Initial Hire Assessments
Provide Valuable Service
By Jonna Wilson
May, 2007 Lead Article -- Impact Publications, Inc.
Because employees are a company’s most valuable assets, the most important issues facing organizations today involve hiring and retaining the right people. A study conducted by Howard University found that annual corporate turnover averages 15%, and nearly 80% of that turnover is due to hiring mistakes.
Poor hiring results in poor morale as well. When less competent employees reach “critical mass,” their lower performance standard unfortunately becomes the standard for the organization. Even long-term employees capable of higher performance will discard their higher standards and conform to the lower ones.
While the costs associated with inaccurate hiring decisions are significant, their total impact is rarely measured within an organization. Research has identified some cost examples:
- Turnover for a production worker - $30,000;
- For a $48,000/year professional - $76,000;
- For a sales person - $155,000;
- For an engineer - $188,000; and
- For a mid-manager - $320,000
Long-Term Costs also Substantial
The long-term costs of a “miss-hire” must also be considered. Even an employee earning a modest $25,000 annually, with employment-related expenses, represents an investment of $1.5 million (in current dollars) over the course of his/her career! If this person proves to be a marginal performer rather than a high performer -- an average difference of 40% -- the organization is losing at least $10,000 on that investment each year. Using that same concept, hiring only top performers an organization could result in an annual payroll reduction of 25% or more.
As if turnover, absenteeism, productivity, quality, low employee morale, and high training costs associated with bad hires don’t pose enough problems -- there is also the legal liability of “negligent hires” to consider. In other words, failure to uncover an applicant’s incompetence or “lack of fitness” often translates into high injury rates, grievances and organizational apathy.
So called “miss-hires” occur primarily because many companies make the mistake of selecting applicants based solely on educational credentials and interviewing skills. Interviewing, when using targeted, behavioral processes, with significant time expended, selects the appropriate candidate approximately two-thirds of the time. But in reality, most interviewers make their decision within the first five minutes, which reduces the accuracy selection rate to less than one-third.
Unfortunately, an applicant’s education and work experience provide very little objective information about the person’s values and attitudes. While job knowledge and skills can be developed; core motivation and trait characteristics generally cannot be taught in a classroom or orientation session. “You can teach a turkey to climb a tree, but it’s easier to hire a squirrel.”
Every person hired can move an organization forward through his/her ideas and contributions -- or he/she can hold the company back. Gaining an edge in hiring the best talent can be achieved through a human resource system that incorporates an assessment center. With an assessment center, the organization can choose people who come closest to its requirements, and place them in jobs for which they are most suited.
Testing for Strengths and Competencies Pays Off
Testing for strengths and competencies complies with federal employment laws. The Civil Rights Act supports the objectivity and fairness of psychological selection techniques. Equal Employment Opportunity Commission (EEOC) guidelines states that “…tests, when used in conjunction with other tools of personnel assessment, … aid in the development and maintenance of an efficient workforce and… aid in the utilization and conservation of human resources.” The critical factor is to insure that the assessment process is developed and operated within the highest professional and ethical standards.
Peoplework Solutions Corporation is experienced in measuring aspects of human performance, abilities, personal characteristics, behavior, and other attributes. We offer expertise in the design of simulated methods, psychometric testing, diagnostic analysis, job analysis and data synthesis, and the operation of assessment centers. Our assessment services are ethical and in compliance with local, state and federal laws, including the EEOC and Americans with Disabilities Act (ADA).
Successful Partnership with Toyota
Our most comprehensive assessment services are provided in partnership with Toyota Motor Manufacturing of West Virginia. In 1997, we began the screening for their start-up facility in Buffalo, WV. The plant now employs over 1,000. Approximately 18,000 applicants entered the initial cognitive assessment phase. Of the 11,000 who proceeded through Phase II and III of the assessment process, approximately 1,300 qualified for the remainder of the selection process, which initially produced 600 employees.
Based on pass/fail standards established with Toyota, the result was an overall pass rate of 10%. Of that number, approximately 50% were hired after interviews, background checks, and physicals were completed. The selection process strives to include those individuals who exhibit the competencies identified as desirable by Toyota.
Today, Toyota Motor Manufacturing of West Virginia attributes a great deal of its success to its assessment/ selection process. The process is time consuming -- each successful applicant has to pass 16 hours of assessment. However, the advantages are worth it. They include:
- .38 absenteeism rate;
- ½ national average injury rate;
- Consistently meeting production standards;
- Consistently high-quality performance – over 1 million engines produced without quality issues;
- Non-existent grievances non-existent as issues are resolved by team members;
- Only a 5% turnover;
- Quality workers in high demand; and
- 0% mandatory turnover (terminations)
We have been able to combine our EAP expertise with our holistic approach and knowledge of larger organizational issues. As a result, we have been able to assist agencies and businesses in meeting goals through helping create and maintain a healthy and productive workplace.
We have built an outstanding reputation based on high-quality services that are unique, affordable, and usable. We take pride in staying informed regarding the changes in our profession, developing strong relationships with our clients, and sharing our knowledge with them to maximize their success.
Jonna Wilson is affiliated with Peoplework Solutions Corporation, a small, private, West Virginia-based EAP and full-service human resource development firm. It has a 15- year history of providing EAP services, and it has become the “provider of choice” regarding initial hire assessments as well.