HUMAN RESOURCES

Smarter Hiring, the DDI Way

Some companies spend more time selecting the right copier than hiring the right employees. You can do better.
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"What is a date, really, but a job interview that lasts all night? The only difference ... is that in not too many job interviews is there a chance you'll end up naked at the end of it."

That's Jerry Seinfeld, revealing a startling level of truth below the surface of his date-as-interview shtick: The courtship process is usually far more rigorous than the way we go about hiring. Watch any of the nearly 10 reality dating shows currently airing, and -- hot tubs included -- you'll see couples actually getting to know each other. Employers can learn a lot from them.

It's yet another dirty little secret of American business. Despite the corporate chorus of "People are our most important asset," we aren't attacking the challenge of hiring as if our corporate lives depended on it. Jim Collins, who intensively researches successful companies and wrote the bestseller Good to Great, uses the metaphor of "Who's on the bus?" He says that "most companies don't pay enough attention to getting the right people on the bus. Great companies practice a principle of getting the right people on the bus, the wrong people off, and then pointing the bus in the right direction." Provocatively, he adds that an "emphasis on getting the right people on the bus is even more important than strategy."

Other experts express similar sentiments. "Most organizations have no process, virtually no training for managers in what is arguably the most important thing they do. Almost everything is deemed more important than intelligent hiring," observes Bill Catlette, a former human resources executive, now a consultant and author with Richard Hadden of Contented Cows Give Better Milk. Larry Pfaff, an industrial psychologist, chuckles when talking about companies that "have a two-month process to approve a $10,000 purchase of a copying machine, but can hire someone after about a half-hour's investigation."

Why the mess? Catlette puts it succinctly: "HR is not treated with enough respect, and it is a reputation that has been earned." What's more, smart hiring is a process versus a quick business fix, and in the '90s, when the labor pool was tight, companies were happy to harpoon any warm body. Smaller companies focus even less on hiring, according to HR experts. Yet, with limited resources and without much bench strength, they actually require higher levels of performance. Why do they fail to bring order to the chaos of hiring? It's in their blood. Smaller companies tend to be run by entrepreneurs who built their businesses on intuition and trust their gut when it comes to hiring. But that approach can lead to gut-wrenching mistakes.

There are companies, however, that are making their hiring process accountable. Many of them are working -- or have worked -- with a surprisingly little-known company called Development Dimensions International, or DDI, a consulting firm that -- on the most basic level -- helps fill jobs, millions of them, with the right people. Of course, "little-known" is relative; DDI is quite celebrated within the precincts of the HR world, but unlike household-name consultants -- McKinsey, Bain -- it doesn't have a breakout brand.


GET A JOB: Since William Byham started DDI in 1970, the company has helped to fill more than 15 million jobs.

It probably should. What Tom Peters is to excellence and Jim Collins is to leadership, William C. Byham, who cofounded DDI back in 1970, might very well be to hiring. Byham's mission has been to prove that it isn't a matter of intuition or luck, but can be as disciplined as any other business decision. "He has had a profound influence, as a psychologist and management thinker, and DDI has had a tremendous influence," says Richard E. Boyatzis, a professor at the Weatherhead School of Management in Cleveland. DDI got started when Bill Byham and his cofounder, Douglas W. Bray, both organizational psychologists, took the then-emerging concept of "assessment centers" and applied it throughout corporate America.

Today, 30 years later, DDI -- which is based in Pittsburgh and has offices around the world -- is involved in checking out everyone from CEOs to supermarket checkers. More than 15 million people in 70 countries have survived its selection gauntlet, with 8,000 new candidates identified each day (many by the 20,000 DDI-trained assessors). While most of DDI's consulting is for large corporations, DDI clients also include hundreds of smaller businesses, particularly those in aggressive growth modes. Byham notes: "We tend to deal with rapidly growing small companies, those planning 200% growth over the next year who need to ramp up their hiring systems."


HISTORY LESSON: Byham believes that past behavior is the best predictor of future performance.

