Not a Member? Get access to HR news and resources that you can trust.
Here is how HR can help prevent the missteps that could cost your company big in court.
Is your employee handbook ready for the changing world of work? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
60+ new SHRM Seminar dates in 10 U.S. cities and virtually.
Expand your influence and learn how to become an effective leader -- Join us in Phoenix, AZ, October 2-4, 2017.
The market for candidate and employee assessment tools has never been hotter.
According to a 2014 report by business intelligence firm The Aberdeen Group, 57 percent of companies use pre-hire assessments to help select top talent in what’s estimated to be an $800 million market. Companies using assessments effectively see results in everything from time-to-fill metrics to employee performance to lower turnover. Employers should be cautious, however, when selecting the type of tool to deploy and in deciding how assessments should be used in the hiring process.
Finding out if the company selling the product or assessment has any statistical research to demonstrate that the test really measures job-related performance is a good idea, said Janette Levey Frisch, founder of the EmpLAWyerologist Firm.
Employers also need to look beyond reliability and validity to ensure assessments don’t create disparate impact or introduce opportunities for discrimination into the hiring process. As an example, there was much attention earlier this year on a new application called Jobaline, which uses a proprietary algorithm to assess the voice qualities of candidates for customer service roles in call centers and other phone-intensive positions. The technology may be novel and may indeed have some value but the risk of misuse is also high. Frisch cautioned that in order for a job or hiring test to be legally defensible, “It must be job-related and consistent with business necessity.”
The Aberdeen Group’s 2014 study reported promising data for how assessments can impact company success. Aberdeen’s research methods include designating certain participating companies as “best in class” based on how they perform as a business on a number of metrics.When using assessments consistently and effectively, these best-in-class companies achieved significant gains in first-year employee retention, employee engagement, positions filled internally and customer retention.
Strategies to Achieve the Highest ROI
Define competencies first. Before you choose what kind of assessment to use for candidates or which assessment model will be best for your business, you have to decide what you’re testing for. Defining competencies for assessments doesn’t have to be an exacting or lengthy process.You simply need to think about what makes employees at your company successful, so that you can look for these characteristics in candidates. For example, you may decide that empathy and self-awareness are key attributes that make customer service, marketing and sales professionals successful at your company. If so, you should seek out assessment tools that identify these traits. Having a competency model as the basis for your assessment tool will also help defend against any legal claims because it will demonstrate that the tool measures qualities that are job-related.
Think life cycle. Most HR professionals understand the value of using assessments in the hiring process but The Aberdeen Group’s research shows that top companies are using assessments throughout the employee life cycle at much higher rates than the industry average. Assessments can be good tools to identify employees with leadership potential and can even be used in succession planning.
You don’t necessarily have to invest in multiple or pricey assessments if your budget is strapped.As long as you map competencies for all the scenarios in which you want to utilize assessments and then choose a comprehensive tool, the same information can guide employee development from hire to fire. On the other hand, Zach Lahey, a research analyst in human capital management with The Aberdeen Group, cautioned that “It might be hard to find one assessment for all roles.” He explained that an organization shouldn’t feel pressured to commit to just one vendor or one assessment model. In fact, the more differentiated your competencies are, the more it makes sense to have multiple evaluation techniques. “[Using multiple assessments] might mean spending a bit more but it should also result in better quality candidates and hires,” he said.
Follow up and calibrate. Considering the cost of implementing enterprise assessment tools, it only makes sense that companies would want to thoroughly evaluate this investment. Measuring the correlation between assessment results and employee performance on the job is a key step in ensuring that your assessment process is working as intended.
It is important to keep in mind that assessments are just one part of the employee selection process. “Having a candidate take an assessment doesn’t mean that you know everything about him or her,” said Lahey. “Some assessments are extremely informative but the information can be misused.”
Frisch agreed, remarking, “Assessments cannot do all of the work of selection for you and cannot serve as a substitute for having a real conversation with candidates.”
Amy Gulati, SHRM-SCP, is a freelance writer based in the Washington, D.C., area.
SHRM OnlineStaffing Management page
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Don’t Lose Sight! What Does Poor Preventive Care Cost Your Business?
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies