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How Analytics-Based Hiring Improved U.S. Bank's Performance and Diversity

How Analytics-Based Hiring Improved U.S. Bank's Performance and Diversity

by Paul Berg

Story Highlights

  • U.S. Bank used talent analytics to improve branch performance
  • Partnership with Gallup increased the rate of top talent discovered by 10x
  • Talent is the engine of diversity, strengths are the engine of inclusion

One of the most important findings Gallup has ever made is that companies name the wrong person manager a staggering 82% of the time. Yet, by hiring the top 10% of manager talent -- call it "A" level talent -- organizations generate a 27% lift in revenue per employee.

Hiring less talented managers, however, costs businesses hundreds of billions of dollars in potential organic growth every year.

For example, a company with 50,000 employees and 5,000 managers typically only has 900 top-talent managers in place.

If that company generates $50 billion in annual revenue, low management talent costs the company $11 billion a year.

The majority of managers hired are not top talent -- companies miss on 82% of manager hires.

Is there enough "A" talent to go around?

"A" manager talent is rare. Gallup Analytics shows that only about 10% are born with it.

But still, a 50,000-person company could expect to have 5,000 people with "A" talent -- enough to potentially fill every manager spot.

Gallup analytics found that by hiring the top 10% of manager talent -- call it "A" level talent -- organizations generate a 27% lift in revenue per employee.

"If we hire more talented people we will be more successful in the end," says Steve SaLoutos, Executive Vice President and recently appointed Regional Executive of Midwestern Markets in U.S. Bank's Consumer and Business Banking division.

Prior to his new appointment, SaLoutos led the Metropolitan Banking division where he oversaw more than 1,100 branches in the largest markets in the bank's footprint.

"We see that with all the critical measures we have -- customer experience, turnover, revenue growth and the sales management aspects of the job. 'A' talent excels at all of those measures."

The problem is, most organizations screen out top talent unintentionally because they don't use the right predictive analytics to spot it.

And the problem compounds by hundreds, if not thousands, when managers bring their own biases and "glare factors" to the hiring process.

SaLoutos decided to work with Gallup to pinpoint "A" talent.

After seeing substantial impact in Home Mortgage and Business Banking from hiring "A" talent managers and bankers, SaLoutos and Gallup partnered to hire "A" branch managers and district managers to drive customer experience, revenue growth, production and retention.

At first, Gallup's talent-based hiring assessment came late in the process, after recruiters, HR business partners and hiring managers had interviewed candidates.

The results were sobering: only about one in four of their final candidates had "A" talent.

SaLoutos and his leadership team were frustrated by the seeming lack of "A" talent in their candidate pool. So they created interview guides. They wrote best practice manuals. They gave leaders multiple rounds of hiring training, in-person and online.

But the percentage of "A" talent still didn't budge.

Then, U.S. Bank and Gallup flipped the process.

After studying more than 600 branch managers, Gallup and U.S. Bank developed a different candidate approach, with a predictive digital profile at the beginning of the applicant journey, not late in the process.

As a result, the talent funnel expanded. Dramatically -- that strategic decision upped the number of "A" candidates tenfold without increasing the candidate pool at all.

This indicated that 90% of "A" talent had been unintentionally screened out.

In fact, U.S. Bank "found" more "A" talent in the first five weeks with the new strategy than it had in the previous 12 months under the old process.

Talent-based hiring also fueled diversity.

Leading with Gallup's talent analytics also supercharged diversity in SaLoutos' branches. The percentage of "A" talent minority candidates exploded. "We were able to identify a more diverse candidate pool than we could before," says SaLoutos.

U.S. Bank's hiring of diverse talent increased 17% overall. Diverse "A" candidate hires increased 74% within the first 18 months.

Organizations often operate with a scarcity mindset around top talent and diversity -- they assume it's too difficult to consistently have both.

Diversity tends to be sacrificed, which is then "remedied" by box-checking, quota-filling exercises (either by implicit or explicit directive). People may perceive that the company is making "token hires," which demeans qualified and talented candidates and seeds a culture of mistrust rather than inclusion.

This is not only disgraceful, it's a terrible business practice, as myriad studies show.

It doesn't have to be like this. There is a better way.

Gallup analytics and U.S. Bank's talent-based approach obliterates this false dichotomy between talent and diversity.

"A" talent is equally distributed across all categories, including race and gender. It is the hiring process, namely the human element, that is biased and flawed.

In fact, leading the hiring strategy with talent analytics provides an objective starting point for all candidates, rather than the subjective and bias-ridden process of basing hiring decisions on the candidate's experience, education, skills and the hiring manager's "gut instincts."

Indeed, SaLoutos feels the approach removed blinders the company didn't even know it had.

"A" talent is equally distributed across all categories, including race and gender -- it is the hiring process, namely the human element -- that is biased and flawed.

While the predictive profile increases the number of talented managers today, SaLoutos says the approach will also have a long-term impact on U.S. Bank leadership because the organization regularly promotes from within.

"So [diversity in senior leadership] starts with the people we hire as branch managers today," SaLoutos says.

Yet, simply hiring diverse talent does not create an inclusive culture.

As the Harvard Business Review article "Diversity Doesn't Stick Without Inclusion" put it, "Without inclusion, however, the crucial connections that attract diverse talent, encourage their participation, foster innovation, and lead to business growth won't happen."

But a strengths-based approach accelerates inclusion. SaLoutos uses CliftonStrengths with all his managers to engage and grow talent on their teams, which, Gallup Analytics shows, can substantially increase the feeling of inclusion -- and nearly all employees who feel highly included are engaged.

And the implementation of CliftonStrengths gives all SaLoutos' managers the tools and coaching they need to leverage talent to its greatest potential.

"We've used Gallup's more intense coaching programs to teach many of our performance managers to be better strengths coaches to make sure they understand: Don't try to bend something that's not going to bend," SaLoutos says.

"Be who you are and use your strengths to be successful to achieve the business objectives."

As a result, the "A" talent is more likely to stay, be engaged in their roles and feel they belong. And those managers will generate a cascading effect, improving the engagement and performance of those they manage.

What's the bottom line?

U.S. Bank's approach indicates that organizations likely have enough "A" talent in the existing candidate pool for management and leadership roles.

But spotting "A" talent requires talent analytics.

Using talent analytics at the beginning of the application process, not toward the end, widens the funnel and exponentially increases the discovery of "A" talent.

It also takes unconscious bias out of the process and improves diverse hiring as well as employee performance.

A strengths-based development approach accelerates inclusion -- necessary for engagement and retention -- and gives "A" talent the tools to succeed.

Which, after all, is the purpose of management in any organization. The reality is, however, that many organizations are likely turning their most talented candidates away. And they don't even know it.

This is one of three articles in a series about U.S. Bank's success with talent analytics. Read an interview about how U.S. Bank won with talent analytics and about the return on your investment in CX.

Gallup can help you create an analytics-based hiring strategy:


Paul Berg is a Senior Managing Consultant in Gallup's Finance Practice.

Jennifer Robison contributed to this article.

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