Included in the businesses DDI has helped drive are those who make the cars you pilot: Both Toyota and BMW hired DDI to staff their new U.S. manufacturing facilities. DDI has hired everyone from the lowest level worker all the way through senior management. Today, nobody asks if a Beemer is from South Carolina or Dusseldorf, and one could make a case that DDI's hiring approach helped make American auto manufacturing credible again.

At the core of its process is Targeted Selection, which is its trademarked phrase (the company is infatuated with buzzwords). Think of it as an operating system for hiring, a set of instructions that is "behavior-based." This simply means that past behaviors -- versus, say, a personality test -- are the best predictors of future performance. (DDI uses personality testing only for senior positions as part of a holistic view, separating it from competitors, like Gallup, which rely heavily on the personality instrument.) Its "structured interview" -- central to the Targeted Selection apparatus -- probes for these behaviors through a gentle but relentless examination of past job experiences. The assessor, who either works for DDI or was trained by it, focuses on specifics. Rather than ask how you might win over a tough customer, the assessor might say, "What was your most difficult sale, and how did you approach it?" (Less squirm room.)

Like much of what DDI does, this is institutionalized common sense. Byham says people think they know how to interview because they've been grilled so often themselves and the wrong approach gets passed along, a contagion of bad practice. Interviewing is a skill that must be taught.

DDI doesn't test for basic skills. That's the job of recruiters and internal HR departments. "If you look at why people fail," Byham reflects, "it's almost never for technical reasons. It's for a behavioral reason; they can't get along, overanalyze, jump to conclusions." Byham feels confident, for example, that DDI's process would have identified behavior-based issues with Harvey Pitt, who melted down as SEC chairman last year. "Absolutely," he says. "Pitt is a brilliant lawyer. His problems were management-oriented and related to handling internal matters and the press. That would have emerged."

To explore a job candidate's potential more deeply, DDI also offers a series of simulation techniques. The most elaborate of these is its Acceleration Center process, which can be an all-day affair. To clone a virtual job experience (without the Raelians), DDI has created a hypothetical company into which a candidate is thrust -- a full and complete simulation that includes business challenges, financial issues, public relations crises, the works. And it's all videotaped. The idea is to replicate a fluid, real-world job -- a nonlinear experience complete with interruptions, surprises, and distractions. It's a process that is equally valuable at assessing outside candidates and judging internal ones. Byham tells the story of a closely held small business in which the son of the founder and the executive vice president were both assessed as part of a succession plan -- and, to the surprise of Dad, the son was the objective winner.


DDI has created a hypothetical company into which a candidate is thrust -- a complete simulation that includes business challenges financial issues, PR crises, the works.

Candidates going through the DDI process today might find themselves faced with solving a personnel problem or mentoring someone on the team, while handling a constant stream of e-mails and phone calls. Part of the mix is an in-basket exercise, which assesses time-management skills and priority-setting. Of course, the actual simulation depends on the job description -- DDI spends a lot of time working with its clients on that -- and the "competencies" being assessed. For example, someone who deals with the media might suddenly get the message that a hostile public relations person is on the phone. How the candidate proceeds -- whether to wing it or decide to canvass internal resources before taking the call -- is part of the evaluation. All the "actors" in the day's performance are trained assessors. (Or at least they usually are. Sometimes DDI uses actual actors as part of the strategic charade.)

And that's just the morning. The real pressure cooker comes in the mid-afternoon, at a strategic meeting in which the candidate presents a recommendation based on a business case history that was supplied earlier. After the day is finished, the assessors, who've seen it all, meet for the data-integration phase of the evaluation. DDI claims it is the only consultant that incorporates this phase, a critical part of the process. Here, an entire day's behavior is quilted into a pattern; trends are identified, weaknesses brought to the surface, strengths knotted. A candidate who gets off to a rocky start has the ability to rebound. If the assessors disagree about a candidate's prospects, they can go to the videotape and replay a critical moment. The system aligns not only behavioral characteristics with the requirements of the job, but also, in some cases, the cultural fit. Byham believes this is the transcendent beauty of the DDI approach: the fullness of an individual, revealed.

