The Perfect Candidate

Image, not reality, is too often the basis of hiring decisions.

The government has a hiring problem. Agencies have favored the wrong candidates, particularly older ones over younger workers. They've allowed others to game the system and get away with it. The results have been bad hiring decisions and dampened enthusiasm among top candidates. More troublesome, federal hiring systems might be discriminatory. Unless agencies adopt new assessment methods and think more creatively about how to bring on experienced private sector workers, more trouble lies ahead.

In a 2004 report, the Partnership for Public Service, a Washington nonprofit that works to boost interest in public careers, determined that federal hiring methods are "outmoded and inefficient." The government relies too heavily on measurements of training and experience when selecting job candidates. Too little attention is given to actual skills or the quality of applicants' training, experience and education.

"The challenge here is that, by and large, the best people aren't getting a fair shake," says Max Stier, the partnership's president. The costs of poor assessment are tangible, too-higher turnover, lost productivity and greater absenteeism, adding up to millions of dollars every year. But the ultimate cost is,"We aren't getting the government we ought to have," Stier adds.

Poor Predictors

Consider an agency that is hiring a new economist. After collecting applications-either through an automated hiring system or a paper-based résumé with a form listing knowledge, skills and abilities-an agency human resources staffer determines whether the candidates meet Office of Personnel Management-prescribed minimum qualifications for education and job experience. After eliminating those who don't make the cut, the HR specialist awards points to the remaining candidates based on their education and work experience. Then, typically, the top three scorers are referred to the hiring manager.

In government, a candidate with many years of experience is deemed better than one with fewer, even if the younger candidate is a hard-charging go-getter and the older one has been unmotivated for years. At the same time, it doesn't matter whether a candidate earned his economics degree at Harvard or the University of the District of Columbia. Both are considered equal.

Agencies prefer to hire based on training and experience because they appear to be objective measures and are easy and inexpensive to gauge. But training and experience turn out to be among the least successful predictors of future job performance, just above graphology-handwriting analysis in an evaluation by psychologists Frank L. Schmidt and John E. Hunter published in the September 1998 Psychological Bulletin. Under the training-and-experience method of hiring, "There is usually no attempt to evaluate past achievements, accomplishments or job performance," they explain.

And because information about education and work experience is self-reported, honest candidates are more likely to be eliminated in the first or second round, when little or no reference- or fact-checking is done and, when automated systems are used, before a human being even sees the submissions. James Tsugawa, a senior research analyst with the Merit Systems Protection Board, studies civil service issues. He says there is some evidence-none conclusive-that relying on self-reporting may adversely affect Asian-Americans, who tend to downplay their accomplishments.

Others aren't so modest. In a 1998 study, the Society for Human Resource Management found that 53 percent of HR professionals had at least sometimes discovered embellished employment histories in résumés, while 29 percent said they'd seen bogus academic degrees. Yet, says one government HR director, who asked to remain anonymous, "We are pretty much taking [candidates] at their word." Responsible hiring managers do check references, conduct interviews and fact-check résumés, but even with all the rules governing federal hiring, nothing requires them to do so.

Garbage In, Garbage Out

Automated systems were supposed to be the HR cure-all. Agency personnel staff would be freed to become consultants, thinking ahead about closing skills gaps, succession planning, recruitment and other lofty objectives. The systems collect online résumés and use keyword searches or questions posed to applicants to narrow the field automatically. Without the right key words, or the right answers, a candidate is eliminated. The others are ranked and sent on to the HR office. At some agencies, it has worked. At others, it has flopped.

It's "garbage in and garbage out," says Kathy Burgers, assistant HR director at the National Forest Service. "If we don't work with managers to make sure the questions [asked of candidates] meet their needs upfront, then they won't be happy with the people" who are certified as top candidates.

For too many agencies, it's just "paving the cow path," says Steve Nelson, director of the Office of Policy and Evaluation at the Merit Systems Protection Board. Last year, MSPB issued a report on automated hiring systems. It's unfortunate, Nelson says, that many agencies aren't using the shift to automated hiring systems as an opportunity to reengineer assessment methods. They are simply moving their old training-and-experience-based assessments to the Web.

And rather than transition HR staff into consulting and planning roles, agencies have downsized personnel offices. HR staffing has fallen 20 percent, from about 50,000 in 1994 to 40,000 last year.

Downsizing and the perennial budget squeeze facing HR offices cause the lack of creativity afflicting the hiring process. Unable or unwilling to develop new assessment methods, agencies have relied heavily on something called Outstanding Scholar hiring to fill more than a third of entry-level positions, according to a 2000 study by the Merit Systems Protection Board. Outstanding Scholar allows agencies to dispense with competitive hiring procedures and tap entry-level candidates who had 3.5 grade-point averages in college.

Thankfully, most agencies have dispensed with the Administrative Careers With America exam, which they began to use to fill entry-level jobs after the federal government settled a discrimination lawsuit in 1981. OPM then developed the ACWA tool, a 156-part questionnaire that asks job candidates multiple-choice questions about experience and accomplishments.

