Using Assessment Testing to Avoid Making “Bad Hires”
There is a growing trend in talent acquisition; employers are utilizing assessment testing tools to improve their hiring results. Assessment testing has been a human resources tool for at least three decades, but the process is more prevalent today than ever, in part because making bad hiring decisions is too costly in lost productivity, time, and training. In addition, a hiring mistake at a senior level in a small to mid-size company can have a significant impact on overall firm performance and morale.
There have been several studies showing the cost of a “bad hire” to be anywhere between 1.5 to 3 times the person’s compensation. While these studies seek to quantify the loss, my experience has shown that far greater damage can result from making a bad hire in the mid to senior level ranks. It doesn’t matter if the area is sales, finance, operations, or technology. A bad senior hire in any department can cause long term problems for the organization.
Defining a “Bad Hire”
So what constitutes a bad hire? For years I have posed this question to C-level executives, department heads, and HR leaders. The answers I have received are what you would expect – incompetence, unreliable, poor work ethic, not a fit for the culture, doesn’t work well with the team, etc.,etc. Through my years of experience as an operating executive, and a consultant in executive search and assessment testing, I’d like to offer you my own definition of a bad hire. I would suggest to you that when you make an obvious hiring mistake, and the person is clearly not a fit from the outset, the damage to the firm is actually minimized. Why? You fire them and you fire them quickly! We all make hiring mistakes. The key is to not hold on to a new employee when you know that hiring that person was clearly a mistake. It is not good for your firm and it is not in the best interest of the employee either. The key to successful retention is to hire slowly and fire quickly.
In my experience, the absolute worst hires are people who are NOT clearly a mistake – it is the person who turns out to be mediocre – that is – not really a good hire but not terrible enough to fire. It is this scenario that I feel has a long lasting negative impact on the business, especially if this mediocrity is inserted into critical positions in your firm. There is a ripple effect that brings with it ramifications in all areas of the company.
So let me ask you – have you hired anyone who was not really that good but who just wasn’t bad enough to fire? If you are like most business leaders, your answer is “yes – absolutely.” We’ve all done it! The danger here of course is that your culture changes as you build your firm and continue to tolerate and employ mediocre performers. Jack Welch, the former CEO of General Electric, used to address this problem by firing the bottom performing 10% of the people in the organization each year. Well that may be OK for a Fortune 500 company with many thousands of employees. But what if you are a small to mid-size business with a few hundred employees? Is it really feasible to terminate 20 people this year if you have 200 employees? Well – the answer is “maybe.” But I’m not here to debate that. I’m here to tell you that there are ways to avoid making hiring mistakes – and one of those ways is by implementing an effective pre-employment assessment testing process.
Types of Assessment Instruments
There are hundreds of assessment tests in the market. Some measure abilities and others may measure personality fit. The term "psychological testing" covers a broad range of tests, including tests of cognitive ability and personality tests. Cognitive ability or aptitude tests attempt to measure the potential to learn a specific body of knowledge. These tests include assessing a candidate’s abilities in critical thinking and other intellectual skills and characteristics (memory, number speed, accuracy, reasoning, word comprehension, and spatial visualization – to name a few).
Personality tests (also known as behavioral assessments) are instruments for the measurement of emotional, motivational, interpersonal, and attitudinal characteristics, as distinguished from abilities. Thus, they measure personality traits, temperament, personal preferences, interests and attitudes, ways of thinking about oneself, and styles of relating to others.
Not all assessments are suitable for use as pre-employment assessments. Specifically, psychological assessments that were designed for clinical or diagnostic use should not be used. There is a big difference between pre-employment assessments and clinically-oriented psychological testing. The courts have consistently ruled that psychological testing generally has no place in the business environment. However, using a well-established and validated pre-employment assessment instrument properly ensures protection against EEOC problems. When an assessment program is properly implemented and utilized in conjunction with other standard hiring and interviewing procedures, it strengthens the employer’s position of taking affirmative action to ensure that applicants and employees are treated fairly without regard to race, color, age, religion, sex, or national origin.
Are You Great at What You Do, But Not So Good at Hiring? You’re Not Alone!
