WHY COMPANIES

SHY AWAY FROM

ASSESSMENTS

IN

RECRUITMENT

A M e r i t T r a c R e s e a r c h

The emergence of new technologies and disruptive trends is creating diverse job opportunities. Competition among companies to snatch the right talent is exerting enormous pressure on human resource (HR) departments to streamline hiring, curate suitable job offers and ensure relevant employee training – quickly, accurately and efficiently.

As employability rates plateau, businesses need to find more effective ways to assess and hire talent. This paper looks at the barriers to adoption of assessment tools.

It also shows how recruitment and talent management can succeed with data-driven evaluation of the impact of assessment.

Abstract

Today’s organizations are increasingly leveraging new technologies to make business more agile, mobile and responsive to customers – and they are using data to drive this transformation.

To succeed in this dynamic business environment, it is important for organizations to find innovative ways to adapt to change. Despite traditional paper-based testing mechanisms giving way to new models, technologies and online assessments, many organizations hesitate to invest in upgrading their recruitment processes.

Companies that want to reduce talent attrition and costs of training arenow more cautious about whom they hire. This means that they are willing to scan large talent pools for even a few jobs in order to ensure the best fit, which can be time-consuming and tedious.

In today’s age where data is the lifeblood of most processes, there is a need for data-driven methods to determine what talent is best for any job. Simply following one’s gut instinct does not work anymore. Sophisticated, comprehensive and integrated assessments have the potential to help organizations identify top talent, improve quality ofhire, reduce costs, and identify training needs. These sifting and selecting approaches leverage best-practices for hiring across the entire employee lifecycle – and those who are quick to leverage these are already reaping significant benefits.

Introduction

Page 1

Challenges for assessment tools in recruitment

Despite the potential of scientific assessments to transform recruitment, many organizations use rudimentary tests, interviews and subjective opinions to make hiring decisions. A recent study by SHRM & MeritTrac showed that only 58% of organizations use scientific assessment tools – and even then, only in select stages of the hiring. The true value of assessment tests can be fully realized when leveraged across the entire employee lifecycle.

More alarming, however, is what lies hidden in these statistics, i.e., 42% of organizations do not use assessments at all. The study shows that the topmost reasons for this are the perceived high cost of using assessments and the inability to justify returns on investment (ROI) for assessment tools, leading to lack of management buy-in for using assessments. However, this is in contrast to organizations that affirm the benefit of using assessments to identify high potential talent, thereby helping them improve quality of hire across roles, functions and levels.

The reasons for not using assessments can be attributed to several existing trends within the HR industry. A closer look at these can help organizations understand the barriers to adoption of assessments while highlighting the long-term benefits of using them  

Page 2

Choosing the right tool - Most organizations are optimistic about the role of social media and simulation in the assessment suite. To leverage these, they must first gain knowledge about emerging trends and understand the solution landscape. It is equally important to choose the right assessment solutions for specific requirements. Frequently, this decision is in the hands of HR managers or internal teams (31%). Currently, only 7% of organizations rely on recommendations from external experts. External vendors, partners and consultants who frequently deal with assessment tools have in-depth knowledge of how different tools work and are often best-suited to guide HR departments on selecting the tool that meets their hiring requirements.

Analyzing the right metrics -

As per the MeritTrac-SHRM study, among the organizations that use assessments, only 45% actually track the impact and validate this objectively through data. Of the remaining 55% of organizations, 30% use a ‘gut feel’ approach while 25% do nothing to measure or trackimpact.

Without systematic ways to objectively track the value of assessments, organizations have no tangible measure of how these tools are increasing value or delivering returns. Ironically, without measuring the ROI of assessments, their value cannot be accurately determined, leading stakeholders to view assessment as a cost instead of a value- driver. These are the top two reasons why 42% of organizations do not use assessments

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44%

24%

In addition to tracking value, it is important to understand what metrics are being monitored and evaluated. Typically, performance scores and managerial opinions are the primary metrics used to determine the efficacy and benefit of assessments. However, it is very important to define objective measures and quantitative metrics to assess performance. These could include performance in the first year, customer feedback, absenteeism, revenue contribution, etc., to better map the correlations between the right hire and business success.

Limited use of Tests -

Only 22% of organizations use assessment tools for entry-level hiring. The reasons for this include the need for speedy processes when it comes to mass recruitment and the cost per hire. Further, 12% of organizations feel that using such tools requires more time and energy. This perception may be attributed to the lack of awareness about newer and well-integrated tools with mobile-friendly features and the measurable value they offer.

Need for accurate data on value delivered by assessment -

They can also assist with interpretations, recommendations and measurement matrices. This plays a key role in the success – or failure – of assessments as a strategic hiring tool. Without such recommendations, enterprises may choose tools or assessments that do not meet organizational goals, leading to dissatisfaction with the tool and reduced benefits

ConclusionCurrently, 42% of organizations do not use scientific assessments when making hiring decisions owing to various reasons that primarily include perceived high cost, inability to justify ROI and lack of management buy-in. The reasons for this vary from lack of adequate data on the short and long- term value of assessments, limited use of tests and the lack of awarenessabout new tools and how to use them. In an age where data is the key to informed decision-making, there is a need for enterprises to adopt a data- driven approach when it comes to hiring talent and developing their workforce. They need to take a closer look at assessments, how they work and the kind of value they deliver. When chosen, leveraged and measured correctly, well-integrated recruitment assessment tools have the potential to improve quality of hire, retain talent, and increase profitability. 

Talent Assessment Tools in India, 2016 – A collaborative study by SHRM India and MeritTrac 

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Reference

With 42% of organizations hiring without scientific assessments, there is immense scope for introducing ways to enrich the type of talent as well as its pipeline within the employee lifecycle.

The actual benefits of using assessments run deeper than just finding the right candidate for the job. Leveraging a variety of assessment tools can help organizations increase talent retention rates, empower employees to meet performance goals and reduce the total cost of ownership of talent. Additionally, using these tools in an integrated and comprehensive manner greatly increases the convenience and satisfaction of hiring managers, leading to increased productivity of not merely HR departments but also the entire enterprise.

Moving forward, there is a pressing need for organizations to create a business case for the adoption of assessments in recruitment using systematic and objective measurement of their impact. While tracking value, organizations need to look beyond popular metrics and uncover data on how assessments can improve resource savings, productivity, promotion readiness, training needs, etc. As more organizations adopt this data-driven approach, they will uncover the true value of assessments in recruitment – and realize how they can be leveraged to find the right talent for the job and drive greater business success.

The way forward -

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Bangalore- 560 035, Ph: +91 (80) 71819100 For more information - info@merittrac.com

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