Tag Archives: Rasch

Photographs As Items for Assessment – Free Example

Photographs of people in activity is a promising newer area for development of business-relevant assessments that has been in use for years in healthcare.  Originally developed in the Netherlands to help patients suffering from fear of pain when moving the body (kinesiophobia), the University of Maastricht’s website has details on citations and free compressed (zipped file) short version of the main test.

Clearly, this same approach could be used to develop more engaging employee and organizational assessments that may be difficult to fake, have better face validity, and more workplace fidelity than other types of items.  Further, with cheap and even free video sites, video items could also play a bigger role in future assessments.

Consider these possible fruitful examples.

a) Vocational Interest Assessment

Vocational interest tests help people identify career paths for which their interests, values, and aptitudes are particularly suited.  But most all are purely text-based.  What if each career alternative had photographs of the tasks in each job or job family, with video vignettes of major tasks?  Perhaps this could be a fun way to assess what activities and careers would ultimately help the person realize their goals.  Take another look at the picture at the top of this article.  It’s an actual picture from PHODA’s assessment, but couldn’t it represent the task of lifting articles out of a trunk for the job of a taxicab driver?

b) Employee Selection

Cognitive and knowledge-based tests are often used to select new employees, but not nearly as often or instead of the ubiquitous job interview.  What if good instruments could be developed, perhaps with a combination of item types, to include pictures?  People could rate pictures like this one on the degree to which it looks similar to their desk – would you expect highly conscientious people to endorse this picture?

I would guess that highly conscientious and prudent people would be unlikely to indicate that this picture reflects their own office.  Sales Convention pictures would be good for the high-end of extraversion; Police taking down violent offenders for low levels of agreeableness.  The potential for pre-hire selection, especially using to add to Computer-Adaptive Testing item banks is tremendous.

c) Culture & Climate

Static pictures may be difficult to identify that reflect various organizational cultural differences, but videos could certainly be used to assess these. 

As optimistic as I am about the potential for picture-based items to take a larger role in organizational assessment, I recognize there are also downsides.  First, while digital cameras are cheap, actors may not be.  If you can find existing workplaces where you can take these pictures, it may help you avoid hiring actors for static pictures, but perhaps not for videos that could really suffer with amateur actors.

Second, one New Zeland user of the PHODA complains that if the photographs are context-specific, they can loose value in other contexts.  I remember once when I worked for AT&T Microelectronics, we hired Wally Borman to redo his 1970’s era rater training videos because while the content was good, the actors wore sideburns, bell-bottoms and leisure suits.  This was never going to be very persuasive as “cutting edge” to managers in a bleeding-edge semiconductor factory (computer chips).

Do you see the same potential for photograph-based items as The Scientific Leader?

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Australian CAT for Kids

The Australian State of Victoria’s standard educational assessments include computer-adaptive tests (CATs), reports their new, free manual on report interpretation.  I was pleased to discover that the Victorian Curriculum and Assessment Authority uses the most modern form of human assessment to help children of all ages learn.

In particular, it is noteworthy that their easy-to-read manual includes an understanding of Rasch Measurement.  It notes the specific locations where there are items that are out of scope for a given assessment.  In these places, the child is mismatched with the test – the questions are either too hard or too easy to produce a trustworthy metric.

I’m hopeful that Australia’s educational leadership rubs off on more schools around the world.

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Madoff Destroys $50 Billion with “Giant Ponzie Scheme”

Bernie Madoff is the latest in the series of senior executives to destroy value, this time with an apparent $50 billion dollar fraud, according to the Financial Times.  Madoff, a former Chairman of the NASDAQ stock market, on thursday admitted to his employees including his two sons that his operations were “all just one big lie” and “basically, a giant Ponzi scheme”.  The alleged fraud is the largest ever investor fraud ever blamed on a single individual.

Previously, I had written about the “Three Stooges of Operational Risk“, where I detailed senior executive destruction from Key Lay of Enron, Bernie Evers of Worldcom and most recently, Dick Fuld‘s follies with Lehman Brothers.  In two of those three I noted the dishonesty and fraud that accounted for their downfall similar to Madoff.  But unlike Madoff, they were less candid about thair fraud.  After Madoff’s brazen alleged admission, is there any uncertainty that leadership due dilligence is a critical part of the selection process of hiring senior executives?  Could it be any more clear that the pre-hire assessment procedure is a non-trivial subset of Enterprise Risk Management?

