Why Use Psychological Assessment?
Enhance predictive validity and selection fairness
Four Key Benefits:
Return on Investment
Traditional methods for predicting performance – unstructured interviews, reference checks, and previous job experience – are notoriously poor measures of a new team member’s role success.
- Reference Checks
- Years of Job Experience
Research demonstrates the superior predictive power of a comprehensive psychological assessment for forecasting a team member’s ability to meet training criteria and, ultimately, his or her overall job performance (e.g., Robertson & Smith, 2001). Results from the correct combination of critical thinking, leadership, personality, and motivation instruments – when analyzed by a licensed clinical psychologist – equip organizations to make fair, data-based hiring and promotion decisions.
- Comprehensive Assessment
- Critical Thinking
Hiring high-performing talent is important. Retaining top performers is critical.
One in four hires departs his or her new organization within a year (CEB, 2012). Why? Common reasons for separation include poor role fit, incongruence with company culture, employee-manager mismatch, and the use of poor performance predictors while selecting among candidates – all factors that can be addressed with selection (or preemployment) assessment.
Research illustrates the predictive power of selection assessments: Studies of preemployment assessment at Fortune 500 and 1000 companies predict employee retention and success for up to 90% of hires. When a scientifically-validated assessment process is employed, turnover is decreased by up to 50%.
How can assessment predict retention and decrease turnover? Valid selection assessments are designed by a licensed psychologist and interpreted within the context of an organization’s culture, norms, and existing employees’ data (i.e., an organizational profile). Questionnaires included in the assessment measure variables such as candidates’ innate traits, current work behaviors, and motivators. Psychologists are trained to analyze these data within the context of research-supported predictive algorithms as well as their years of graduate training and professional experience. The end result is increased peace of mind that the time, talent, and other resources invested in hiring pay dividends for years to come.
Person-role fit is the degree to which a person’s skill, knowledge, abilities, and other characteristics match the demands of a particular role. Decreased productivity and low employee morale are common consequences of poor fit. This mismatch can also increase workplace stress and turnover (Deniz, Noyan, & Ertosun, 2015).
When selection assessment data are linked to a scientifically-validated job analysis, the role fit of new hires can be increased by 60-90% (Caldwell & O’Reilly, 1990). With increased person-role fit, new hire satisfaction, engagement, and retention are also strengthened.
Return on Investment
In business, return on investment is king. ROI on scientifically-validated selection assessments is approximately 200% during a new hire’s first year and 800% for his or her second and subsequent years at an organization (Bernthal, 2003).
Basic calculations for the cost of a bad hire range from $15,000 for a full-time, entry-level position to $50,000 or more for upper-management and executive roles (Boushey & Glynn, 2012). Such calculations include tangable (i.e., easily quantified) costs including:
recruitment advertising fees, recruitment staff time (e.g., ad creation and dissemination, resume review, interviewing), relocation and training fees for replacement hires, outplacement services, and litigation fees
However, intangible (i.e., less easily calculated) costs are also incurred. Intangible costs may include:
negative impact on team performance, disruption to incomplete projects, lost customers/clients, time spent on performance management with the bad hire, harm to the hiring manager’s reputation within the organization, and decreased employee morale
- True Bad Hire Cost (Tangible + Intangible)
- Tangible Bad Hire Cost (Manager/Executive)
- Selection Assessment Cost
When intangible costs are added to the tangible, the estimated true cost of a mid-level bad hire skyrockets to as high as $240,000 (Frye, 2017).