1. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 1 Jim Thomas, Ph.D. Manager, Consulting Services January 17, 2003 Competency-based Selection Pays Off C O M P E T I T I V E A D V A N T A G E. R E A L I Z E D.

2. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 2 Presentation Overview The Selection Challenge The Selection Solution Screening System Outcomes ROI: Costs and Benefits Lessons Learned Q & A

3. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 3 The Selection Challenge National financial institution Operations roles Transaction Services Lockbox Processing 6500 hires per year (37% turnover) 13,000+ applicants processed annually

4. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 4 The Selection Challenge High standards for new hires Tremendous pressure to manage costs Fact-based decision making culture

5. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 5 The Selection Solution Develop and deploy a new screening process... – Web-administered – Competency-based – Technically sound – Defensible – Demonstrated ROI

6. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 6 The Selection Solution Career Fit Inventory Self-reports of a candidate’s past behaviors, preferences, and motivations as they relate to critical work behaviors Approximately 100 items with a 5-point Likert- type scale ranging from "strongly disagree" to "strongly agree" Six Behavioral Disposition Scales include: –Quality Approach –Confident Approach –Outgoing Approach –Stable Approach –Adaptable Approach –Positive Approach

7. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 7 The Selection Solution Applicant Experience Profile Competency-based instrument that solicits applicants’ past experiences indicative of the ability to perform critical work behaviors Applicants respond to a series of behavioral statements and indicate if they have performed the described behavior Assesses past behavior related to: – Ability to Learn – Interpersonal Skills – Work Standards – Initiative – Customer Service Orientation

8. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 8 Screening System Outcomes Candidate Outcomes Passing rate = 75% No adverse impact CFI time to complete* = 27 minutes AEP time to complete* = 19 minutes 80+% of candidates finish battery in less than one hour High levels of candidate satisfaction * Average

9. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 9 Screening System Outcomes Employer Outcomes Candidates who pass screening battery are 5 times more likely to be successful performers Each candidate “screened out” saves approximately 20 minutes of Recruiter time (time allowed for interview) Web-administration of screening battery viewed as highly successful by Recruiters Dramatic reductions in turnover for both job categories: Transaction Services: 37% to 25% Lockbox Processing: 30% to 21%

10. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 10 ROI: Costs Screening Costs Increased by $243,000 Interview Costs decreased by $33,000 Total net increase in selection system costs = $210,000

11. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 11 ROI: Benefits Direct Benefit - Lower new hire/ orientation costs (# hires x daily salary x 90 days) = $4.7M Indirect Benefit – Less lost productivity due to vacancies (# vacancies x average time to fill* x daily salary) = $1.2M Indirect Benefit – productivity improvements due to more skilled workforce = ? * Average time to fill was approx. 30 days

12. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 12 ROI: Calculation ROI = Benefits – Costs x 100 Costs ROI for Direct Benefits = 1,092% ROI for Indirect Benefits = 248%

13. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 13 Lessons Learned Selection system improvements entail COSTS Know where to look for benefits: Selection system operating costs (e.g, cost per hire). Systems with more extensive interview components may show ROI on this basis alone. Reduced turnover (less recruiting, less orientation, less training) Increased workforce performance Selection system improvements deliver BENEFIT$

14. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 14 Lessons Learned Most HR organizations don’t know their costs! Even when cost data is available, ROI studies are difficult to conduct (not the same as a validation study) Rule out other causes for positive outcomes

15. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 15 Lessons Learned I/O Psychologists working as HR Professionals must experience a paradigm shift... Validity Coefficient

16. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 16 Lessons Learned Decision Makers want HR to... Show Me the Money!

17. © Development Dimensions Int’l, Inc., MMIII. All rights reserved. 17 Questions and Answers

18. C O M P E T I T I V E A D V A N T A G E. R E A L I Z E D. Thank you If you have any questions or comments, please e-mail Jim Thomas at: jim.thomas@ddiworld.com