Employee Testing
Gives Employers the Hiring Edge
by
Maryanne Preston
Hiring Solutions
published: Small Business Monthly (March 1997)
Employee testing is no longer just for big
business. Small-business owners are discovering that employee testing
gives them the hiring edge. It helps answer that nagging question in
the back of every employer's mind, "Is this candidate really who he
appears to be?" Many candidates are not. Career management firms are
finding an increasing number of individuals falsifying information on
their resumes. Career counseling and out placement centers are
coaching and grooming job candidates in all areas of the job search,
particularly in how they present themselves during an interview. Fear
of litigation has made previous employers reluctant to divulge any
information about the candidate other than dates of employment.
Because a bad hiring decision can cost a company $6,000 for an
entry-level position to as much as $250,000 for a top executive,
business owners are using employee testing to increase their odds of
hiring a competent, productive employee.
There are many types of employee-testing products
and services available. Most employers start with integrity and
aptitude tests at entry-level positions, and for higher-level
positions, add skills tests, sales skills tests, and personality tests
to determine job fit. Once the hiring decision is made, employers can
then use behavioral assessments as a management tool. Prices for these
products range from as little as $10.00 for an aptitude test to
$100.00 for a personality profile for each candidate.
There is usually a setup cost of $75.00 to $150.00
for the computer software. These tests are administered and scored on
site by the employer. There are also testing services that will
administer, score, interpret, and fax the reports to the employer
within a 24 to 48 hour period. These services generally start at $125
per candidate. The most elaborate form of testing includes a battery
of tests, interviews with a psychologist, and simulations of real-life
situations in the work place. The cost of these services is determined
by the psychologist and start at $500. Reports are generally available
within 30 days. Small-business owners need to consider their budget
and cost of a bad hire when looking for an assessment product. Other
factors to consider are whether the assessment meets all current Equal
Employment Opportunity Commission and American Disability Act
regulations; whether it has been recently validated in the business
community; if the report is timely, readable, and easy to
understand;and if it is easy to administer and works well within your
current hiring system. Most importantly, the assessment should have a
"lie scale," an indicator of whether the candidate has been honest and
consistent with his answers. Some products enable the employer to
develop custom profiles of job positions based on successful employees
in that position. These custom position profiles enable the employer
to quickly determine job fit.
The purpose of using assessments is to learn more
about an individual and validate other information gathered in the
hiring process. Employers have found that relying on their "gut
feeling" during an interview is not an accurate predictor of
performance.
Studies by John Hunter, Ph.D., at Michigan State
University, show that the interview is only 14% accurate in predicting
a successful hire, that background- and reference-checking has 26%
accuracy, that aptitude- and personality-testing has 53% accuracy, and
that job-profiling increases the accuracy to 75%. Therefore, a hiring
process that takes advantage of as many predictors as possible will
greatly increase your hiring success.
Although using this process will increase hiring
costs up front, a poor hiring decision (let alone a series of hiring
failures) costs much more. Each "bad hire" can cost a company 25% of
his annual salary plus benefits--for recruiting and training costs
alone. However, the greatest cost to business owners comes in poor
customer service, lowered productivity, lowered employee morale, lost
sales, lost customers and loss of your good name.
Employee testing enables business owners to be
selective in finding and hiring the right person for each position. It
enables them to put new hires and current employees in proper
positions and pinpoint potential problem areas before they arise. It
enables them to conduct specific training based on each employee's
strengths and weaknesses and provide team-building tools for maximum
performance.
While employee testing today provides valuable
information, that is easy to understand and extremely cost-effective,
it should in no way be used as the sole determining factor in making a
hiring or management decision. Test results should represent 25% of
your hiring and management decision. The U.S. Supreme Court has
declared that "all aspects of the hiring system, including the
application" is a test. Companies have found that the proper and
consistent use of effective testing and assessment systems can
dramatically strengthen their legal position in regard to hiring.
Job-related testing is becoming an effective way to document objective
and nondiscriminatory hiring practices. Unlike interviewers, tests are
incapable of being prejudiced by the applicant's race, gender, age,
religion, or disability.
Using a thorough hiring system that includes
employee assessments will not only give small- business owners the
hiring edge, but it will also allow them to benefit from decreased
turnover costs, reduced training costs, reduced employee-recruitment
costs, higher sales, increased productivity, and higher employee
morale.
© St. Louis Small Business Monthly,
The Source for Business Owners March 1997.
