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Assessment & Evaluation

Published February 2009

Quantifying the Return on Your People Investment

 

  Dr. Jeff Facteau and Dr. Jay Janovics

What if you had the opportunity to streamline your company's talent acquisition process and substantially improve quality of hire? "Sounds promising," you might say. What if you also could demonstrate cost savings, productivity gains or a measureable return on your investment? You'd be a hero, right?

Many companies are doing exactly this by implementing assessment tools in recruiting and hiring processes and then quantifying the impact on measurable outcomes such as retention, sales revenue, productivity and quality. Assessments can take on a variety of forms, including ability tests, personality and biographical inventories, simulations and knowledge or skills tests. Regardless of type, it is possible to quantify an assessment's value by linking candidates' scores to the outcomes the organization values and is trying to effect.

Consider a broadband communications company that integrated assessments into its hiring process for customer-service representatives (CSRs). It found that CSRs who scored high on the assessment resolved inbound service calls about 20 seconds more quickly and up-sold about $1 more per call than their lower-scoring counterparts. When the company extrapolated these results, this translated into nearly $18,000 per agent per year. With assessments costing only $20-30 per candidate, with four to five candidates being considered for several hundred openings per year, this is a significant ROI.

With findings such as these, one might expect every organization to implement assessments. However, the potential value of assessments is seldom translated into terms — increased sales, reduced attrition, efficiency gains or return on investment — that influence the decision makers who hold the purse strings.

To translate the value of assessments, know what characteristics to assess — such as skills, abilities and personality characteristics — know how best to assess them via tests, inventories, simulations or interviews; and then implement the assessments effectively. Finally, follow through on an evaluation strategy to demonstrate the value of the assessment program.

Step 1: Select the Right Assessments

Start with a job examination. How is success defined and measured? What characteristics promote behaviors that lead to success? Also, consider the organization's strategic direction and how planned or anticipated changes will influence what is expected of employees, as well as how success is defined or measured. Designing an assessment program with the future in mind will help ensure talent managers evaluate candidates for the job demands of today and tomorrow, rather than yesterday.

There are a variety of characteristics that predict performance in different roles. Few characteristics predict performance across all jobs. Confidence and an ability to influence others, for example, are important in sales roles. Emotional resilience is important in demanding customer-service roles, while it's critical for a pilot or ER nurse to keep a cool head in an emergency. Knowing which characteristics contribute to effective performance in certain positions will help talent managers choose the right assessment tools to evaluate candidates' success potential.