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Experts have claimed for more than a decade that employee assessments need to divorce from the employees’ self-reports about how they think they behave and focus more on how they actually behave. In fact, most people are rather biased in self-assessments.
The measurement of employees’ actual behavior has traditionally been performed through the observation of people in the job. From this lens, assessing real behavior for people who are not yet in the company, that is, job candidates, has been a virtually impossible task.
Fortunately, times have changed thanks to Kodo People! Kodo People is a new HR SaaS tool that applies state-of-the-art knowledge from Behavioral Economics to assessments in the talent acquisition and people management worlds. Behavioral Economics is a scientific discipline that introduces psychological, neurobiological, and social elements into economic analysis, and that has received several Nobel prizes in Economics in the last decades for its treatment of people as humans rather than as ultra-rational machines.
At Kodo People we are strong advocates of the current world trend towards a more humanistic, people-first HR management style. For this reason, we developed Kodo People as the first TA software that fully deploys the benefits offered by Behavioral Economics assessments. Our behavioral assessments are based on so-called economic games, which are abstract decision-making tasks in which people make decisions with real monetary consequences. The measurement of candidates’ actual behavior in your hands!
Kodo People allows TA managers to hire faster and better thanks to objective data gathered from candidates’ actual behavior in the games. Data-driven decisions are fundamental to build a people-first workplace as they help removing important barriers such as the recruiter’s biases. This automatically enhances DEI outputs in organizations because hiring decisions are less dependent upon hiring managers’ subjective evaluations and treat all people identically, regardless of their gender, ethnic background, physical appearance, etc.
The Kodo People Talent Acquisition module consists of 3 easy steps built upon our previous research and accumulated scientific knowledge. The 3 phases of the TA module are Screening, Behavioral Style, and Onboarding.
Hiring managers’ main requirements for new hires are strongly related with adaptability, uncertainty management, and job interest. In fact, our research shows that measuring only these 3 factors provides for a fair and fast assessment of a candidate’s probability of success in any organization. Other variables are of course important, yet these 3 explain nearly 70% of what constitutes a good hire. Each of the variables that come after these 3 in importance add less than an extra 10% explanatory power but require a much longer assessment. Therefore, a screening phase that considers adaptability, uncertainty management, and job interest yields a comprehensive, ultra-fast, and efficient measurement tool for the assessment of a candidate’s appropriateness as a new hire. Given that these three variables are essential across positions, sectors, industries, etc., the initial screening phase that allows hiring managers to keep only those candidates with a reasonable probability of success should be primarily based on the Kodo People’s “Screening Index” (see Figure 1). The Screening Index is a numerical value from 0 to 100: the higher a candidate’s index, the more optimal the candidate’s adaptability, uncertainty management, and job interest. Hiring candidates with a high Screening Index is a guarantee of success!
We are living in ever-changing times and organizations need to be as adaptable as possible to deal with uncertainty (see here and here). To be adaptable in a changing environment like the current one, organizations need to move quickly and hire adaptable employees. A recent report by Talent Economy shows that 91% of HR decision-makers in the UK expect future employees to be recruited based largely on their ability to cope with change and uncertainty. Similarly, the IBM executives survey report shows that willingness to be flexible, agile, and adaptable to change has moved from 4th to the 1st position among the most valued behavioral skills from 2016 to 2018.
The speed of hiring decisions is warranted thanks to the Kodo People TA module, thus contributing to make organizations more adaptable and sustainable. Moreover, our TA module measures the candidates’ potential for adaptability.
The basic underlying forces that allow people to be adaptable have to do with knowledge: about the environment and about the self. These are the main antecedents of adaptability. There is no room for adaptation if one does not know what environment one needs to fit into. And other people are the basic element of the environment that needs to be accounted for, since changes are driven by people. But fitting is typically about two elements, and hence it also requires knowing what needs to be fitted into the environment, that is, oneself.
In sum, adaptability requires both “strategic reasoning” and “self-awareness” capacity, which are the two components of Kodo People’s measure of adaptability. Strategic reasoning refers to the ability to understand how people think so that the individual can anticipate others’ behavior in order to make contextually-appropriate decisions that maximize welfare (Behave4, 2019). Self-awareness refers to the capacity to know one’s own strengths and limitations, that is, to be neither under- nor overconfident (Behave4, 2019). Of course, we measure these variables using economic games that have been used for years in academic research.
Therefore, a candidate who scores high on strategic reasoning and self-awareness meets the basic needs for a great adaptability potential. Importantly, this is virtually independent of the specific position the person will occupy in the company or the specific sector/industry in which the company operates.
Intimately related to adaptability, the capacity to cope with uncertainty is a crucial requirement for new hires nowadays. Someone who doesn’t deal well with uncertainty may indeed have big problems in the current volatile scenario involving fast and frequent changes.
The Kodo People’s measure of uncertainty management consists of assessing the candidates’ decision-making in economic games related to uncertainty, both in the domain of gains and in the domain of losses. In particular, our measure considers two key elements of uncertainty management: “risk neutrality” and “loss aversion”.
