Wednesday, 29 June 2011

Best practices may not be best for your organisation

If your organisation puts time and effort into implementing best practise HR methods, such as ability testing, it must be reassuring to to know it all pays off in the end. Or does it? A recent study involving US financial organisations casts doubt on this belief.

Oksana Drogan and George Yancey were interested in six recruitment technologies generally considered as 'best practice': job analysis to see what a candidate needs to perform well; monitoring the effectiveness of recruitment sources; using ability tests; structuring interviews; using validation studies to establish whether recruitment performance translates to job performance; and using BIB/WABs, different forms of scoreable application forms (SAFs in the UK).

There is already much research on these areas at an individual level. For example, it's well-evidenced that when ability tests are well-designed and appropriate to the job they can predict aspects of individual job performance. But Drogan and Yancey were curious about organisational outcomes: in their case, financial success. Evidence is thinner and equivocal in this domain, so they decided to conduct a fresh investigation to see how these individual promises fare at the organisational level – do they cash out, or do the cheques bounce?

The researchers contacted HR executives from various credit unions across the US and surveyed the 122 respondents on whether they used each of the six practices, giving each organisation an 0-6 overall score. They also gathered publicly available financial data on each credit union, rendered into different measures such as market share growth; a quick review confirms a fair variety in financial performance across the organisations.

However, that variety was not down to the practices used. Firstly, the overall score did not correlate with any of the financial measures. Secondly, on any given measure, the financial success of companies that employed it was no better than that of those who did not. Neither was there any sense of a bedding-in period, with practices becoming more effective over years of use: such an effect was found for only one practice (validation) with just a single financial measure.

The authors conclude that “increasing the technical sophistication of selection procedures alone is not sufficient to influence bottom line results.” They point to other priorities that HR can take: aligning procedures to the unique features of the organisation, or taking an integral approach that recognises that investment in recruitment may be ineffective if this doesn't tie in with how you train new employees. In other words, use a procedure because it's useful here, now, for you, not because it's trumpeted as Best Practice.

ResearchBlogging.orgDrogan, O., & Yancey, G. (2011). Financial Utility of Best Employee Selection Practices at Organizational Level of Performance The Psychologist-Manager Journal, 14 (1), 52-69 DOI: 10.1080/10887156.2011.546194

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