In fairness, these Industrial Organizational Psychology methods have their limitations.  No forecast could ever be perfect, or and even the best assessment procedures only account for 30-60% of the variance in job performance.  But it’s relatively rare that factors such as conscientiousness are used to screen executives – and conscientiousness highly predicts dishonest, and imprudent behavior in the workplace like that of Madoff.  With new methods from Rasch Measurement, Computer-Adaptive Testing, and an innovation from the Scientific Leader, “Inverted Computer Adaptive Testing” using Virtual Realtity, it’s increasingly difficult for people to fake or misrepresent themselves on these assessments. 

How much risk are you accepting when you use standard interviews to hire your employees?

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Pandora’s Box Worth Opening: Example of Future Rasch Measurement

I’m really amazed at the combination of the Music Genome Project and my iPhone.  Pandora Radio is a free service that allows you to stream customized music “stations” to your computer or your iPhone.  Today, I was able to stream it to my iPhone and pipe it into my car through the Auxiliary plug.  By selecting a specific song or genre, it is able to use its’ information on similar other songs and create an unlimited series of songs similar to the one you like.  Better still, you can have it mix across channels. And any new channels you create on either your iPhone or computer are automatically available on all your devices.

As each song plays, you’re able to give it a “thumbs up” or “thumbs down” to indicate whether or not you like the song.  Favorable and unfavorable ratings help the system adjust future selections to be in the same general domain as the original song, but will be more similar to those you liked.  These binary or dichotomous selections can be considered the most basic form of data useful for productive Rasch Measurement.  It’s an excellent example of why the Rasch model has so much potential in the Web 2.0 world where people are constantly sharing and rating things on Facebook, LinkedIn, Amazon.com and other social websites.

The current version is useful, but appears to be uninformed by psychometrics.  It is based on ratings of over 400 attributes to describe songs, and an engineering algorithm to organize them.  Each song is represented by a list of attributes.  Wikipedia’s entry describes relatively atheoretical approach used to parse the attributes into “genes”, and then recommend similar alternatives to create a “channel”.  The firm has several patents, both for the algorithm, playlist technology and interface on the technology.

J. "Mike" Linacre

John Michael Linacre

But apparently 10% of songs are rated by more than one “technician” to try to improve reliability.  From the description on Wikipedia, it appears the firm isn’t using it’s data to the fullest.  Pandora has over 2 million users, as of December 2, 2008.  First, even if there were only 500 or so ratings of each song, or genre, the users “thumbs up” and “thumbs down” would be excellent fodder to analyze with Rasch Measurement software that could further improve both song and listener measurement, on the same “ruler” of interest.  Second, whether technicians or listeners, some people are likely to be easy thumbsters and others hard.  This leniency and severity bias in ratings can be adjusted with Mike Linacre’s Many Facet Rasch Model (MFRM) method.  Linacre also happens to write the two most popular Rasch analysis programs, Winsteps and Facets.  Highly robust to missing data, this approach could really help Pandora improve assessment of both the songs, Genres, and listeners simultaneously – especially with a form of Computer-Adaptive Testing.

While Pandora Radio is a fantastic overall offerring today, my only other suggestion for improvement is to allow it to be used outside the USA.  When I was in India a few months ago, I learned the hard way that Pandora’s geolocation software could detect that my IP address was abroad, and refused to send me my normal stations, until I returned to the states.  I didn’t try US-based proxies to try to still connect, but hopefully, both Rasch Measurement and Global Licensing will be future features they’ll be adding in the future.

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American and European Human Capital Options

A derivative is a financial instrument that gets it’s value from something else.  One special type is an “option” that gives the owner a right, but not the obligation, to buy or sell an asset.  Human resource, or personnel, employment is a special case of Real Options applied to people. In our case, though, we own ourselves and our labor, but for the right price we’re willing to lease it out to employers and clients for a period of time. 

In the case of employment, hiring an employee amounts to buying (call option) the right to utilize labor for 8 hours a day.  In some cases, the terms of an employment contract are extremely limited, such as contracts for professional athletes and union members.  These amount to a European option, such as the case where the owner of a baseball team has the right to release an athlete, on but not before a certain date.  The more flexible type of employment arrangement is the American option variety.  With an American option, the owner can exercise their right (e.g. liquidate the asset, or fire the employee) without respect to a specific date.  In option terms, letting a person go, or not hiring a consultant for another project is called a “put option”.