Bill Byham is a sixtyish man with an open aspect and a folksy style that belies his role as the Grand Assessor. There is a gentle but firmly missionary quality about him: "What a wonderful business we're in. We're helping people get into jobs where they can succeed and will feel good and be motivated. What better can you do, other than cure 'em of cancer." He is from West Virginia, and his down-home style -- no New York Zip Code in hearing range -- noticeably contrasts with the buzzwords that percolate in his patter, including a favorite: empowerment. "We kind of invented empowerment around here," he is fond of saying.

DDI is privately owned, and at $100 million in annual revenue is one of the largest companies in its field. That number includes both selection and training, which is the second half of its business. Its work isn't sexy or glamorous. "I used to say we were in the aftermarket of McKinsey," Byham jokes. "McKinsey would come in and say, 'Decentralize or break into three parts,' and then walk away. Somebody had to come in and do the down and dirty. We're sort of anonymous." DDI places itself between headhunters and hirers. "We protect the company from the headhunters, and I really do mean that," he says. "The mistake that companies make is believing that headhunters are doing any real due diligence." What about the role of executive recruiters in the current business mess? "At some point, with all these high-profile business failures, somebody is going to ask, 'Where were the headhunters?"

The birth of DDI coincided with publication of Bill Byham's article "Assessment Centers for Spotting Future Managers" in the Harvard Business Review in 1970. A freshly minted organizational psychologist, he was working for J.C. Penney as it was moving from Main Street to the mall and finding that managers who were successful in the smaller box stores couldn't hack it in the larger formats. Byham was charged with finding a way to identify candidates with the skills to succeed in these larger venues. He knew Doug Bray, who had built the first assessment center for AT&T in 1956, so he thought, "Let's build one for J.C. Penney and simulate the challenges store managers would face." Targeted Selection was born out of the theory and practice of these original assessment centers.

The HBR article boldly declared, in the male-centric language of the era, "Under the controlled conditions that obtain in the assessment center, managers can observe promising young men in action and evaluate them objectively.... Previously developed yardsticks have not been worth their salt.... Batteries of written tests ... cannot assess the way a man works with people; supervisors' ratings can be highly biased.... The assessment center technique has shown itself a better indicator of future success than any other tool management has yet devised.... "

Byham got noticed. "Suddenly, big companies -- Ford, Shell -- called and said, 'We'd like to have one of these.' There were no consultants in those days," he says, "so I saw an entrepreneurial opportunity. I went to Doug Bray and said that we should go into business together, and he said, 'Sure, if you do all the work." Bray never left AT&T, contributing to DDI's growth as an off-premises guru. It was Byham who built DDI over the next three decades and pushed the company to validate its findings. "Because of my background, we are very research-oriented here," he boasts. There are a lot of consulting firms that have been around that long, but few have remained so faithful to a single approach. Most rely on having something new to sell, a hot twist. But DDI doesn't have to change because it is infinitely adaptable. Today, employers are on the prowl for adaptability, team skills (given that team selling has become de rigueur), and international acumen, and DDI can assess for them. "Could you have a reasonable conversation with someone from Colombia?" Byham gives as an example. "Could you find it on the map, or would you look next to Russia?"

Employers are also looking for honesty and integrity, not exactly a shocker. Byham says that honesty can be tested for with entry-level employees. You can ask, for example, if you believe that it's okay to take money out of the till if you're being underpaid. The far more complex issue is testing for integrity with higher levels of management, especially given that not all organizations define integrity in the same way. Nonetheless, Byham believes you can interview for integrity; psychological testing has shown that those with low integrity see the world as sharing their values. Take a question like, "We all try to put our best foot forward sometimes. Have you ever had a situation where you had to make something seem better than it really was?" Individuals with integrity issues tend to tell the self-incriminating truth.

Hiring a dishonest person can cost you a lot, but how much does DDI cost? Its fee structure won't break the bank of even midsize companies. As an example, to assess two outside candidates versus two inside contenders for the same job will cost you roughly $6,000 for each evaluation. So why haven't more small and midsize companies turned to DDI? An obvious reason is that DDI hasn't marketed to them. It's vastly more profitable for it to target larger entities, but with the emergence of Web-based assessment tools, DDI can serve a wider range of companies more efficiently. That's good for it, and for the small-business market.