People who are too conservative (i.e., risk-averse) or too risky often make decisions that are detrimental in the long term. Risk neutrality assesses precisely a person’s capacity to abstract from the level of uncertainty associated to a decision and always choose the best option, that is, the option with higher expected returns. In other words, risk-neutral people are not negatively affected by uncertainty and are therefore able to choose the options that maximize the long-term benefit, regardless of the volatility attached to the decision menu.
On the other hand, loss aversion refers to the tendency to value losses more than benefits, which typically leads to avoid risks when eventual losses are possible. The decisions of loss-averse people are negatively affected by the possibility of losing something and this often prevents them from making the right choice in scenarios where that possibility exists. Someone who is too averse to losses, hence, might have problems to choose the most beneficial options when losses are possible.
In sum, candidates with optimal scores on the risk neutrality and loss aversion scales meet the basic needs to deal well with uncertainty and, again, this does not really depend on the specific position or sector/industry considered.
However obvious it might sound, it’s only recently that science has demonstrated that those candidates who are more interested in the job perform better, display higher job satisfaction, and stay longer in the company. There are different ways to approach a person’s interest in a job. Yet, as for the aforementioned measures, at Kodo People we don’t think asking the candidate is a good option to understand whether s/he is really interested in the job. Let candidates demonstrate their job interest!
The Kodo People’s measure of job interest also consists of two elements, namely, “self-competition” and “diligence”, which are assessed using economic games.
Self-competition refers to the preference for competing with oneself to try to improve one’s own past performance. A candidate who is interested in the job should show the intrinsic motivation to improve continuously – isn’t getting the job an improvement? Our measure of Diligence refers to the candidate’s way of approaching the assessment. In other words, does the candidate take the assessment seriously? Our methodology allows us to uncover whether someone is taking sufficient care to complete the assessment (which can be done in less than 10 minutes) in a consistent manner.
In sum, candidates with optimal scores on the self-competition and diligence scales display two fundamental elements associated with job interest and, again, this does not really depend on the specific position or sector/industry considered.
2. Behavioral Style
The second phase of the Kodo People TA module is the perfect complement to other assessment tools, such as interviews and the evaluation of qualifications and hard skills. Those candidates who obtain a sufficiently high Screening Index are moved to Behavioral Style. In this second assessment, which also takes less than 10 min to complete, people’s style is classified along a continuum from “Soft” to “Hard” (i.e., Soft|Hard scale from 100|0 to 0|100, although most people fall somewhere in between). In contrast to the Screening phase, here there are no ex-ante recommendations because any behavioral style can represent a good hire depending on the context and therefore one size doesn’t fit all. That is, hiring managers need to decide which profiles they prefer to hire.
People who display a Soft style are oriented to the long-run, relatively risk-averse, and score low on negative reciprocity and high on bargaining flexibility. Someone with a marked Soft style can be represented as the patient, conservative, predictable, and subtle negotiator, who stays long at the negotiation table. These profiles are typically good for stable teamwork and for positions where the risk of abandoning a negotiation is associated with large costs. They can excel in sales departments but mostly in those cases in which a long-term relationship with the client is fundamental.
On the other hand, candidates who display a Hard Style are rather focused on short-term results, relatively risk-loving, and score high on negative reciprocity and low on bargaining flexibility. A marked Hard Style represents the direct, unpredictable, explosive, and tough negotiator, who tends to force the negotiation and often leaves the table. These profiles are typically appropriate for tasks with unstable or short-term goals and for positions in which there are no large costs associated with leaving a negotiation. They can excel in sales departments, especially in the implementation of relatively aggressive campaigns in which a long-term relationship with the client is not expected or important.
Behaviorally balanced teams can be built both by hiring people with intermediate behavioral styles (remember that most people show both styles to some extent) or by combining hires with different but complementary profiles. This increases behavioral diversity, which tends to make organizations more inclusive and teams more creative.
A candidate has been hired because s/he displayed an acceptable Screening Index and the Behavioral Style the organization was looking for. During the test period, we are very interested in the new hire’s social behavior. Is the new hire fitting well with the team? Since social behavior is heavily dependent on the context and, in particular, on the relationship with others, we should only evaluate this aspect once the person knows something about the social environment, that is, after having been in the company for some time.
The Kodo People Onboarding assessment, which also takes less than 10 min, provides a full radiography of a person’s social preferences. It includes two groups of variables, namely, “social profile” and “social interaction”. The first includes non-strategic measures for the person’s levels of envy, compassion, egalitarianism, selfishness, social efficiency, and altruism. These are so-called distributional preferences. The social interaction measures are strategic in that the decision maker needs to consider other people’s (expected) behavior. These include measures for trust in others, trustworthiness, cooperation, conditional cooperation, and strategic behavior.
These 11 measures represent a complete picture of the new hire’s social dispositions and can be extremely helpful in understanding, for example, why someone doesn’t fully integrate with colleagues or why someone does not cooperate in the workplace.
Are you ready to lead the social change in your org? Join Kodo People and take your hiring process to the next level!