Friday, June 6, 2014

Primer on Big Data and Hiring: Chapter 2

This is the first chapter of a primer on big data and hiring. The structure of the primer is based on the following graphic created by Evolv, a company that provides "workforce optimization" services. Evolv was selected not because it is sui generis; rather, it is emblematic of numerous companies, from start-ups to well-established companies that market "workforce science" services to employers.

The Evolv graphic below is intended to illustrate the process of workforce science.

Chapter 2: Supplement
Psychometric tools gather predictive data on the workforce throughout the employment lifecycle

Psychometrics is the field of study concerned with the theory and technique of psychological measurement, which includes the measurement of knowledge, abilities, attitudes, personality traits, and educational measurement. The field is primarily concerned with the construction and validation of measurement instruments such as questionnaires, tests, and personality assessments.

To what extent are psychometric tools accurate predictors of behavior or performance?

According to a 2012 study by Oracle and Development Dimensions International (DDI), a global human resources consulting firm whose expertise includes designing and implementing selection systems, more than 250 staffing directors and over 2,000 new hires from 28 countries provided the following perspectives on their organization’s selection processes (the following are excerpts from the study):
  • [O]nly 41 percent of staffing directors report that their pre-employment assessments are able to predict better hires.
  • Only half of staffing directors rate their systems as effective, and even fewer view them as aligned, objective, flexible, efficient, or integrated. 
  • [T]he actual process for making a hiring decision is less effective than a coin toss.

In a 2007 article titled, “Reconsidering the Use of Personality Tests in Employment Contexts”, co-authored by six current or former editors of academic psychological journals, Dr. Kevin Murphy, Professor of Psychology at Pennsylvania State University and Editor of the Journal of Applied Psychology (1996-2002), states:

The problem with personality tests is … that the validity of personality measures as predictors of job performance is often disappointingly low. A couple of years ago, I heard a SIOP talk by Murray Barrick … He said, “If you took all the … [factors], measured well, you corrected for everything using the most optimistic corrections you could possibly get, you could account for about 15% of the variance in performance [between projected and actual performance].” … You are saying that if you take normal personality tests, putting everything together in an optimal fashion and being as optimistic as possible, you’ll leave 85% of the variance unaccounted for. The argument for using personality tests to predict performance does not strike me as convincing in the first place.
The hiring assessment functionality of workforce analytics contains three divergent logic systems, legal, psychological and managerial. The legal logic system derives, in part, from the Americans with Disabilities Act (ADA) and its accompanying regulations and related caselaw. The psychological logic system derives primarily from the five-factor model of personality, or Big Five, as it has evolved over the past 20-25 years. The managerial logic derives from the implementation of the human resource function of the employer. Technology in the form of workforce analytics then attempts to tie these three logic systems together in order to create an automated assessment program that attempts to determine applicant "suitability" or "fit."

For example, many workforce analytic companies utilize the Big Five model in creating their personality assessments. As its name implies, the Big Five looks at five traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism, with each trait conceptualized on an axis from low to high (e.g., low neuroticism, high neuroticism). The Big Five, operating under various names, existed for a number of decades prior to its "rebirth" in the early 1990s, where it was embraced by organizational psychologists.

Since the late 1990s workforce analytics companies like Unicru (now owned by Kronos) have adopted the Big Five for use in their job applicant assessment program. The workforce analytic companies have created "model" psychological profiles and tested applicants against those profiles. In general, applicants receive either green, yellow or red scores on the basis of a 50/25/25 cutoff. Applicants scoring red are generally not interviewed, let alone hired.

The use of technology systems to hardwire workforce analytics raises a number of fundamental issues regarding the translation of legal mandates, psychological models and business practices into computer code and the resulting distortions. These translation distortions arise from the organizational and social context in which translation occurs; choices “embody biases that exist independently, and usually prior to the creation of the system.” And they arise as well from the nature of the technology itself “and the attempt to make human constructs amenable to computers.”

These distortions are compounded when psychological models, legal standards and managerial processes are turned over to programmers for translation into predictive algorithms and computer code. These programmers may know nothing of the psychological models, legal standards and management processes and their translation efforts are colored by their own disciplinary assumptions, the technical constraints of requirements engineering, and limits arising from the cost and capacity of computing.

Managerial processes may be poor vehicles for capturing nuance in legal policy and psychological models, especially in a context like employment discrimination where regulators have eschewed rules for standards and where the interpretation of those standards by regulators and psychological professionals may change over time. For example, the ADA prohibits pre-employment medical examinations and psychological tests used by workforce analytic companies may be considered medical examinations (please see ADA, FFM and DSM). Employers and workforce analytic companies have interpreted the medical examination requirement as prohibiting the use of tests that are designed to diagnose mental illnesses. 

This interpretation creates two significant risks for employers and workforce analytic companies. First, the legal standard does not speak to "tests designed to diagnose mental illnesses;" rather, it is "whether the test is designed to reveal an impairment of physical or mental health such as those listed in the Diagnostic and Statistical Manual of Mental Disorders." "Designed to reveal" is semantically and substantively different from "designed to diagnose" and, as set out in Employment Tests are Designed to Reveal an Impairment, Big Five-based tests are designed to reveal impairments by their screening out process. As depicted in the graphic, tests designed to diagnose are a subset of the overall category of tests designed to reveal an impairment.

Using the "designed to diagnose" category as the proxy for medical examinations puts employers and workforce analytic companies at significant risk of violating the ADA medical examination prohibition and the confidential medical information safeguards under the ADA. It may also result in other claims against the workforce analytic companies by job applicants, employers and insurers. The mistaken use of the "designed to diagnose" category as a proxy for medical examinations could be considered a design defect in the product liability arena or as negligent in a tort claim.

The second significant risk for employers and workforce analytic companies arises from their failure to account for the evolution of the Big Five model from non-clinical model to clinical model.  In her seminal review of the personality disorder literature published in 2007, Dr. Lee Anna Clark stated that “the five-factor model of personality is widely accepted as representing the higher-order structure of both normal and abnormal personality traits.” A clear sign of this evolution comes with the publication of the most current volume of the Diagnostic and Statistical Manual for Mental Disorders (DSM-5), published in May 2013, where the model used to diagnose many personality disorders is based on the Big Five. 

Consequently, even if the standard for defining a medical examination was focused solely on the use of a test that diagnosed a mental illness, the five-factor model has now evolved into a diagnostic tool used by the psychiatric community to define mental impairments, including personality disorders, of the kind set out in the DSM-5. The failure of employers and workforce analytic companies to account for the evolutionary development of the five-factor model puts them at significant risk due to their belief that the five-factor model is not a diagnostic tool - a belief that time and scientific advances have now overturned. 

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