Companies of all sorts, from retail to natural resources, are trying to gain a competitive advantage with data analytics and artificial intelligence. Beyond better marketing, product design, and customer experience, AI can also help the hiring process. A company’s human capital contributes hugely to its bottom line. Predictive analysis can gauge applicants for company and cultural fit and prevent ill-fated mismatches.

TalentFit Solutions Inc. is bringing AI to employee recruiting and retention. The startup is parsing existing research and statistics to find out why poor hiring happens. And it’s training algorithms to steer companies toward people who will fit in and excel in their unique work environments.

Some estimates suggest the cost of making one bad hire can be up to three times that hire’s salary, according to Mitch Gudgeon (pictured), co-founder and chief executive officer of TalentFit.

Gudgeon spoke with Jeff Frick (@JeffFrick), host of theCUBE, SiliconANGLE Media’s mobile livestreaming studio, at theCUBE’s studio in Palo Alto, California. They discussed the cost savings and competitive edge that companies can gain with data analytics for hiring (watch complete video interview with transcript here).

This week, theCUBE spotlights TalentFit in our Startup of the Week feature.

Good company, good employee, bad hire

Gudgeon’s own experience as a company misfit inspired him to found TalentFit. Just after he completed his MBA, he landed a job at what seemed like a fine organization to join and grow with. “We went through the hiring process, did all the due diligence, and realized once I joined the team that my ideal culture wasn’t exactly what the culture was in the organization,” he said. 

The organization and its culture weren’t inherently bad; they just were not the best fit for Gudgeon. “I wasn’t able to actually feel that I got what I needed from the company — and them probably from me too,” he said. 

Research on the subject shows that hiring mistakes like this are quite common. In fact, 95% of organizations make bad hires each year, according to one survey from Brandon Hall Group.

TalentFit hopes to help employers make fewer mistakes by putting hard data and advanced technology into their hands. Ideally, the tool would have greater predictive power than “feeling out,” textbook HR guidelines, degree worship, etc.

“It would be pretty nice now to be able to say, ‘Hey, you actually align — and the data shows this too,'” Gudgeon stated. 

Quantifying the ‘good fit’

Company culture is not just about a group of co-workers having some things in common. It could help to have friendly employees that could have a beer or enjoy hobbies together. But deeper shared values about the company’s mission are what can make a real difference in outcomes, Gudgeon pointed out. A good fit is achieved when employees’ core values align with the company’s values. The more of them they can hire, the happier and more productive bosses and employees will be.

With analytics, companies can figure out who is excelling and why, and then hunt for more of that type of employee. “Organizations have a huge amount of data about their employees: their personal details, education, family background, and so on,” said Aditya Narayan Mishra, chief executive officer of CIEL HR Services, as quoted by HR Technologist. “They also have data about employees’ performance and behaviors. Hence, they can correlate all these three dimensions to determine the typical profile of an employee who is likely to be successful with them.”

Companies should strike a balance between recruiting people who share core values and curating a clone factory, he added. “If you’re just bringing in people that kind of fit the culture, are you just kind of going birds of a feather? Are you missing the opportunity of what’s so important right now in terms of diversity, diversity of opinion, diversity of background, diversity of point of view?” he asked. 

TalentFit tracks demographic data in an attempt to audit its algorithm for bias.

Culture: Soft word, hard outcomes

Companies — especially those vying for scarce talent — increasingly must deliver value to employees beyond dollars. “I think it used to be leadership set the direction, and you had to listen to what was going on and you had to sort of abide by the rules of the culture. And if you didn’t, you were gone,” Gudgeon said. 

Part of what is tipping the balance toward employees are new ways to vent grievances about company cultures. In addition to word of mouth, there are now sites like Glassdoor.com that enable them, Yelp style, to relay their workplace experiences. A “Severance and Workforce Transition Study” found that companies increasingly comb through sites like Glassdoor and social media after laying off employees. If companies can publicize the good points of their cultures — through employees or their own efforts — they can attract top talent. A culture they feel at home in might win them from competing employers.

“If you’re being recruited by five different firms, and they’re all offering the same pay, what’s your differentiator?” Gudgeon said. It could be culture. Analytics can help companies understand how their cultures harmonize or clash with certain employee types. They can make cultural changes to attract more of the type they seek.

“People are more attracted to organizations that they … know they fit the culture, they feel they align with the culture,” Gudgeon said. “They’re likely to actually take a pay cut even, a lot of the research is showing.” 

Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s CUBE Conversations.

Photo: SiliconANGLE