Employee assessments play a critical role in talent management strategy.
By Brent Skinner
It’s true: The best-performing organizations are surpassing their competitors by hiring the right candidates for their needs and placing them in the roles suited to their capabilities. How do they align and track these employees within their organization to promote success? Employee assessment.
A growing body of research is unearthing the profound benefits that employee assessment can yield not only for employees themselves, but for entire organizations. Aberdeen Group’s latest research into these matters, Assessments 2011: Selecting and Developing for the Future, identifies the best practices of organizations that succeeding at assessing their employees—and at using the data to drive organizational goals.
All organizations can learn a good deal from a best-in-class (80th percentile or better) performer’s approach to employee assessment. It typically begins and ends not at the moment of hire, but instead continues throughout the employee lifecycle and is integrated in the entire organization’s process—not just HR. Organizations taking advantage of employee assessment appear to also align HR strategy and overall organizational strategy to outperform peers.
Just how much do they outperform? Aberdeen’s research finds that only 16 percent of laggard employees (those at or below the 30th percentile) exceeded expectations on performance reviews, whereas 73 percent do at best-in-class organizations. The stark difference remains at industry average performers (middle 50 percent of aggregate scorers), where only 27 percent of employees exceeded expectations at performance reviews.
Best-in-class performers have established a wide lead over their peers in the other criteria of performance, too: Sixty-nine percent of key positions at best-in-class organizations have at least one successor identified, but the percentage falls precipitously to just 30 percent, at industry average organizations and a paltry 15 percent among laggards. Hiring manager satisfaction is also a factor. At best-in-class organizations, it improved 19 percent compared to 7 percent at industry average firms. For laggard organization, it actually decreased 1 percent year-over-year.
Assessing All the Time
These sizeable differences shine a light on how strategic employee assessment can be for organizations that embed it into their everyday operations. Best-in-class performers are assessment omnivores. They employ a healthy array of assessment tools across a broad spectrum of key points along the employee lifecycle. For example, more than one-third (35 percent) of best-in-class performers, use behavioral-based/personality type assessments, skill-based assessments, and critical thinking/cognitive ability assessments. The data from these assessments is analyzed to influence decisions that drive who a company hires, what employees are deemed high potential, and who is promoted.
"There are two things you want to look for," says Mollie Lombardi, research director and principal analyst for Aberdeen. "First, there’s the scientific validity of the assessment. You’d want to work with the vendor to make sure that’s in place. And then, there’s also the validity within the organization. If you couldn’t correlate that fact that your top performers achieved a certain outcome on that assessment, you’d want to know. A test can be a great test, but until you know what it means for your company, it’s not going to be very meaningful. If you’re going to take the time and money to assess for something, it should be aligned with something that drives the business forward."
Diving into Data
Among all participants in Aberdeen’s study, pre-hire assessments remain the focal point: Eighty-four percent of best-in-class performers and 69 percent (combined) of industry average and laggards have a process in place to assess candidates and applicants.
"Pre-hire assessments are a critical component of any integrated talent acquisition strategy," says Madeline Laurano, talent systems analyst and advisory practice manager at The Newman Group, a Futurestep Company. "In a competitive global market, identifying the right job candidate early in the recruiting process can help organizations improve productivity and reduce retention."
Compared to their competition, however, the extent to which best-in-class performers make use of assessment data is remarkable, and they mix and match older data with newer data when analyzing and interpreting the potential of employees. According to Aberdeen’s findings, 57 percent of best-in-class organizations integrate pre-hire assessment data with post-hire assessment data in their efforts to identify high-potential talent. In fact, best-in-class performing organizations are 85 percent more likely to correlate post-hire assessment data with ongoing performance and 42 percent more likely to tie ongoing performance back to pre-hire assessment data.
"One interesting trend is that more and more providers are expanding their services and/or products to include both pre-hire and post-hire assessments," says Laurano. "Assessment providers that had their roots in pre-hire are expanding to post-hire and vice versa. This speaks to the increased demand for integrated talent management since assessments are the backbone of any successful strategy."
