Pre-hire assessment tools that mine data
deliver true gold: the right candidate for the job.
By Ray Bixler
In today’s war for talent, finding qualified workers is becoming increasingly difficult. In fact, a recent study by Leadership IQ tracked 20,000 new hires and found that 46 percent failed within 18 months. The cost to replace an employee ranges from 50 to 150 percent of a position’s salary. Plus, these totals do not factor in the indirect costs of lost sales opportunities, lack of productivity, and lowered morale. It is clear: Make the wrong choice and your new employee will most likely impact the growth of your business, damage your team’s morale, and cause involuntarily turnover. On the other hand, make the right choice and your new employee has the potential to help your business grow, stay longer, and help the company succeed.
With so much riding on making the right hire, HR has had a recent increased interest in pre-hire performance assessments. A recent issue of Forbes listed evolving assessment science as one of the nine hottest trends in HR technology, and The Atlantic featured people analytics on its December cover, and how it is “already transforming how employers hire, fire, and promote.”
Most HR professionals would agree that past performance is the best predictor of future performance. According to the International Journal of Selection & Assessment, its peer- reviewed, published research shows that organizations that utilize pre-hire performance assessment data in their hiring process achieve clear benefits:
- Anticipate future performance. The higher the performance assessment rating, the better the supervisor performance review once on the job.
- Reduce turnover. Organizations have experience first- year turnover reductions as high as 69 percent.
- Improve satisfaction. By selecting employees with a track record of exceptional customer service, overall customer satisfaction scores increased by an average of 16 percent year-over-year. But there are some underlying issues with the traditional ways of conducting pre-hire assessments. Perhaps the most widespread bias in hiring today occurs subconsciously.
In a recent survey of some 500 hiring managers by The Corporate Executive Board, 74 percent of respondents reported that their most recent hire had a personality “similar to mine.” Lauren Rivera, a sociologist at Northwestern, spent parts of the three years from 2006 to 2008 interviewing professionals from elite investment banks, consultancies, and law firms about how they recruited, interviewed, and evaluated candidates. She concluded that among the most important factors driving their hiring recommendations were shared leisure interests.
What executives should be considering is data collected though a standardized assessment process. Reports that include skills the candidates have mastered, what traits and behaviors they positively display at work, and where they have developmental needs should be reviewed during the hiring process. Reference Checking Reinvented For decades, recruiters and hiring managers attempted to gather behavioral insights on candidates by calling references. But this practice is becoming extinct for a variety of reasons.
- References rarely provide any meaningful feedback. A few years ago, a SHRM study confirmed that because most organizations and individuals don’t want to be held liable for saying anything defamatory, they say nothing at all aside from verifying dates of employment.
- The process is extremely inefficient. “You’re it” telephone tag can take weeks to complete.
- The method is scientifically flawed. The data collection process is not standardized and produces inconsistent results, even when the references actually respond.
Organizations now have to the option to assess candidates’ past performance from references in a way that overcomes the legal, logistical, and scientific shortcomings of dealing with references by phone. Web-based pre-hire performance assessments can be initiated in minutes and completed in less than two days with no recruiter or hiring manager intervention. Research has shown that well-designed pre-hire assessments that gather and manage multi-rater feedback electronically deliver an 85 percent response rate while also mitigating legal risk inherent in phone-based referencing.
Using self-assessments in another path to improve or validate hiring decisions. They are designed to measure cognitive ability, personality traits, and technical, job-related skills. These solutions have the potential to provide valuable insight into candidates during the hiring process, yet shortcomings exist. One of the biggest and most common challenges of self-assessments is they only offers the candidate’s perspective, which, in the end, may be flawed.
Personality tests also have their strengths, but there are several weaknesses: