1. IBM Smarter Workforce: A predictive hiring solution1

2. IBM Kenexa workforce science offerings directly impact talent gaps
“Talent Gaps” Present one of the Biggest Talent Opportunities in the Market
66% of CEOs report the absence of necessary skills is their biggest talent challenge…
PwC’s 2013 global CEO Study
39% of CEOs say they are “barely able” or “unable” to meet the demand for talent
- Deloitte: Disrupting the CHRO
Nearly 70% of global organizations feel they lack the required skills to compete…
- Bersin, 2013
IBM Kenexa workforce science offerings directly impact talent gaps
and differentiate the IBM Kenexa Talent Suite and Smarter Workforce solutions.

3. Science Improves our Effectiveness in Solving Workforce Challenges
Companies struggle with the effectiveness of talent acquisition continuing to rely on subjective ratings yet,
Only 56% of companies use an assessment as part of the hiring process1 spending more than $2 Billion annually2
Over 60% of organizations are increasing their investment in talent analytics2 to retain critical talent.
The rise of the independent worker suggests that turnover rates will increase in 2014 and beyond
Talent Acquisition Example:
56% of companies use an assessment tool as part of the hiring process - Aberdeen Group
There is a $2 Billion market for employment assessments - Bersin
Organizations Struggle to Find People with the “Right” Skills who Fit into Their Organizations
And Those That Are Hired Are NOT Always The Right Fit:
~ 50% of newly hired employees had some remorse about their decision according to DDI research:
Lack of realistic job preview was a major factor
~ 50% of HR/Hiring Managers were satisfied with the hiring process, with:
< 33% confident in conducting interviews
33% blamed the overreliance on subjective evaluations for low quality of hire
Science can add enormous precision to the hiring process – Not only with the science behind selection (so selection system design – do you use multiple hurdles, a culture-fit pre-screening questionnaire, a structured interview with specific questions), but also with the science behind selecting the people with the precise skills to be successful (AMC example) at both a manager and an employee level.
Talent Leadership and Engagement Example:
The rise of the independent worker suggests that turnover rates will increase in 2014 and beyond.
“No collar” workers are striking out on their own as human capital becomes the leading source of sustained economic value.
The “open talent economy” suggests there will be more fluidity from role to role or organization to organization, according to Bersin.
By 2020 as much as 50% of the workforce may be independent (Freelancer’s Union)
Thus retaining top talent or at least leaving a positive impression upon exit - will be even more critical to maintaining a competitive advantage.
Organizations are Increasing Their Spend on Analytics With Modeling Turnover Critical to Retaining Talent
According to Bersin:
60% of organizations are increasing their investment in talent analytics
“Your most likely home runs in this area will be…Turnover or Retention Analysis:
Developing or buying a model to predict retention… (since that will become such a huge issue this year)
Science can add tremendous insight into the retention process. Can science stop turnover – No – but close! We can predict exactly who is most likely to leave and what are the specific levers that managers can use to stop turnover before it starts. Through precision, we can help managers be proactive in retaining their top performers by learning from exiting employees and predicting who is likely to face similar issues within the workforce.
Talent Optimization Example 1:
Organizations Lack the Tools to Identify Talent Gaps and Forecast Future Talent Needs
CEOs Report Talent Gaps will directly impact Client Success:
66% anticipate losing business to competitors
64% fear a loss of revenue
53% anticipate delays in innovation
59% face lower customer satisfaction
87% say their employees feel more pressure/stress
- Accenture 2013 Skills and Employment Trends Survey
To address Talent Gaps at all levels Organizations have directly increased their L&D budgets by 11%. - Bersin by Dolomite
Corporate L&D Spending Topped $130 Billion
Yet many don’t know where this spend is focused (Bersin)
– In other words, organizations are throwing L&D funds at their talent gaps without actually knowing what gaps they have!
Science and experience (e.g., AMC, Dollar General) suggests this is the WRONG approach – It is NOT a one- size-fits-all solution.
Science can directly address talent gaps in a variety of ways – Without a thorough understanding of the specific skills/competencies on staff – organizations struggle to remain competitive, create new ideas, and anticipate future skill requirements. Science can help organizations understand and evaluate the skills/competencies that they have on staff today, allowing considerable efficiencies to be gained in the hiring and succession processes – but even more impactful, science can help guide the learning and development of existing staff through a precise focus on only those competencies that are critical.
66% of CEOs anticipate losing business to competitors due to talent gaps3
Corporate L&D spending increased 11% to $130 Billion to address these gaps2, yet many don’t know where the spend is focused
1: Aberdeen Group, 2 Bersin, 3 Accenture

4. Impact/ROI Skyrockets When you Pair Science, Process & Data
Predictive hiring
Workforce readiness
Predictive retention
Create a blueprint of your best talent and acquire more like them:
“I need to improve business performance by hiring more people who have talents like my top performers.”
Create a workforce readiness plan based on existing talent:
“I need to better understand what talent I have on staff to deal with today’s demands, and anticipate the talent I need for tomorrow.”
Create a retention plan across my workforce:
“I want to retain my best talent and reduce turnover costs. I want to know why my top talent might leave and what I can do to stop it.

