Personality profile exams provide what they always have—and then some.
By Todd Harris
Over the last half century, much has changed—a man has landed on the moon, the Red Sox have won the World Series, and “social networking” is no longer a phrase describing cocktail hours, parties, or even a physical event. The same could be said for organizations and the tools they use—for example, the creation of a formal HR department is a relatively new development.
Interestingly, despite all types of changes within organizations, some tools have stood the test of time, including personality assessments. At their core, assessments are still what they started out as—a tool to measure and index personality characteristics for the purposes of predicting the job roles and functions where individuals can best succeed. However, their popularity has spread rapidly even amidst the economic environment that organizations and their HR departments face today. What accounts for this trend, and why does the tool continue to remain a vital part of organizations?
While the economy presents many challenges and problems for HR departments to deal with, we consistently hear a common request from our customers: How do we get more out of our employees and our current resources? Fortunately, this is one area where assessments can drive bottom-line impact for any organization, in any industry.
The background, history, and spread of personality assessments across the globe provide an ideal backdrop to explore how the refinement and evolution of the tool have made it an indispensable part of organizations across the world.
How the Assessment Grew Up
When tracking the evolution and proliferation of assessments around the world, six key milestones marked the development of personality assessments into a core tool in today’s HR arsenal.
First, the U.S. population is increasingly diverse, as are the populations of many other countries. Personnel selection systems that rely solely or primarily on measures of cognitive ability significantly adversely affect most protected groups, especially African Americans, Native Americans, and Hispanics. White people are often hired at a disproportionately high rate when typical cognitive ability tests are the primary selection and screening tools. These adverse impacts created substantial pressure on companies to find equally valid, but less discriminatory, selection techniques. Research on personality variables indicates that they have much less, and often no, adverse impact on members of protected groups, a tremendous advantage when dealing with increasingly heterogeneous customer, supplier, and employee bases.
Second, the research findings from the U.S. Army’s Selection and Classification Project (known as Project A), a multi-million dollar, seven-year research effort in the 1980s, clearly indicated that the Army could improve forecasts of overall job performance via the addition of personality assessments to its battery of cognitive tests.
Third, the appearance of the Five-Factor Model (FFM) in the early 1960s spurred a large amount of academic research in the area of personality, providing a reasonably comprehensive, yet parsimonious, taxonomy to organize the measurement of personality.
Fourth, influential meta-analytic reviews—in which the relationships between a variety of measures of personality and a variety of job performance metrics were examined—provided further empirical evidence for the predictive validity of personality measures.
Fifth, “real-world” views held by non-psychologists continue to hold that the qualities and characteristics within individuals have a crucial impact on their performance at work. For example, an examination of most job postings indicates that employers frequently seek personality-driven factors such as social skills, initiative, creativity, flexibility, etc. at least as often, if not more so, than specific technical skills, experience, or intellectual abilities. Thus, the view that personality really matters appears to be widely held.
The last factor that may be driving the increased importance and usage of personality assessments in business and industry is the nature of work and the economy itself. The world of work has changed more rapidly in the past 15 years than in the prior 100. Eight fundamental forces are shaping the 21st century workplace:
• Increased technology, especially information technology;
• Increased diversity and globalization;
• Increased prevalence of collaborative, team-based work structures;
• Increased concern for person-organization “fit”;
• The importance of work/non-work balance;
• The frequency and pace of change;
• An increased emphasis on learning; and
• New expectations of leadership.
These factors do not function independently, but rather accentuate and multiply one another. For example, leaders who operate in today’s global environment have to possess fundamentally different skills than their predecessors did. As a group, these conditions make the explicit consideration of applicant and employee personality factors by organizations more critical than ever before.
The spread in use of personality assessments made the tool a natural fit for modern HR departments. However, today’s economic and work environment has accentuated a major shift in the role and function of the HR department. What was once a reactive service center, where employees and leaders within an organization could go to get information, is now a very active department that is expected and designed to align with core business goals.
The use of assessments has certainly followed suit. Today, assessments are used in markets such as retail, finance, and healthcare to align the right people with company roles. Assessments are used to address profitability, turnover, sales, and reputation management.
For example, in the financial industry many banks are using assessments to get more people into jobs that can help drive revenue. A Massachusetts-based bank used assessments to determine department placements for employees and subsequently, which employees may be best-suited for leadership roles. As a result, the bank’s executives credit assessments in part with helping to increase net income by 43 percent in 2009—during the economic downturn.
In another example, a South Carolina-based credit union sought to transform its transaction-based culture to an active sales environment. Using assessment tools, the credit union developed “behavioral profiles” of ideal candidates for branch service representative positions and asked current and prospective employees to take an assessment to help identify ways they could improve their sales performance. This combination of an assessment-guided culture shift with a new focus on cross-selling has helped increase loan volume by $100 million to a total of more than $700 million during the past year. Member satisfaction is also at an all-time high: 95.3 percent.
In the retail industry, one franchisee of a personal service chain has used assessment-based strategies to maximize the performance and close rate of sales associates. Just prior to implementing assessment tools, the average sales close rate was 12-to-13 percent. For the three-month period directly following implementation, the average sales close rate jumped to 27 percent. The franchisee firmly believes that 80 percent of this turnaround can be directly attributed to the implementation of the assessment tool and supporting strategies.
The healthcare industry has also turned to assessments to help with a variety of problems, including turnover and succession planning. Since medical personnel are expensive to hire, train, and continually educate, the selection process in hospitals must be effective yet quick, given the amount of staff that are hired each year. An Indiana-based hospital has used assessments to streamline the application and selection process and, additionally, identify individuals who may be able to fill senior roles should those people retire and/or leave. So valuable has the tool become that for talent initiatives like employee and leadership development, the hospital estimates assessments are used about 75 percent of the time.
Assessments: Looking in the Crystal Ball
The above examples illustrate that assessments aren’t just psychological tools anymore: The evolution of use has made them strategic business initiatives that organizations across many industries use to address core business problems.
But what does the future hold? Given the slow, if persistent, economic recovery, it’s fair to estimate that the focus on using the tool to support business goals like reducing turnover and increasing profitability and sales will continue. However, those most responsible for the overall direction of an organization, the leadership, will likely see an uptick in their use of assessments. While the tool is widely used at lower levels within organizations to identify hires and potential candidates, senior and executive-level positions also frequently rely on assessments. However, as leadership will continue to be under great scrutiny to perform under tough conditions, we expect organizations to use assessments as a way to mitigate risk when hiring a particular executive or promoting from within.
The science behind assessments will likely undergo a transformation at some point.
While a major renaissance occurred in the field during the mid-1990s, academic and applied researchers have continued to refine and extend their understanding of the role of personality in organizations, which means given the last few years of economic uncertainty and instability, more will be in play for researchers to dissect and understand about what types of personality traits are needed for success.
Globalization will be an important driver in the extension of assessments. Currently, for example, about 30-to-40 percent of the work I do is overseas—a number I expect to rise. In terms of industry reach, any market where people are considered the most valuable asset (think consulting, finance, IT) will continue to invest in assessment to ensure their people are in the best positions to succeed.
What most certainly won’t change, however, is the strategic importance assessments deliver to organizations across the globe. The evolution of assessments will continue, both in their science and in their use, helping organizations achieve core business goals, as they better understand individuals and the job roles for which they are best suited.
Todd Harris is the director of research for PI Worldwide. He can be reached at email@example.com.