPA, etc. those things are not very powerful,” Halfteck says. “You might get into a school because your father got into the school. Those are not indicative and insightful about who you are as a person and your potential.”

Far better to do an analysis based on observing actual behaviours and performance in real time via one of their games, he says. Fifteen minutes of play is enough to create a megabyte of data.

Good college grades indicate a certain level of intelligence and diligence; but maybe the wrong kind. The highest-value jobs don’t come with a ton of instructions. They require adaptation and learning on the job, rather than being told what to do.

“Companies want someone who thrives on challenge [and is] willing to learn something new,” Josh Bersin, the principal and founder of Bersin by Deloitte, a data-centric HR consultancy. “[They want] a seeker of information, willing to adapt. If you’re the type of person that wants to be told what to do, you might be a straight A student. In fact you might even be a better student than the other type of person.”

Prasad Setty, Google’s vice president for people analytics, recently told The New York Times that they’ve found that SAT scores and college GPA didn’t lead to success at the company, and “are no longer used as important hiring criteria.”

A name brand school matters to a certain extent because they do some pre-screening for smart, high-achieving students. But it doesn’t mean nearly as much as people think. Put to the test, traditional criterion don’t hold up, Bersin says.

“We have a client — an insurance company. They’re a Northeast-based sort of traditional Ivy League-led company. They have this culture of only hiring people [who] had MBAs from top schools and so forth,” Bersin says. “They looked at the performance of best sales people and they found it had nothing to do with where they went to school, and nothing to do with their grades.”

Even their references didn’t mean all that much. The ability to perform well in an undefined job mean much more. Replacing the interview

Just about every job application, internal or external, involves a series of interviews.

Interviews are actually an exceptionally poor source of data.

It’s an information problem, Knack CEO Guy Halfteck says. “How unique can these questions be? You tend to get more of the same.”

“The ability to attract insights — and predictive insights — and make an intelligent decision based on that info is very poor,” he argues. “People fake it, they put on a show, we all know that interviews are not predictive.”

Interviews are fraught with irrationality. We select people who are good looking, who look or think like us, or that we kind of like.

Computers don’t have that problem. Not only are interviews bad sources of data, people aren’t all that great at them.”Most people don’t know how to do good interviews,” Josh Bersin says. “When most people do an interview they say ‘oh I really like that guy,’ well you might like him but that doesn’t mean he’s right for the job.” The interview has value as a basic screening tool, but it falls short.

Companies are finding or creating better data than ever before
The other part of the “Moneyball” equation is replacing what doesn’t work with something that does.

For example, there’s a vast selection of professional data available about people far beyond their résumés.

A software engineer might not mention on LinkedIn that they work with iOS. But that doesn’t mean you can’t find them, says TalentBin’s Peter Kazanjy. It’s about looking at the massive amount of data people put in the Internet, and taking what he calls the “Google approach” and using technology to collect and make sense of it.

“Humans engage in professional activity all across the web,” Kazanjy says. “Even if [an engineer] never put it on a LinkedIn profile you can know that he’s been tweeting about iOS and Xcode and Objective C, that he’s a member of meetups on meetup.com or has answered questions on Stack Overflow, or he’s following a bunch of repositories on GitHub or he’s participating in Apple engineering support email chat lists about Xcode.”

“That’s an iOS engineer, obviously,” Kazanjy says, “but it’s obvious only when you’ve gone and looked at the implicit activity and said ‘ok cool, walks like a duck quacks like a duck, must be a duck'”

That lets you get beyond what people list as their skills and interests, and find the people who are passionate and engaged with the communities around those skills.

Gild, another startup, looks specifically at the quality of the code engineers put up on GitHub, a popular hosting service for software development projects, to find diamonds in the rough.

If you can’t find enough data, create it

It’s even possible to get incredibly useful data out of the way people play games. Games involve intense engagement, reaction, and even reading other people. Knack has built a variety of games that help them find the behaviours and personality traits that boost productivity and performance, to “quantify success,” in the words of CEO Guy Halfteck.

“Cognitive ability is a small fraction of what we measure,” Halfteck says. “We measure everything from creative abilities to emotional and social intelligence, to how you think and make decisions … how you interact with emotions, understand emotions, how you learn new information, how curious you are about the world.”

Halfteck calls it “behavioural big data.” One of the most powerful things they’re working to do is reverse engineer success for individual companies. They’ll work with a company and build skill profiles by having a variety of employees play their games. That way, they can find what makes for a successful innovator, manager, or engineer at any given place. A computer can get useful data from every instant of a user’s engagement with a game, is better at finding patterns, and is more objective than any human alternative.

The power of big data technology and advances in business psychology means that data already stored and information already collected through surveys and assessments are more useful now than ever. Kenexa, which surveys and assesses some 40 million people a year, was was recently bought by IBM for more than $1 billion to boost its capabilities in this growing field.

“What we’re bringing to the table is what we call the human insight analytics,” Kenexa CMO Tim Geisert says. “So what drives engagement from an organizational standpoint? What are the key data points that make people good at what they do in their jobs?”

“What’s supercharged that is the technology that can gather that data,” Geisert added. “The platforms which we run that data on and using it for analytics, insights, and predictability.”

What employers are looking for today
The ability to learn and adapt quickly

“Every HR person I talk to says that your passion and drive overcomes educational background and ability except for one thing,” Bersin told Business Insider.

