You think you have it bad when hiring. Imagine if:
- All of your entry level job candidates were known to your entire industry and customers.
- You and all of your competitors had access to exactly the same background, pre-employment, and past performance data, outside of your one chance to interview this person.
- Oh, and at least one of the pre-employment tests that are given doesn’t correlate with the performance of your most critical employees.
- The cost of acquiring the labor is huge and the compensation levels are fixed.
- If you make a mistake, it takes a year to correct.
- It may be 3 years before you know if you made a good hire.
- The order of when you and your competitors can make a job offer is pre-determined, though for a high price you can jump the line.
- And this all takes place on national television in front of your customers.
Welcome to the drafting of professional sports players in the United States. And this time of the year, the focus is on the National Football League (NFL).
I bring this up because the NFL brings nearly all of the prospective players to a group workout called a combine, which leads to the drafting of players in April. In the combine, the players are prodded and poked by medical staffs, given psychological tests, and are put through a variety of physical skill exercises. Teams also have a chance to interview players individually. The combine is organized so that the teams can see what the roughly 300 players can do without flying them all over the country. For players’ perspectives on this and the drafting process, click here and here.
The oddest thing about the combine is that they take single measurements of core skills (speed, jumping ability, etc) when they have access to recordings of every single play in which the player has participated (real performance). Granted, different players go against different levels of competition, but you would think that about 1000 samples of a person’s performance would be a bit of a better indicator than how fast he covers 40 yards (usually a touch under 5 seconds, even for the big guys). The interviews can be all over the map with clubs asking about drinking behavior (the players are college students) and the ability to breakdown plays. And then many players get picked by teams that don’t interview them at all.
From a validation point of view, the performance data on players are actually readily available now. Much like call centers, the NFL records some very detailed individual statistics and not just team wins and losses to evaluate players. Whether the number of times a defensive lineman can bench press 225 lbs correlates with tackles for loss is not known (or at least published), but you get the idea.
Much is made about the pressure that the players are under to perform well at the combine. This is probably more so for those from smaller schools or with whom the teams are less familiar. But, the pressure is also really on the talent scouts (sports’ version of recruiters). They only get to pick 7 players in the draft. Undrafted players can be signed by any team and history shows that they have a surprisingly high success rate (see below).
Because of the amount of data available on players, the draft process is reasonably efficient, if you use the metrics of percentage of players who are in the starting lineup on rosters by draft position, turnover (which is mostly involuntary, and achieving high performance (measured by being voted onto the all-start team), higher drafter players do better than lower drafted ones. Of course, the higher a player is taken in the draft, the more he’s paid for the first part of his career, so there is some financial bias to start higher drafted players. Interestingly, undrafted players perform at the same level on these metrics as third round picks. Perhaps there’s something to having a chip on your shoulder.
What we can learn from the NFL is that when there’s a lot of data available, you can make better selection decisions, even when your competitors have the same data. Second, there’s still plenty of good (though not the best) talent available that’s overlooked by the masses. Finding that inefficiency in the selection process and addressing it can lead to a significant competitive advantage. A good validation process can help you do that.
For more thoughts and insights regarding pre-employment test validation, contact Warren Bobrow.