It sounds neat and tidy and affordable, but all this talk about selection can be unsettling. Are we creating an overly standardized Stepford work force? What about our grand tradition of rugged individualism? Byham responds to questions about the dark side of DDI with a story he used to tell at GE when he was running training programs there. "I gave them a description of a hunchback who didn't speak English well and who didn't graduate from college. I asked, 'Would you give him a job?' They said, 'No.' Of course, it was Steinmetz." He's talking of Charles Steinmetz, the brilliant engineer who made significant breakthroughs in the study of electricity. Byham insists that DDI's methodology would have let Steinmetz in, but how can he be certain that Steinmetz would have made it through the in-basket test? In true absent-minded-professor fashion, he might have taken a left turn and never come back.

Even if Byham is right, though, the best system is still that -- a system, one that lets some in and not others, one that slams the door on the gifted but unclassifiable. It's hard to disagree with Jim Collins, who argues, "Sometimes the most important piece of information is very hard to quantify." He relates the story of a POW who escaped from prison twice and was hired for that reason. (Collins wasn't being critical of DDI; he didn't want to comment specifically on its approach.) But Byham is adamant: DDI is fundamentally egalitarian, and in fact, it does seem to de-privilege the well-born bounder by stressing behaviors over contacts, country clubs, and education. During the interview process, candidates will even be asked if they went to the same Ivy League school their mother or father did. This built-in objectivity served DDI well when the Equal Opportunity Commission was established (DDI helped put in its own selection system, Byham notes). If a company is too loosey-goosey in its hiring practices, if it can't point to a process that eliminates the risk of discrimination, it sets itself up for an avalanche of litigation. Because DDI is driven by behavior and is person-neutral, it helps bulletproof companies against charges of discriminatory hiring.

What about competitors? There is the Gallup Organization. The senior consultant for its assessment and training business is an articulate and intense young man named Marcus Buckingham, who is also the author (with Donald O. Clifton) of Now, Discover Your Strengths and (with Curt Coffman) of First, Break All the Rules. He says, "DDI doesn't like me very much," and mentions that Byham had challenged him to a debate at an industry conference, after DDI had posted a negative review of his book on its website. Buckingham declined.

Unlike DDI, Gallup uses an automated questionnaire to evaluate candidates. It does conduct open-ended interviews for managerial positions, but there are no simulation or role-playing exercises. Buckingham insists that DDI's behavioral-based approach is neither scientific nor conclusive. "DDI says we looked at the job," he gripes, "and here are some good interviews and questions -- best of luck." Buckingham dismisses all the studies Byham is so proud of, claiming they are based on data that don't have inter-rater reliability, meaning that assessors aren't tracked to assure consistency of ratings from one evaluation to the other. Buckingham also says DDI doesn't give candidates a statistically reliable score. "They don't say, 'Jim scored X, and he will perform better than Marcus, who scored half X." And the "dimensions" that DDI claims to assess? Buckingham calls them "spurious bull -- ."

Byham believes that the Gallup system is too sketchy. He isn't completely opposed to personality tests. "I am for a holistic view, and Rule No. 1 is, The more the better," he insists. "But they need to be different instruments. Three kinds of personality tests won't help you." He also claims that Buckingham is dead wrong about DDI's methodology. "They don't understand it," he argues.


The need for a systematic focus on hiring is so great that even those in different camps recognize -- and welcome -- DDI's work.

Another difference between DDI and Gallup deals with the not insignificant question of an individual's ability to change. It's fair -- and necessary -- to ask if selection systems penalize those who are still a work in progress. Marcus Buckingham doesn't believe we change that much: "We become more and more who we already are." Byham sees the world differently. "He [Buckingham] is more into predestination than I am." Even so, DDI believes that behaviors -- creativity, for example, or initiative, or integrity -- are not trainable, at least within the current business context: no time, no money. "Businesses fool themselves into thinking they can change people," Byham noted. "It's not like people can't change, but given the speed of business and supervisory attention, it's highly unlikely. The famous last words of the poor interviewer are, 'We will train him in that."