The one innate quality that is absolutely necessary for every job is “learning agility.” That’s the ability to pick things up quickly, to learn on the job, and to take initiative.

Over and over again, the people who perform best are the ones who don’t need to be told what to do, the ones that love challenges, seek information on their own, and quickly adapt.

People who follow instructions are mostly substitutable. Those who can be thrown into a new situation and thrive are truly valuable.

Resilience in the face of rejection

Stereotypes about certain jobs are often proved false when you look at the data.

“Most people believe that a good salesperson has to be an outgoing personality, has to be really friendly and good with relationships,” Kenexa CMO Tim Geisert says. “Part of that’s true, but what we’ve found in our data is that there’s actually a trait that’s hidden that predicts more success than any of those other more overt traits and that’s called emotional courage.”

It’s being resilient, being able to hear “no” again and again and keep going.

Flexibility

It’s not always a single trait, but a combination of two essential things that leads to success, Kenexa CMO Tim Geisert says. Obviously, a friendly demeanor is essential, but that’s not everything.

“That, combined with flexibility as a trait is the difference between good and great people in that position,” Geisert says. “If you think about it, many of the people who deal with the front line of customer service or help desk or any of those sorts of things, what is critical is the ability to switch on a dime and change what you’re doing and still maintain that friendly demeanor.”

A strong professional presence

Because recruiters don’t have to rely on posting things online and hoping for a response, the number of potential candidates has vastly increased. So in some ways, the bar is higher than ever, LinkedIn’s Dan Shapero says.

“Since recruiters can now proactively find relevant candidates, they have more choices and can be more selective,” Shapero says. “Rather than sifting through hundreds of irrelevant résumés, a recruiter can selectively choose who to target and find the best candidate for a job.”

“As a result, recruiters now expect candidates to have a professional presence online that showcases their professional brand,” Shapero says. “It’s in candidates’ best interest to showcase their professional brands online because the majority of recruiters no longer post requisitions on job boards and pray that relevant candidates will apply. They’re using recruiting products to proactively search professional sites, like LinkedIn, to find the best and brightest.”

Social and emotional intelligence is essential

Raw analytic power isn’t everything. And the need to work well with others isn’t just needed for those in customer service.

Knack has found that one of the major things that correlates with success across just about any job is social intelligence.

“One way to think about it is that everything we do, and try to achieve inside organisations, requires interactions with others,” CEO Guy Halfteck says. “Whether you’re an innovator, a physician, a teacher, a retailer, or a salesperson, your social abilities, being able to intelligently manage the social landscape, intelligently respond to other people, read the social situation and reason with social savviness — this turns out to differentiate between people who do better and people who don’t do as well.”

If you come up with an innovative idea, it likely won’t go anywhere if you can’t convince anybody. It’s not just about creativity.

Knack measures aspects of social intelligence, with, among other things, a game called “Wasabi Waiter” where job applicants play as a server and are measured on how well they read social and emotional signals.

A diverse background helps people adapt to new places

One of the most difficult jobs to fill for oil companies are production roles — the ones where people spend years out in the field, often living in the desert.

When one oil company looked at the data for who stuck these jobs out and succeeded, they found surprising results, Josh Bersin says.

The company started out the traditional way, looking for people with petroleum degrees, good academic credentials, and so on. But when they looked at the data, that didn’t predict success.

“The head of recruiting found out that the people who were surviving in these jobs — and these are jobs where the turnover rate was very very high — were mostly people who had come from families that had multicultural parents, parents that had international experience,” Bersin says. “They grew up in a climate with lots of different types of people around, which wouldn’t necessarily be true depending on your college.”

Another interesting find? The most successful people had played sports in college too.

Employees who are wired to like others

One theatre chain that Josh Bersin worked with found a surprising amount of variation in concession sales from theatre to theatre. When they tried to track down the cause, they found that employees were happier at the high-grossing theatres, and that customers were more satisfied.

Naturally, they tried to boost that in all of their stores by training everybody in better service, but six to nine months of training didn’t produce results. It wasn’t the training, it was the people, the head of HR discovered.

“There are people who are wired to be in customers service; they like it, they like people. There are others who aren’t,” Bersin says.

The company’s hiring practices were based on the usual: grades and credentials and degrees. They tweaked their screening criteria and pre-hire assessment to focus on whether people had happy personalities, enjoyed being around people, and liked serving others. The return on that investment was in the millions of dollars.

Raw processing power, and conscientiousness

At the end of the day, how sharp you are still matters. And so does how fundamentally diligent and careful you are — whether you always want to do a thing well.

Through the many games Guy Halfteck and his team have put together, those have been two of the constants.

“We know certain things about the world. We know that across the entire set of jobs that people can engage in, it’s general intelligence that’s your processing power and conscientiousness. That you do the right thing and care and plan ahead — those things — and to do the right thing,” Halfteck says. “These are independent of motivation. Those two aspects of a person are very predictive of performance across any type of job.”

Increasingly, a high score in baseline attributes like these will mean more and more as companies look for raw potential.

The Google formula: A sense of mission, and personal autonomy

Google’s been one of the pioneers of the movement towards bringing data to HR, with an entire department devoted to “people analytics.”

According to a recent New York Times piece, the most innovative workers had “a strong sense of mission about their work,” and feel like they have personal autonomy.

These uses of data are still in their infancy. But in time, leadership, management, and productivity are going to be less of a mystery, and more of a science.

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