RonanCPL

Psychometrics Help the Recruitment function. It's a fact!

It is a fact that most organisations are set up and exist with the objective of
generating a profit.  Check the “Articles
of Association” for most companies and you will see this fact clearly stated.  It should be logical then to assume that
every decision and action the organisation takes should go some way towards
achieving this particular goal.  In all
the operational areas of the organisation, projects are assessed in terms of
their potential risk and return.  i.e.
what are the potential risks (to profits) and what are the potential returns
(will they increase or potential for profits) 
This may seem like quite a black and white overview of an organisation
and we could debate for days on social responsibility and so fourth but
ultimately every strategy, initiative, and day to day activity of an
organisation is implemented with a view towards generating more profit.

 

With this in mind let us look at this scenario. 
How would you feel if you were the CEO of a company and one of your
operational managers came to you with this proposition?  “I would like to undertake a project for the
organisation.  The risk of failure on
this project could be up to 90% and the potential for increased productivity
and return to the organisation is unclear.” 
Would you give this project the thumbs up?  Yet this is the proposition that many HR
departments present to their organisation every time they make a recruitment
and selection decision.

 

Organisations
must make hiring decisions; they have no choice about that.  They can however choose the methods they use
in making those decisions.  Research
evidence has shown that different methods have very different validities for
predicting future job success.  Validity
in this sense can be defined as “how accurate is our selection method in
determining the potential future success of a candidate in a particular role
within the organisation.”  Some methods,
such as interviewing, have a relatively low validity, while others such a
psychometrics have a high validity.  It
is interesting to note then that the latest research from the CIPD shows that
96.9% of organisations still rely on interviewing as their primary method of
selection.

 

The
following chart shows the validity of various methods of selection that most HR
departments use.

 

SELECTION METHOD                                          PREDICTIBILITY

Handwriting analysis                                              0%

Age                                                                             0%

Self Assessment                                                      0%

Projective Tests                                                        3%

Traditional Interviews                                              4%

GPA                                                                            4%

Expert Recommendations                                     4%

Personality tests                                                       4%

Motivation                                                                  4%

Reference Check                                                    6%

Biographical Data                                                    9%

Situational Interviews                                             9%

Behavioural
Interviews                                           10%       

 

(Predictability refers to the % chance of selecting the
best candidate)

Adapted by Dr. Wendell Williams (2002) from Hunter &
Hunter, 1984

 

 

Basically
what this is telling us is that if you use behavioural interviewing as your
primary method for selection you stand about a 10% chance of selecting the
right person for the job.   That leaves a
potential 90% failure rate!  So what can
HR do to improve their potential for success? 
Well psychometrics can offer a possible solution.

 

As
long ago as 500BC, the Chinese were using a battery of psychological tests to
aid in the selection of government officials.         Since
the 1920's, psychologists, corporate counsellors and human resource professionals
in government, education and industry have used psychometrics to measure
achievement, ability, intelligence, personality, interest, motive, and aptitude
or general mental ability in a particular field.  The growth of psychometrics can be traced to
"professionally developed tests" that meet the reliability, validity
and fairness standards advocated by professional institutions like the
International Test Commission, the Association of Test Publishers, the American
Psychological Association, and the British Psychological Society. These
'professionally developed tests' generally provide accurate assessments of
human capabilities and behaviour than those based on observations of
individuals alone or through other techniques.

 

There
are over 100 psychometric assessments available to organisations but relatively
few have been specifically designed for use in an industrial setting. This however is
changing and there are now assessments available that have been specifically
designed for the organisational setting and have introduced the concept of “job
matching”.  i.e. matching the person to
the job.  Harvard Business Review
conducted a large study of 360,000 people in 14 industries, over a twenty-year
period in an attempt to identify what makes for job success.  They found that “it’s not experience that
counts, or college degrees, or other accepted factors; success hinges on a fit
with the job.”  They found that
regardless of any other factor, people are only successful when they are
matched with jobs for which they have the right level of general abilities;
where they have an interest in the work; and where their psychological make-up
equips them to do the job well.  Other
research has confirmed this view as can be seen in the table below.

 

Interview               -----------------14%

          +

Background
Checks  -----------------26%

          +

Personality
testing  -----------------38%

          +

Ability
Testing        -----------------54%

          +

Interest
Testing      -----------------66%

          +

Job
Matching          -----------------75%

 

Psychological
Bulletin Vol. 96, No. 1, August 1994

Professor Mike
Smith, University of Manchester

 

This chart shows the efficiency of a variety of methods you
can use in the selection process.  It
indicates that people selected on the basis of the typical job interview are
good hires only about 14% of the time — not a very good record.  That’s just one good employee for every seven
hired.  It
scary to think that depending on the position you are hiring into, experts put
interview mistakes somewhere between 19% and 48% of annual payroll.  

 

 

But, as you add other selection
techniques, such as background checks and integrity testing, personality
testing, ability testing, interest testing, and job matching, the essential
elements of psychometric assessments, the percentage of selecting good
on-the-job performers increases to 75%.

So now a HR department can turn a
potential 90% failure rate when selecting employees into a 75% success rate.

 

So now you have diminished a lot of the risk in your
selection decision but what about the productivity gains?  It has been
argued,  “In economic terms, the gains
from increasing the validity of hiring methods can amount over time to
literally millions of dollars. However, this can be viewed from the opposite
point of view: By using selection methods with low validity, an organization
can lose millions of dollars in reduced production.” (Schmidt & Hunter,
1998)  If this is the case, then in our
current economic environment and competitive market, these organisations are
unnecessarily creating a competitive disadvantage for themselves (Schmidt,
l993). By adopting more valid hiring procedures, they could turn this
competitive disadvantage into a competitive advantage. At present only 36.9% of
organisations use some form of psychometric assessment, so the potential for
gaining competitive advantage is great.

 

It is time that HR realised that their selection methods
can have a direct impact on profits and the potential productivity of the
organisation.  The importance of every
selection decision you make is essential to the success of your organisation,
as it has been argued “it is not possible to optimise the effectiveness of
human resources, by whatever method, if there is a less then adequate match.”
(Roberts 1997)

 

Talk to your CEO and offer them this project proposal.  “We can substantially decrease the risk we
take every time we make a selection decision and increase the productivity of
the whole organisation.”  See what their
answer is!