Academic Study Validates Topgrading Hiring Steps

Introduction: Michael Lorence vetted Topgrading Case Studies in his Georgia State University dissertation entitled: The Impact Of Systematically Hiring Top Talent: A Study of Topgrading As A Rigorous Employee Selection Bundle. Lorence’s dissertation runs 148 pages and it analyzes Topgrading a many ways, relating his analyses to decades of academic research on hiring. Among his findings:

Summary: Topgrading hiring consists of 12 recommended hiring steps, and Lorence’s analysis concludes that all 12 contribute value (explained below).

Research on what helps make companies money shows that selection “bundles” (a combination of methods) are important if they do one or more of 3 things:

  • Tap the skills and knowledge of candidates
  • Tap the motivation/commitment of candidates
  • Integrate HR strategy with business strategy

 A chart shows that all 12 Topgrading hiring steps meet 2 or more of the 3 criteria.

From Chapter V: Discussion of Findings

This investigation was motivated by the impact of the mis-hires epidemic in the United States. Hiring managers mis-hire approximately 70% to 80% of the time across all industries (Smart 2005). This mis-hiring carries with it an associated annual cost of approximately $864.5 billion when accounting for the cost of mis-hire rate, the total number of people hired in the U.S. annually, and the average salary of the U.S. worker2. This computes to approximately 5.28% of the total GDP for the United States in 2013 (Sousa 2013).

Insight 1: As a rigorous employee selection bundle, Topgrading breaks the destructive organizational routine that causes perpetual mis-hiring.  (Lorence explains and documents his conclusion with cited literature).

Insight 2: As a rigorous employee selection bundle, Topgrading creates value in three modes: Financial or operational improvement, improvement in individual employee performance, and reduction of mis-hire rate. The employee selection literature stream shows that selective hiring is directly linked to improving firm performance (MacDuffie 1995; Vlachos 2008; Vlachos 2009). This research provides evidence that employee selection bundles (ESB) improve firm performance. These improvements come in three modes: financial or operational improvement, individual employee performance improvement, and reduction of mis-hires.

Across the six case studies, 79.2% of processes concerning the ESB under study had positive impact on firm value. On average, 54.2% of all discrete steps were reported as directly reducing the mis-hire rate. 19.4% of all steps were directly linked to improving individual employee performance. 15.2% of the all steps were directly linked to improved financial or operational improvement.

Regarding their mis-hire rate, the average mis-hire rate across all six in the pre-Topgrading environment was 69.3%. The average mis-hire rate in the post-Topgrading environment was 10.5%.

To learn more:  Contact Georgia State University to obtain a copy of Lorence’s dissertation.

Published 11/25/2014

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