Many excellent executives are terrible at hiring and picking winners. Why is this? I believe that successful executives have personalities that “lean” toward the positive – they “want the candidate to be the right fit.” Their eagerness and propensity towards moving forward influences their judgment. They tend to gravitate toward seeing the best in situations and people. This could be great for managing but not necessarily good for screening, vetting, evaluating, and selecting. A heavy dose of objectivity is needed to offset this bias and this is where assessment tools can be extremely valuable.
Hiring is about needs, not likes. Many managers have difficulty objectively evaluating people for different roles. Different roles call for different personality types and in some cases a manager may not like that personality type – but really needs that personality type on the team. Unfortunately if mangers rely only on “gut” and whether or not they like someone, they will tend to make more hiring mistakes. An objective scientific assessment instrument can help to eliminate these problems.
Putting Assessment Testing Into Perspective
Assessment Testing is a powerful tool, and as such, can be relied on too heavily. I have seen many clients fall in love with assessment testing. It’s easy to like something that works and provides a scientific approach to the hiring process. However, assessment testing should be used in conjunction with other hiring processes to determine the best fit for the company, and should never be the sole reason to hire (or not to hire) a candidate. Accurate job descriptions, phone screenings, personal interviews, and professionally handled reference checks are all also important. Many companies now are using assessment tools to better understand their current employees, how they may better communicate and collaborate with each other and how they may contribute more to the organization in other areas.
Profiling the Position is Critical for a Successful Assessment Testing Process
Many companies overlook one of the most important parts of the assessment process – that is putting the position description and requirements through its own assessment profile. Our assessment process begins by having all stakeholders agree and contribute to what the ideal profile should look like. It is an on-line, collaborative tool through which we bring the management team (those who will be involved in interviewing and selecting the candidate for the position) through a series of questions regarding the optimal behavioral/personality fit for success in the position and within the firm’s culture. These questions are then discussed and debated and the ideal profile is created for use in a comparison to be made with the candidate’s profile. This part of the process – putting the job through the assessment profiling system – is critical for the overall success in selecting the best candidates.
Assessment Testing Still Requires Specialized Knowledge
One of the trends I have seen is the “do it yourself” on-line assessment tests. Even with the proliferation of on-line testing tools, there is still a need to have a consultant who understands how to properly administer the test and how to correctly interpret the results as they relate to the specific position and company. This is typically accompanied by training and certifications in specific assessment instruments. It has been my experience that many managers feel they can read and interpret a personality test. But that doesn't mean it's a good idea. Besides not really understanding how the test results should be interpreted, there are legal concerns. The Equal Employment Opportunity Commission has issued criteria regarding the design and evaluation of testing. While hiring a third party doesn't absolve a business from liability, it underscores the necessity of using people with substantial knowledge in this area. Many assessment consulting firms now tailor their products especially for small businesses. They've also scaled down fees accordingly.
Can a Candidate Cheat on the Test?
No. The test designers took this into consideration and can detect if a candidate is trying to give answers they think the manager wants to see. In addition, and more importantly, candidates have no idea what employers are looking for. With personality tests there are no right and wrong answers.
Why Don’t More Recruiters Use Assessment Testing?
Many recruiters are motivated to simply make a placement. They become concerned with anything that may jeopardize their fee. The recruiter’s perfect candidate may have perfect credentials and qualifications for the position but may not, from a work behavior and personality point of view, be a fit for the position or the firm’s culture. Executive Search Consultants who take this into consideration are a rare breed. Getting the “right fit” is really the true value that a search professional should be bringing to the table.
It is a Growing Trend Because It Works
There is no question as to the value of a strong assessment testing process. It is a growing trend because it works. Selecting the best candidate for a position is an art and a science. The assessment process adds a much higher level of reliability to all of the data points being considered – those gathered from the resume, the interview, the reference checks, and the assessment test itself. It adds to the science of the selection process and inserts a level of objectivity that can be extremely valuable in the interview process itself. This is one of the reasons why we prefer to conduct the assessments toward the beginning of the candidate qualification process. The results provide a valuable interviewing guide and provide the interviewer with specific points to focus on as they relate to the position.
A well-executed assessment process will help to avoid hiring mediocre performers, reduce hiring mistakes, and contribute to identifying personalities, attitudes and workplace behaviors that will be (or will not be) successful in the position and in your corporate culture. Over time this upgrades the quality of your team and greatly improves retention. Given the affordability of these services now, it pays to include them in your hiring process.
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