Talent management Sydney: CVs and interviews are the worse predictors of success in a job

 

 

According to a report published by the HBR, the number 1 reason 82% of hiring managers gave for bad hiring decisions was inadequately qualifying candidates for key attributes required for the job during the hiring process (i.e., technical and soft skills).

After reading the HBR report, we were curious to find out why traditional hiring and recruitment methods were failing to qualify people for roles.

In 2010 we set up a longitudinal study to find out which hiring methods were the best at evaluating candidates for pricing, revenue and commercial management roles.

What we did

In 2010 we began our research to find out which hiring methods were best (and worse) at predicting success in new and challenging pricing roles and talent management Sydney.  We have continued to study the topic of talent evaluation since then and have considerable insight and data analytics to support our clients build high performing teams and talent management Sydney culture.

In our study, we examined traditional methods such as CV, interviews and standard aptitude tests and more robust talent evaluation tools such as: pricing and commercial tests, team capability tests, and customised pricing assessment centres. We wanted to know which methods were better at talent management Sydney, evaluating / qualifying key pricing skills and capabilities for specialist roles and teams

Our target executive group for this study were pricing, revenue and commercial management executives; and to date, we have assessed over 867 pricing and commercial executives in Australia and worldwide. All the executives in this study came from leading companies in Australia, EU and the US and practiced pricing and revenue management across most industries and markets (B2B and B2C).

To assess the effectiveness of all types of hiring methods (i.e., how well each method identifies talent and potential for pricing and commercial roles), we developed a multi trait assessment framework for pricing, revenue management and commercial executives.

This framework consists of a suite of traditional and modern hiring methods (listed above) and includes key both technical and soft predictors of expert pricing performance.

The framework was developed by Subject Matter Experts from pricing, psychology and data science to ensure all questions were statistically tested, mapped and strongly connected to key commercial pricing attributes and competencies.

Each executive was asked to complete the assessment program followed by a self-assessment form in which they ranked their own pricing capability across 9 commercial pricing competencies. They also provided explanations of their rating scores.

The hypothesis tested at the time was two tailed – that there would no significant difference between hiring methods used during a typical hiring process and more advanced assessment methods in terms of either qualifying key pricing attributes and/or predicting expert pricing performance.

Our findings showed quite a different story…

Results:

We found that 56% of executives sitting the test failed to meet the pricing competency threshold / benchmark despite having CVs /professional background in pricing and commercial management roles and high self-assessment scores.  30% of executives were either on or close to the pass mark (i.e., acceptable). 8% of executives displayed strong price and revenue management capability and potential for new and challenging pricing roles to come. See our blog on professional development.

We found that CVs and interviews were by far the worse predictors of success in the role or identifying talent during the hiring process with indicators as low as .24 for self-assessments and .18 for CVs.

We found that expert tests, customer pricing assessment centres and capability tests were the best predictors of success in all roles (from analyst to price leader) with a strong predictive indicator of .75 for expert knowledge tests and assessment centres and .70 for pricing & commercial reasoning tests.

We found that the recruiters and hiring managers / assessors level of knowledge and expertise in teambuilding and pricing helped accelerate and validate the talent evaluation & selection process.

We found test-re-test reliability scores for all specialist evaluation tools were high (Cronbach Alpha of =.8).

Implications for talent management Sydney

What someone says they can do in a CV or during an interview bears very little resemblance to how well they perform in a specialist pricing role.

Self-assessment based hiring methods like interviews and CVs are by far the worse predictors of success in a job.

More robust talent evaluation tools are essential to qualify key pricing skills, styles and competencies for all pricing and revenue management roles during the hiring process.  Hiring manager’s gut feel is not good enough.

An integrated evaluation and onboarding program is now required to ensure the team includes a broad mix of working and thinking styles, skills and competencies.

How you hire and who you have on your hiring team can have significant results on the quality and cost of hiring.

Conclusion

Our study clearly shows that traditional assessments methods like CVs and interviews are failing to qualify key skills and attributes during the hiring process for new and challenging pricing roles.

We advise CEOs and HR leaders to break away from traditional hiring methods when building new or existing pricing and revenue management teams.

We invite you to trial our multi trait assessment framework for pricing and commercial teams to support your next hiring process. See our blog on team management skills for pricing leaders. See our blog on cognitive bias when recruiting. Also – see our blog on job transformation.

To sign up: https://taylorwells.com.au/taylor-wells-pricing-strategy-advisor/

See our blog in failed price increase strategies – and what we can learn.

 

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