Smarter Hiring, the DDI Way

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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.

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