The term “risk mitigation” has almost become a household term. We hear references to risk mitigation pertaining to investments, business operations, computer systems, emergency management, crop management, product liability, public relations, and the list continues. Yet, as it pertains to human resources and talent prediction, we seldom hear the term.
“Risk mitigation is a culmination of the techniques and strategies that are used to minimize risk levels and pare them down to tolerable levels,” according to IBM. Risk mitigation implies a set of priorities and tolerances for risk that we might be willing to accept. Not all risks can be eliminated, but these risks can certainly be mitigated.
That’s why I’m proposing that you consider “risk mitigation” as an HR strategy—minimizing negative consequences, especially legal consequences, while optimizing business results. Naturally, there is both tension and balance between minimal exposure and optimal results. So, how does risk mitigation apply to talent prediction and the science of hiring the best employees?
1. Talent Prediction is a Science, Not an Art
Today there is a considerable body of research comparing talent prediction methods. Some methods are good, some better, and others best. So, if talent prediction is a quantifiable science, then it’s possible to rank the effectiveness of various methods. For example, see this chart based on data from the U.S. Office of Personnel Management that ranks a variety of current employment testing methods. Talent prediction will never eliminate all errors, yet the risk of errors can be mitigated by paying close attention to the science.
2. Accuracy. Accuracy. Accuracy.
These are the core elements for risk mitigation and ultimate hiring success. If a process is well documented and can be proven accurate, your potential risk and exposure will be mitigated. Yet, accuracy alone is not enough. Accuracy without fairness will likely create greater exposure rather than less. Rationally, we understand our goal for talent prediction is a fair and accurate process. Unfortunately, it’s surprising how easily these goals can become secondary to logistics, convenience, fear of dropouts, etc. If predicting the best talent is truly important in your organization, then holding firm on accuracy and fairness will most assuredly minimize your risks and optimize results.
3. Recognizing the Greatest Risk
The human element can introduce the greatest potential risk to the hiring process. If we acknowledge that talent prediction is a science, then we know there are variables that affect the outcome. So, our primary purpose is to isolate and control the variables that affect our hiring decisions. It amazes me how often procedures, either unintentionally or intentionally, fail to mitigate the effects of the human element. Whether it is inconsistency, bias, lack of training, or something else, identifying and addressing human emotion must be a top priority for proper risk mitigation.
4. Understanding Applicant Reaction
Years ago, an applicant’s reaction to the hiring process wasn’t even on the radar. Organizations were in control of the process and the outcome. Fortunately, the process is now more humanistic with a give-and-take approach, rather than just a take. Still, there are many differences in hiring procedures, with some being considerably more engaging and applicant friendly than others. Risk mitigation in today’s culture requires consideration for applicant reaction. Selection processes that are consistent, easy to follow, and highly job relevant not only create a more positive applicant experience, they also mitigate the risk of error and legal challenge.
5. Discerning Fact from Fiction
Embellishing the truth and enhancing credentials can be an art for applicants. Granted, some applicants are more prone to embellishment than others. Unfortunately, it is often difficult to discern between good applicants and good embellishers. So, to mitigate risk, look for screening tools that provide an objective measure of performance. Remember that self-report information such as interviews, survey questionnaires, and self-ratings are subjective, based on what applicants say they can do, not necessarily on what they can actually do. If your selection process includes any type of self-report data, when possible, obtain confirmation as to the accuracy of what is reported. “What I say” does not always correspond to the reality of “What I can do.”
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For more than 30 years, our team of HR experts has been helping organizations minimize risks while maximizing results. If you have questions or would like to discuss specific strategies for mitigating risks in your hiring process, contact us here for a free consultation or call 888.332.0648.