Best-in-class performers are also further along than their competition in automating and integrating their assessments with technology. Forty-seven percent have recruiting processes featuring automated assessments integrated with the ATS or career portal, whereas only 29 percent of industry average and laggards together have such systems in place. These practices appear to feed into hiring managers’ satisfaction with new hires, Aberdeen’s research shows with automation in these areas, hiring managers exhibit 8 percent year-over-year improvements in satisfaction versus 6 percent among hiring managers at companies lacking such automation.
"For those organizations considering implementing online assessments," says Laurano, "integration with their talent acquisition systems providers should be the top concern. In order to make a talent acquisition strategy, the data between the talent acquisition systems solution and the various third-party recruiting tools (such as assessments) needs to be shared. Integrating the various elements of talent acquisition enables organizations to manage the entire recruitment process on one web-based interface. Integration of assessments with a talent acquisition system can save time for both recruiters and candidates."
Employee Assessments Drive the Bottom Line
"We looked at the difference in performance not only at the employee level, but also at the organizational level," reports Aberdeen’s Lombardi. "Organizations that use assessment throughout the employee lifecycle (i.e. not just at hiring, but once the individual is inside the organization, too) outperform the organizations that don’t use those data points to make talent decisions."
Eighty-two percent of companies believe that HR contributes to the company’s development and transformational capacity on a daily basis, according to NorthgateArinso’s (NGA) annual Talent Management Survey. Of them, 78 percent actively align HR strategy with overall corporate strategy, and an equal percentage of them argue that this alignment should be improved.
NGA’s survey underscores a perennial concern. For a long time, organizations have fretted over how to align HR strategy and corporate strategy. Could it be that the answer has always been in plain sight: methodical integration of employee assessment with technology and organizational management? Nearly one-third (29 percent) of the best-in-class performers in Aberdeen’s report say that they have the data to prove their profitability and revenue have benefited directly from their use of employee assessments
Assessing the Assessing Solutions
"Clients who are seasoned users have more technical questions around the test development and validation of the tools," says Diane Ianni, vice president of marketing and sales at Assessment Systems, one of several co-sponsors of the Aberdeen report.
"They tend to have more specific questions, comparing what they have used before to our tools. Those who are inexperienced tend to need more general education on assessments and how they are used and developed."
In Aberdeen’s report, 43 percent of best-in-class performers rate "evidence of accuracy in predicting potential" as one of their top-three criteria for selecting a vendor.
"Sophisticated users take into consideration the purpose of the assessment, whether it is performance potential, readiness, fit or selection," says Sarah Brock, Ph.D., offering manager, assessment, at PDI Ninth House, another report co-sponsor. "And, this impacts the type of assessment used and how the data is presented."
Additional cosponsors of Aberdeen’s report were Kenexa, provider of integrated assessment solutions supporting the entire employee lifecycle; long-time industry vets CPP Inc and Predictive Index; and SHL Group Limited, a global provider of behavioral and ability assessment in 30 languages. Not among the report’s sponsors, but offering a compelling solution—especially for business-to-consumer organizations that hire a large volume of customer-facing staff—is PeopleAnswers.
Organizations no longer have to fear purchasing an off-the-shelf assessment instrument and then having to administer it and interpret results on their own. Increasingly, providers of assessment tools are offering consultative services, helping clients by providing analysis and interpretation of assessment data. "Organizations need help understanding and interpreting assessment data," says Laurano. "In the past, many organizations would hire a third-party to help interpret data. Today, many providers are actually offering recommendations based on assessment results. This trend enables organizations to feel more confident in their decisions and become more effective in recruitment and retention strategies."
Different roles typically require different assessment instruments, and depending on the roles organizations themselves play, they differ in what they need, as well.
"Organizations that get better data and bring more of that transparency and visibility into their talent decision-making are seeing better results for their efforts," says Lombardi. "All assessments are not created equal, and neither are all organizations. The organizations doing the best, getting the best bang for their buck, are those that really understand the type of assessment they need to be using and the result they’re looking for."