Assessment:

on your investment

getting the return

Assessment testing of employees and candidates is an effective way to identify talent. But fail to take a systematic approach and you will fail to maximize the return on your investment >>
Fact: some people are more talented than others. You can spend time and money teaching someone to excel at a certain task or job, but if you get the right person in the right role in the first place they are likely to perform better. As the saying goes, why teach a turkey to climb a tree when you can find a squirrel? The research makes the case: for jobs of average complexity, the top one per cent of employees are 12 times more productive than the bottom one per cent (Hunter, Schmidt and Judiesch, 1990). With this level of return at stake, making the right decisions about the people you hire is critical. But this means predicting performance is this possible? Or, more importantly, is it possible to predict performance quickly and cost effectively? Unstructured interviews, CVs and references tell us very little about whether someone will excel. Simulation exercises, such as case studies and role plays, are much more effective. But these can be time consuming and expensive. The best way to get return on your assessment budget is to use psychometric assessment techniques. These provide objective and standardized measures of a persons ability and personality at work which, in turn, provide an insight into how that person is likely to perform in a particular role. As figure 1 shows personality and ability tests are a particularly cost effective way of predicting performance.

2012 Hay Group. All rights reserved

Assessment: getting the return on your investment

Figure 1: The diagram based on research by Schmidt and Hunter (1998), shows that personality questionnaires and ability tests are the most effective way to predict performance whilst keeping costs in check

Cost/hire ()

300

Assessment centers

150

Competency-based interview Unstructured interview Personality questionnaire Ability tests References

0 0 15 30
Prediction of performance as a percentage

Predicting performance is a science and to get it right you need to treat it as such. So here are five tips to developing an assessment process that will optimize your hiring process.
Tip one
Choose valid and accurate assessments
Picking the cheapest assessment is tempting when faced with a tight budget. But poorly developed assessments that dont predict outcomes are a false economy: they may appear cost effective but the business benefits will never be delivered. Ask your supplier to prove the predictive ability of their assessments with examples of where it has worked in the past. And then measure the results for yourself.

Tip two
Be clear what you are looking for (and what you are not)
Profiling the competencies you need in the role or level for which you are recruiting will help you decide on the most appropriate mix of assessment techniques. You can match these competencies against the specific personality traits measured in your psychometric assessment. This will be made easier if your tool has been created with common competencies in mind.

2012 Hay Group. All rights reserved

Assessment: getting the return on your investment

Tip three
Use the right assessments at the right time This can drive huge savings, particularly in large recruitment processes. The key is to ensure that the assessments you use at the beginning of the process, when candidate numbers are high, are valid and easy to administer. This enables you to confidently sift out a large number of unsuitable candidates and save places at your more expensive assessment centers for the most talented. Figure 2 is a real example of how a banking organization remodeled their recruitment process to save over $1.7m. By introducing Talent Q ability and personality assessments they improved the accuracy of their screening stages and took fewer candidates to the expensive interview stage.

Figure 2: Highlighting the cost savings in the recruitment process when introducing ability and personality tests

BEFORE 28,000 applicants

AFTER 28,000 applicants

$224K application screen

16,240

$224K application screen

16,240

$325K online numerical test

6,334

$650K online numerical and logical <

4,872

<

$203K telephone screen

4,887

$740K Personality and phone screen <

1,705

<

$2,341K first interview

1,756

$818K first interview

1,074

$1,686K assessment center

755

$1,031K assessment center

752

$60K offered
717

$60K offered
717

574 accepted Total cost/offer $6,750 Total cost $4,839,000

574 accepted Total cost/hire $4,914 Total cost $3,523,000

2012 Hay Group. All rights reserved

Assessment: getting the return on your investment

Tip four
Repurpose your data Assessments undertaken in the recruitment process should not be left to gather dust on file. Choose the right assessment and this data can be used again at other points in the talent lifecycle including development, succession planning and team building.

Tip five
Measure the impact Measuring the long term return on the investment (ROI) you make in the people you recruit can be difficult. But it is critical to show the ROI on your assessment process. You should measure not only whether successful candidates live up to performance expectations but also how long they stay with the company. ROI should take into account the life time value of your employees contributions. To help with this your assessment provider should conduct validity studies that match performance criteria against traits and abilities. Whether you use these at the beginning of the process to understand what makes a high performing employee in your organization or at the end to check whether your selection procedures are effective in identifying high performers, they will give you confidence that you are recruiting people that will thrive in your organization.

Figure 3: The talent lifecycle

Traits, role t pro le

Recruitment

Potential pro le, derailment pro le

Potential

Talent Q

Behavioral type pro le, development pro le

Individual development

Team building and development

Team report, composite team

2012 Hay Group. All rights reserved

Assessment: getting the return on your investment

For jobs of average complexity, the top one per cent of employees are 12 times more productive than the bottom one per cent

Assessment tools for selection: a checklist

Use this checklist to see how your existing selection processes stack up An effective assessment system should:

begin with an analysis to understand what competencies you are recruiting for employ tailored online questionnaires, mapped to these competencies provide dynamic interview questions to support recruitment interviews measure verbal, numerical and logical reasoning abilities pinpoint the possible implications of an employee or candidates personality traits and behavior at work recognize and benchmark the strongest potential performers (using validity studies) create role profiles to ensure you are measuring the right things for the right role indicate the likely fit between an individual and a role evaluate an individuals strengths and development needs in relation to leadership potential.

About Talent Q from Hay Group

Talent Q is a package of unique, online, work related psychometric assessments Dimensions and Elements that enable more confident and cost effective recruitment decisions. They measure both personality and aptitude using the latest adaptive testing technology and were developed by Roger Holdsworth, a pioneer in the field. Talent Q is one of a suite of tools and products available from Hay Group that help you get a return on investment from your people. To find out more visit www.atrium.haygroup.com

To find out how Hay Group can support you in getting the best return on investment on your assessment process visit www.atrium.haygroup.com

2012 Hay Group. All rights reserved