The questionnaire and the Outstanding Scholar hiring authority were intended to be temporary fixes that would be used only until agencies developed individual assessment tools, but a lack of funding and fear of discrimination litigation have held agencies back. Ironically, Outstanding Scholar authority has hurt Hispanic candidates and provided no benefit to black applicants, according to the 2000 MSPB report.

The lack of creativity in federal hiring has been detrimental not only to young workers who don't have the experience to qualify for even the entry level but also to mid-level private sector workers wanting to make the jump to government. It's an almost impossible feat unless the worker is willing to start at entry level. The Partnership for Public Service found that government agencies in 2003 filled 15.3 percent of positions from GS-12 to GS-15 with outside hires. The percentage has risen from 10.5 percent in 2000, but that might be short-lived. During the same time period, the proportion of jobs open to outside applicants declined from 49 percent to 43 percent.

That's going to have to change if government is to meet its program needs in the future, says Claudia Cross, chief human capital officer at the Energy Department. Because of tight budgets, Cross says, agencies "just are not going to be in the position to have bench strength anymore."

Managers looking for the return of the golden days, when agencies hired young people and trained them to fill positions of more responsibility during 30-year careers, are deluding themselves, she says. Cross envisions a new world in which agencies will hire far fewer entry-level staff and will rely increasingly on mid-career hires from the private sector and on contractors. "You have to learn how to make a quilt," she says. "You have to have pieces of a lot of different solutions."

A lack of will to face this new world is holding agencies back. Hobbling hiring managers, for example, is the rule of three, which limits the number of candidates a manager can consider. Most agencies continue to use it despite a 2002 law that allows HR offices to use category rating and consider a larger number of qualified applicants. Agencies lobbied for the flexibility to expand the hiring pool, but as of last summer, 87 percent of large agencies had filled fewer than six positions using category rating, according to an OPM report.

The rule of three also is partly to blame for government's overreliance on educational credentials. Candidates with higher-level degrees tend to land at the top of agency hiring lists even when such education is not necessary for the job. An example is the Government Accountability Office, which for years has favored candidates with master's degrees in hiring analysts. As a result, 90 percent of the agency's analysts have such degrees.

GAO, which announced a new pay structure for its analysts last December, will pay entry-level analysts at least $45,000 starting in 2006, but only if the employee has a master's degree. The few who are hired without master's degrees will fall in a less generous salary range even if they have years of experience in government or private sector auditing.

In this, government is behind the private sector. As BusinessWeek reported in April, prestigious consulting firms and investment banks are looking to promote from within rather than recruit people with master's degrees in business administration. At New York bank Goldman Sachs, for example, MBAs make up just one-quarter of new hires, a complete reversal of the company's hiring pattern five years ago when MBAs were about 75 percent of new employees. "Now we try to figure out how many analysts we can promote, and we fill in with MBAs," says Aaron Marcus, head of campus recruiting at Goldman Sachs.

One reason for Goldman's decision is the belief among top executives that much of what is taught in business schools these days can be learned on the job. At the same time, because of the rapidly rising cost of higher education and stagnant entry-level salaries, schools are struggling to maintain enrollments. More high quality candidates are choosing to continue working rather than give up two or more years of salary to earn a degree. Other top candidates simply can't afford one.

Nelson says agencies should evaluate candidates' competencies rather than require academic credentials as a substitute. "If a bachelor's or master's degree gives you competencies, then you ought to assess on those competencies, not the credential. There are some people with a master's degree who can't tie their shoe," he says.

More troublesome, the diversity of American graduate schools trails that of the population, so a disproportionate number of minority candidates do not qualify for jobs requiring advanced degrees. In 2000, according to the National Center for Education Statistics, 68 percent of graduate students in the United States were white, with 8.5 percent black and 5.2 percent Asian and Hispanic. In professional schools, whites made up 72 percent of the total, compared with 12 percent for Asians, 7.7 percent for blacks and 5 percent for Hispanics.

New Ways, and People, to Hire

The good news is that it's never too late for agencies to revamp their assessment methods and there is abundant research available on which methods predict future job success. Among them are work sample tests, structured interviews (where candidates all are asked the same questions and their answers are compared to those of top agency performers), and tests of personality and mental ability.

Many agencies have taken steps to use better methods. At the Homeland Security Department, the Citizenship and Immigration Services bureau asks some applicants to take a logical reasoning test and fill out a questionnaire about life experience. Some also are asked to go through structured interviews. At the Bureau of Labor Statistics, economists take a written test that gauges logical and quantitative reasoning. Customs and Border Protection, another DHS bureau, gives its candidates tests on logical reasoning, quantitative reasoning and integrity. Candidates then go through a workplace simulation.

Improving hiring will require Congress to fund the development of better assessment tools. It also will take willingness on the part of managers to be more flexible and creative. At Energy, for example, Cross says that when managers come to her saying they need funds to hire scientists, she looks at them quizzically. "When was the last time you did any scientific research?" she asks. The managers, typically, can't think of the last time. Energy has largely ceded that ground to grantees and contractors. What the department needs are project managers and contract overseers.

When thinking about solutions to staffing problems, Cross says, "If you assume what worked last time will work this time, you're probably assuming wrong."