But with human assets, there are numerous other options employers can choose to take – including redeploying people to work on new projects, in new departments and in different jobs.  The more flexible a person in having skills and motivation to work in areas that are profitable to the firm, the more valuable the person. 

When mixed with psychometrics such as The Scientific Leader’s Computer-Adaptive Measurement(TM) approach, human capital can be valued the same way as other uncertain financial assets – using Managerial Real Options.  Have you valued your human capital the same way as professional financiers?  Do you know where your human capital is best deployed in the portfolio of job tasks and projects in your firm?  How flexible and adaptable is your workforce – to be able to redeploy them to new work as customers, markets, and economic crises unfold?  Have you considered the option of investing in growing the skills of your employees to increase their value and reduce your risk, through training and development?

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Board Members Blind to Major Risks

65% of financial-company board members feel they lack the tools and transparency to properly assess risk exposure, according to a PricewaterhouseCoopers survey reported on by CFO.com.  I was particularly intrigued that 77% felt that existing valuation tools are not robust enough, especially because I have a paper submitted to the Society for Industrial-Organizational Psychology’s 2009 conference on this topic. 

Given board member’s desire for better risk and value detection methods, I’m pleased that the Cue-See Model I created has potential to help.  Based on evidence from many business sciences including Finance, Industrial/Systems Engineering, Industrial/Organizational Psychology and Computer Science, Cue See posits four factors that characterize value creation in all processes:

  • Quality: Delighting customers (fitness for use)
  • Cost: Price, or resources consumed to create value
  • Quantity: Volume (units or customers served)
  • Cycle Time: Speed

These four simple factors, when combined with business-level goals, provide a sort of quantitative backbone to understand uncertain and risky value creation in any type of process designed to achieve goals, including financial and shareholder goals desired by corporate board members.  In my paper, I go beyond the introduction I did in a paper for Quality Digest Magazine, and include Monte Carlo Simulation, Discrete Event Simulation, and Real Option Analysis methods mixed with Rasch Psychometrics to quantify human intangibles objectively.  I also go into greater detail on the theory behind the Cue See model in my forthcoming book, “Leading Scientifically: Managing Risks and Increasing Returns”, to be published in 2009 by Prentice Hall / Pearson Education.

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Two Roots of Operational Risk Failures

Ken Lay and Dick Fuld

Ken Lay and Dick Fuld

The origin of the Enterprise Risk Management movement began with the failures of Enron, Worldcom, Lucent, Adelphia, and Tyco where unethical executives cooked the books and nurtured a climate of covering up malfeasance. One professional body, COSO, defines ERM as:

a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.

This first wave included human resource risks (e.g. leaders who cook the books), and organizational culture and climate around candid transparency about fiduciary concerns.  Industrial Organizational Psychologists studying these sorts of human behaviors in the workplace have a long history of assessing and mitigating these sorts of risks.  For individual differences, these include personality traits such as conscientiousness and integrity, and there are a variety of good instruments to assess these.  Culture and Climate on the other hand have good methods to assess, however, this entire universe of I/O Psychology was historically under leveraged by auditors, and since Enron has gained more attention than ever before.  The Scientific Leader publishes the modern, Rasch-based Computer Adaptive Testing approach (Computer Adaptive Measurement) that is much faster, and deeper than traditional leadership due diligence approaches.

I think we’ve come upon a second era of Enterprise Risk Management where the catastrophic failures of Lehman Brothers, AIG, Merrill Lynch, Fannie Mae and Freddie Mac were not due so much to unethical behavior, but rather poor decision making, inappropriate appetites for risk, and perhaps a healthy dose of arrogance.

If the poster child for the first era was Ken Lay of Enron , then perhaps the second should be Dick Fuld of Lehman Brothers.  In Fuld’s case, did his inappropriate disrespect for uncertainty and his ability to know everything cause him to approve the taking on a fatal level of risk tolerance?   It appears so, and it also appears that Dick and his board were culpable for the same sorts of errors.  Industrial and Cognitive Psychology both have a half-century of applied science to help select leaders who will make better decisions, manage their teams effectively and grow their ability to use sophisticated decision making methods.  This includes addressing biases that creep into individual and group/team decision making and the use of quantitative methods for addressing a portfolio of uncertainty such as Real Options decision making in probabilistic finance.

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