Boyatzis, who earlier had some complimentary things to say about DDI, is troubled by this. "People grow, and any of us who had difficulty at any point know that people can blossom. People who hold fast to the selection process don't look into themselves and admit they've changed." And what about those who question whether you can assess at all? Jeffrey Pfeffer, a professor of organizational behavior at the Stanford Graduate School of Business, has some doubts about any system that "presumes you can easily and unambiguously measure talents and abilities." He notes that "Steve Young played for the Canadian Football League, and Michael Jordan was cut from his high school basketball team. If it's hard to assess talent there, it's hard to identify it in interconnected systems." Yet even Pfeffer praises DDI, saying that it "does a very good job of assessing people's attitudes and values. I think cultural fit can be measured, and that is a very important source of team-based organization."

Pfeffer's willingness to acknowledge DDI's contributions was consistent across a wide range of interviews. The need for a systematic focus on hiring is so great that even DDI's rivals tip their hats to the work it has done. That applies to Buckingham, too. This is not to say that DDI's work has been revolutionary. As Larry Pfaff pointed out, "Behavior-based interviewing was around before DDI. A firm called Personnel Decisions International did some behavior-based work in the 1960s." That's as it should be. Management consulting isn't like discovering a new drug molecule. It's about assembling otherwise disorganized insights into a coherent and workable approach, and then building on it. DDI has succeeded in that better than most. It isn't the answer for every company, but every company had better wake up to the fact that it's time to start paying more attention to the people on the bus. As Jim Collins put it, in the end, the methodology matters less than the effort: "You want to learn math? You can debate the methods, but if you spend seven hours a day on it, you will do well. So spend seven hours a day getting the right people."

And the search for the "right people" isn't just a struggle that benefits the employer. When business talks about productivity, it is generally in terms of arithmetic and percentages. But what DDI has done for more than 30 years is force employers to realize that there is also an emotional productivity that comes when workers have jobs that align with their motivations, needs, and integrated behaviors. It's not a perfect system -- it undoubtedly misses talent -- but it strives to recognize the multiple dimensions of an individual, and that's not easy when you're literally matching millions of people with millions of jobs.

Across the economy -- manufacturing, service, you name it -- the hard truth is that we need to recognize that nothing, nothing is as important as hiring the right people. Small companies, in particular, need to recognize this. "Anybody who's screwed up, we could help them," reports Byham. When he is asked about the visible failure of the airlines, he begins to enter his evangelical zone. "When I get on an airline, I'd say they would benefit a lot from our training. They ruin the relationship with the client, but don't have to, if they just showed a little empathy." (Empathy -- another dimension you can test for.) Take note: In today's brutally tough environment -- with products racing toward parity, and service delivery the name of the game -- we'd be far better off spending less time syncing our Palms to our desktops and more time syncing our employees to their jobs.

Contributing editor Adam Hanft is the author of Inc's Grist column.


Unnatural Selection


Too many bosses rely on gut instinct in their hiring decisions, says William C. Byham, chairman and CEO of Development Dimensions International. A disciplined approach is better. Here are Byham's top Do's and Don'ts.

DO
1. Focus on the right stuff. Pinpoint specific skills necessary for success in the job. Frame interview questions to reveal whether the candidate has what it takes.
2. Dig up the past. Get specific examples of how a candidate has handled different situations at work.
3. Realize that three heads are better than one. Ask colleagues to interview a candidate and share their findings with you.
4. Put your candidate at ease. You'll get better answers and make a good impression.
5. Seek a balanced view. No candidate is as perfect as you hope he is. Seek a frank discussion of strengths and weaknesses.

DON'T
1. Be an amateur shrink. Focus on specific examples of specific behaviors, not personality assessment.
2. Ignore job interest. Poor motivation is a leading cause of turnover.
3.Rush. Managers who fill an opening too quickly almost always regret it.
4. Take insufficient notes. Relying on memory gives the first and last candidates an unfair advantage.
5. Place too much emphasis on a single skill. Avoid the "halo effect," i.e., when one outstanding accomplishment overshadows something less attractive.


Please E-mail your comments to editors@inc.com.

Last updated: Mar 1, 2003




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