Three Companies Cut Turnover with Tests

Recognizing the fallibility of interviews, an increasing number of recruitershave added pre-employment assessment tests to their hiring process. These testsrate the personality and motivation of potential employees, allowing recruitersto choose candidates according to how they will fit into the existing corporateculture.

Evaluating candidates’ personalities as well as job skills greatly improvesrecruiters’ odds of making successful hires, which reduces their corporateturnover rates, says Tom DeCotiis, managing partner of DeCotiis Erhard, aconsulting firm in Colorado Springs, Colorado. That can have a huge impact onthe bottom line. When you add up the money spent on recruiting, hiring time,lost productivity, orientation, and training, turnover costs are about 150percent of an employee’s annual salary. If the average salary in a companywith 1,000 employees is $50,000 and there is a 10 percent turnover rate, theannual cost of turnover is $7.5 million, he says. And a 10 percent turnover rateis considered low for most industries.

The primary reason for high turnover is bad hiring decisions. When the wrongcandidate is put in a position, the company pours time and money into someonewho will likely leave within months and may cause irreparable damage in themeantime. In a position where teamwork is critical, a bad hire can affect themorale of the entire staff. “A major cause of job dissatisfaction and thedesire to quit is the quality of the people you work with,” says DeCotiis. Ifyou can zero in on the best candidates for the job, you have a much betterchance of keeping them and the rest of your staff, which drives down the cost ofturnover. The tricky part is knowing which candidate is the best fit for yourorganization’s culture.

“You’ll always find someone with the right credentials, but if they don’thave the right attitude, they aren’t going to work out,” says Robert Fox,executive vice president of marketing at MindData Systems, a provider ofWeb-based evaluation tools, located in Dallas. Unfortunately, most people arepoor judges of character, especially when the only contact they have is in aninterview. “Anyone who’s bright can phrase their responses according to whatyou are looking for.” It’s not until they are on the job that their truecharacter shows through.

Personality assessments give you an unemotional evaluation of a candidate’scharacter and attitude — qualities that are difficult to judge in an interviewalone. These tests don’t rate a person’s skill level, but rather how he willbehave on the job. They evaluate traits such as aggressiveness, motivation,sensitivity, and the ability to handle stress. Using the test results, arecruiter can determine how a person will interact with the existing staff andhow well she will perform on the job.

To make the most of these tests, you have to benchmark your existingemployees by giving them the tests, says Putt Fleming, sales manager at MindData.”All business cultures are unique. It is necessary to benchmarkhigh-performers in order to take full advantage of a profiling tool.”

Applying your own knowledge of who the top, bottom, and middle performersare, you can use their test results to create a custom profile of what the idealcandidates will look like. “When you validate test results against yourhighest performers, you increase your chance of making a good hire,” Flemingsays.

Each position will have a different profile of success. For example, the bestsalespeople generally rate low on compassion and low on sensitivity, whereas thebest managers rate high on compassion and low on sensitivity, he says. You mayinterview someone for one position and realize that his assessment results makehim a perfect fit for a completely different job. “The more data you have onyour existing people and positions, the more useful the tests will be.”

But the tests alone, like interviews alone, are not enough to make asufficient assessment of a potential candidate. “It’s a mistake to rely ontest scores alone,” says Randy Lucius, research director for FitabilitySystems, an online interview and assessment company based in Atlanta. “Theyaren’t foolproof.” But if you use them in conjunction with the rest of yourhiring techniques, including behavioral interviewing, skills tests, and your ownintuition, you make a better hiring choice.

“It comes down to money,” Fleming says. “By knowing more about theperson that is being considered for a position, you can reduce turnover,increase productivity, and increase the quality of your corporate culture. Allof this leads to a more favorable bottom line.”

Workforce, April 2002, pp. 66-69 — Subscribe Now!