The Assessment Lesson Google Just Learned the Hard Way

In The War for Talent, McKinsey and Company3 declared that “talent is the most under-managed corporate asset of the past two decades.”  It’s astonishing this shortcoming persists since these authors further found that “talent driven companies of the Fortune 500 experienced nearly 82% greater profit than their competitor.”  Fortunately for organizations that wisely invest in organizational development, modern advancements in online assessment and evidence-based action plans can facilitate talent management in a way not possible in recent decades2.

There’s a right and wrong way to mine for talent. It’s tempting to follow the latest crazes in testing, assessment, and interviewing – striving for some elusive silver bullet. Even iconic, trend-setting organizations fall prey to innovative-sounding approaches that ultimately fail.  For instance, BusinessInsider.com famously reported that Google recently abandoned its legendary interviewing tactic of asking brainteaser questions in favor of interviewing against a set of competencies that were relevant to the role in question. Competency-based assessments have long been best practice in HR and workplace psychology. Google learned that lesson the hard way, and lessons like that cost money. Studies have shown that even for low-level positions a failed hire costs a company double the person’s annual salary. At higher levels, the cost can be six times the salary. On the other hand, research demonstrate that solid role and cultural fit produces an ROI.

Some modern assessments provide detail in data that hasn’t been possible with traditional assessments like the Myers-Briggs or DiSC, and this allows HR professionals to extract better and clearer insights from benchmark data that can be profitably leveraged in structural behavioral interviews. Benchmarking can be done beneficially without implementing large and costly projects.  And the results have wide-reaching HR applications that impact work performance and ultimately the organization’s bottom line.  To that end, below we give helpful guidelines to maximize the effectiveness of your benchmarking:

Science and specialization matter

Select an assessment that has been validated within the hospitality industry and only choose instruments that conform to the Standards for Educational and Psychological Testing1 and the Uniform Guidelines on Employee Selection Procedures (UniformGuidelines.com). In this way organizations can trust that the results are relevant to the unique conditions that define service-based cultures and work environments, as well as are unbiased with respect to the demographics of test takers. This helps to guard against issues of bias and adverse impact as required by the Equal Employment Opportunity Commission (EEOC).

Measure the correct things

Benchmark employees on attitudes, knowledge areas, and skills, not personality traits. Skills are applied constructs, while personality traits are often abstract. Examples of such skills for most job categories are available for free at the US Department of Labor’s “O*Net Online” at: http://online.onetcenter.org/. This resource exemplifies that personality traits are not synonymous with skills or competencies. Further, members of the Society for Industrial and Organizational Psychology recently published a new study4 showing that personality measures are generally poor predictors of work performance. As such, organizations that use such tools are arguably at legal risk, e.g., non-compliance with EEOC Title VII discrimination standards. More to the point, the old adage of “hire for attitude, train for skill” is a false choice. Attitudes aren’t inherent to personality traits – they’re akin to learned skills. Effective employees need both the right attitudes and skill sets.

Benchmark sooner rather than later

Large sample sizes aren’t always necessary to conduct valid benchmarking exercises. For example, assessments that were designed and validated using gold-standard item response theory (IRT) statistics are the most reliable and accurate in measurement and can detect significant differences based on relatively few test cases, since test items were previously calibrated against large, unbiased samples of professionals. Accordingly, the feedback and “Action Plans” generated from this foundation are meaningful at the individual and group levels.

Seek support to maximize the results

Consult with professionals – actual practitioners – in Organizational Psychology when interpreting and applying benchmark data. And always include a professional with strong expertise in the use and interpretation of the assessment used for benchmarking.

Successful organizations are tirelessly proactive in the war for talent.  A standardized skills assessment with industry-specific content and unbiased scores is one of the most efficient, reliable and effective weapons at your disposal. Combine this with proper reference checking and a structured behavioral interview and the ROI gets even stronger.  As an example, our research indicates that the anticipated first-year, average ROI for organizations using a proper assessment is about $74,500 for each new management hire. This assumes that the value of “high performance” is $100,000, with a 2:1 selection ratio and tenure of five years. Impressive ROIs are also documented for line and middle management hires.

Also, we have repeatedly found that even a modest follow-up or benchmarking study is well worth the effort and relatively small costs involved. Such studies often reveal the particular strengths and weaknesses of your current HR practices, while pointing to new areas of human behavior and performance that will be valuable when hiring new personnel and managing your current talent. Google learned the expensive way about the value of competency interviewing. Assessment and benchmarking drive successful competency interviewing. Together, they are investments that provide a strong competitive by finding and reinforcing your most valuable asset – human capital.

 
 

OTHER ARTICLES BY James Houran, Ph.D., Dallas

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