5. A predictive hiring solution
Predictive hiring can help you improve business performance by predicting which candidates will perform like your top performers.

6. Organizations Struggle to Find People with the “Right” Skills who Fit into their Organizations
Organizations struggle with the effectiveness of their talent acquisition processes, and continue to rely on subjective ratings2 (manager interviews)
“Today’s critical talent shortage is the result of a major mismatch between available skills and needed ones”1
Only 56% of companies use an assessment as part of the hiring process3 spending more than $2 Billion annually1
50% of newly hired employees had some remorse about their decision;
33% of HR / Hiring Managers blamed an overreliance on subjective evaluations responsible for the low quality of hires
1 Bersin, 2 DDI 3: Aberdeen Group

7. Pre-Hire Assessment Foundation Post-Hire Assessment Foundation
IBM Kenexa Assessment Solutions Have Decades of History Helping Solve This Problem
Individual Contributors
Managers
Leaders
Pre-Hire Assessment Foundation
Personality
Situational Judgment
Cognitive Ability
Bio Data
Skills
Job Fit
Cultural Match
Competencies
Post-Hire Assessment Foundation
Onboarding
Learning & Development
Leadership & Succession Planning

8. Predictive Hiring: Questions to Ask
What would the impact on your success metrics be if all of the employees in your most important job family performed at the same level as your highest performers?
What Are Your Success Metrics?
What Is Your Most
Important Job Family?

9. Predictive Hiring Process
Uses Science, Data, and Analytics to transform the Talent Acquisition process
IDENTIFY IMPACT: The link between human capital metrics and business performance
DEVELOP & DEPLOY ASSESSMENT:
Hire candidates who match the profile of top performers
PEOPLE, UNIT, AND BUSINESS LINKAGE RESEARCH:
Key elements that differentiate unit performance
Key drivers of organizational performance are identified
Factors that differentiate top from bottom performing units are determined
LEARN FROM your Best:
Identify traits of top performers in a key job
The critical role that impacts results and the factors and traits that differentiate performance are identified
Assess to replicate top performers

10. Identify Relationships Between People, Units, and Business Outcomes
Identify key drivers of organizational performance
People inputs
Assessment scores
Performance ratings
Training & Development
Compensation history
Biographical summary
PEOPLE, UNIT, AND BUSINESS LINKAGE RESEARCH: Key elements that differentiate unit performance
Development potential
Guest Satisfaction
Manager effectiveness
Employee Engagement
Exit surveys
Unit Inputs
Culture
Engagement
Guest Satisfaction
Unit Size, Age, Density
Control Variables
Competitor Density
Population Density
Population Affluence
Business metrics
Revenue
Sales
Shrink
Profit
Operations Efficiency
Operating Income
Retention / Turnover
Absenteeism
HIPO Employee Turnover
Comparable Store Sales
Transaction Size/Customer
Speed of Service
Sample variables shown

11. Determine Who and What Truly Drives Business Success
Determine the factors that differentiate top from bottom performing units
IDENTIFY IMPACT: The link between human capital metrics and business performance
People inputs
Assessment scores
Performance ratings
Training & Development
Compensation history
Biographical summary
Development potential
Guest Satisfaction
Manager effectiveness
Employee Engagement
Exit surveys
Unit Inputs
Culture
Engagement
Guest Satisfaction
Unit Size
Unit Age
Unit Density
Control Variables
Competitor Density
Population Density
Population Affluence
Business metrics
Revenue
Sales
Shrink
Profit
Operations Efficiency
Comparable Store Sales
Operating Income
Retention / Turnover
Absenteeism
HIPO Employee Turnover
Transaction Size/Customer
Speed of Service
Sample variables shown

12. Learn From Your Best in a Key Job Role to Replicate Success
Identify the critical role(s) that impact results and the factors and traits that differentiate performance
Stakeholder Interviews
Focus Groups
Job Analysis Questionnaire
LEARN FROM your Best: Identify traits of top performers in a key job
Top Performing Job Incumbents are Identified and studied
Performance Appraisal
Nomination process

13. Develop then Deploy the Assessment to Replicate the Best
Assess to replicate top performers
We use the Blueprint of your best talent
to develop and deploy a behavioral assessment
to help you to hire more just like them.
DEVELOP & DEPLOY ASSESSMENT: Hire candidates who match the profile of top performers

