Tech & Work

Can employee assessment tests help cut down on bad hires?

Bad hires and subsequent turnover can cost a company a lot of money and reflect badly on a manager's ability to find the right people. Can assessment tests help?

When she made a job offer to the bright, witty, and technically knowledgeable database administrator, this IT manager of a major insurer and financial services provider thought she'd performed a staffing coup. But time proved otherwise. About a week into the job, the manager could see no progress from the new hire. Often, during the course of the day, she would find the guy with his feet on the desk, either daydreaming or browsing newspapers and magazines. Time was passing, and the conversion was approaching a cost overrun.

When confronted with the issue, the employee confided that his meandering ways were rooted in his youth, when his love of card-playing caused him to flunk out of college. Faced with the ironic problem that this guy could be associated with such a time-sensitive project, the manager intervened, and the conversion was completed on deadline.

What could this manager have done differently in the interview process to avoid this mess? It would have been nearly impossible to discern this personality quirk in an interview alone and the guy would never have "fessed up" about his love of leisure to a potential employer.

A bad hire is not just a manager's personal headache; it has a direct effect on ROI, the CIO's personal stone to bear. Employee performance affects profitability. Poor performance causes workflow disruptions, poor morale, and loss of intellectual capital. Turnover costs are especially expensive when you add up the money spent on recruiting, hiring time, orientation, and training. According to Workforce magazine, turnover costs are about 150% of an employee's annual salary. Think about this: If you have 30 employees in your IT organization, and the average salary is $50,000, and there's a 10 percent turnover rate, you're looking at an annual turnover cost of $225,000.

One tool some companies use to increase chances of finding the best employees is the employment assessment test. Many experts believe that, when used in conjunction with an interview, a solid technical skills test, and a manager's intuition, assessment tests are good tools for finding the employee who will be a good fit for your team. But what kind of tests are best? Experts recommend that when choosing and implementing a test you should make sure the following conditions are met:

  • The test is a proven product backed by rigorous research and has current (within two to four years) validation studies as reported in the Technical Manual for each tool.
  • The test has a reliability measure of .75 or greater.
  • The test is formative (related to an absolute) rather than ipsative (relative).
  • The test has been determined by a legal firm with expertise in labor law that it has "no adverse impact" vis-à-vis federal law.
  • The test is designed specifically for employment purposes.
  • The employer has been trained in the proper use and administration of the assessment tool, so that the right tool is used in the right manner to achieve the desired results.

Costs

The cost of an assessment test depends on the nature and design of the tool, whether it will require customization, what technology will be used, recruiter training, and the number of candidates to be addressed. For common jobs that don't require highly specialized skills, you can set up a simple but effective "off the shelf" assessment system for less than $20,000.

On the other hand, a highly tailored, validated, Wed-enabled assessment system can easily exceed $500,000 in development and deployment costs.

I'd like to hear from managers who have used employee assessment tests, both for job candidates and existing staff. Did you find the testing to be a reliable way to handle personnel?

About Toni Bowers

Toni Bowers is Managing Editor of TechRepublic and is the award-winning blogger of the Career Management blog. She has edited newsletters, books, and web sites pertaining to software, IT career, and IT management issues.

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