14. Predictive Hiring Takes the Assessment Process to the Next Level
Analytics to determine drivers of organizational performance
Analytics to identify factors that differentiate top / bottom units
Study your best to predict top performance
Custom assessment development process,
Fully-automated, validated behavioral assessment
Configured Assessment
Study your best to predict top performance in role
Custom assessment development process,
Fully-automated, validated behavioral assessment
Ready-To-Use Assessment
Standard, fully-automated validated behavioral assessment
Predicts Business Performance
Predicts Top Performance
Predicts Performance

15. What We Assess: The Whole Person
IMPACT
What you have learned to do
What you have gained through life experiences
Performance
Efficiency
Increased Engagement
Reduced Turnover
What you were born to do

16. Predictive Hiring: Proven Impact on Client’s Success:
Over $40 MILLION* in Savings By Reducing Employee Turnover
$63.9 Million* in additional revenue:
200+ General Managers have been hired using IBM’s system
If each generates an extra $300,000 in yearly concession sales
Gained Millions in Net Income and Achieved the Highest Profits In the Industry
1.2% increase Profit per Guest (Approx. 200M guests annually)
23% Increase in Guest Satisfaction (from 43% to 53%)
200%
90%
$40M
Turnover decreased substantially to:
resulting in:
in Savings
With 26,200 employees, = replacing 28,820 fewer employees.
Average cost to replace an hourly employee At AMC is $1,394**
**SHRM Human Capital Benchmarking Database (2011)
Lowered Training Costs
Increased Employee Engagement (from 58% to 70%)
*Estimated based on available data

17. Delivered on IBM Kenexa Assess, With Brassring / Kenexa Talent Suite
Attract job candidates early and often with engaging career sites
Build and maintain a pool of strong candidates from social networks
Allow candidates to connect and share with employees
Integrate tailored culture fit and skills assessments to deliver better matched applicants
Track job applicants more effectively

18. Additional Smarter Workforce Products/Services to Add Value:
IBM Kenexa Talent Acquisition Suite
IBM Kenexa Talent Suite
IBM Kenexa Analytics:
Utilize collected data to analyze HR processes (training, development, succession...)
IBM Kenexa RPO Services based on identified need

19. Predictive Hiring: Examples of Potential Impact
Retail Chain: Turnover
650 locations with 40,000 store 67% turnover
26,800 employees replaced on an annual an average cost to replace retail hourly worker: $1394 per EE
$37M in turnover costs
BLUEPRINT: STORE EE
By hiring more effectively we can reduce turnover by 10 points to 57% means replacing 4,000 fewer associates
Savings of over $5.5M in annual cost
Restaurant Chain: Unit Sales
150 units with 150 store general managers 10,000 employees
Average employee turnover of 67%
Average store sales at $1.4M per unit
BLUEPRINT: GM
Reduced turnover by 15 points saving $2M annually AND
Increased sales by 22% for each new GM yields $300,000 more each
If 25 new GMs are hired translates to $7.5M in additional revenue annually
Fortune 1000: Sales
200 sales people in key position
Average employee turnover of 20% with an average sales quota attainment of $1.2M per sales person
BLUEPRINT: SALES
Replacing only those who 40 salespeople
Average of $1.5M in sales for candidates identified
If 40 new sales people are hired yields $12M in increased sales on an annual basis
Figures shown based on actual IBM Assessment linkage studies done with previous customers.

20. APPENDIX

21. What do we mean by “Science”?
Perception:
Science = Add an “Assessment”
Science = Conduct a survey
Science = Call a Consultant
We are using Science to help:
Improve the effectiveness of talent acquisition programs
Increase employee skill utilization and career development,
Decrease training and development spend and hiring costs,
Improve workforce planning effectiveness,
Improve performance and productivity,
Retain high-performing employees
HCM Definition:
Applying psychological principles and rigor to contribute to an organization's success by improving the performance of its employees.
HR professionals have at their fingertips large volumes of employee data - including demographic data, social chatter, skills profiles and behavioral information - to identify the qualities that make top performers successful.
Augmenting the power of human judgment: Decisions that have been made based on human instinct will be made on the basis of massive datasets consisting of hundreds of variables, including those that no person would ever think of including, and multivariate statistical models that can analyze these numbers in real time.
Companies need to apply the same rigor to their workforce as they do in knowing and anticipating the needs of their customers. They can no longer afford to manage key talent by gut instinct; rather, they need to augment their wisdom with data and scientific analytics to drive decision making.
Capitalizing on the rise of big data within HR, we can reinvent HR by enhancing the power of human judgment through the use of science and analytics.