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Progress still has to be made in the field of employee assessment since crucial decisions with great consequences are often taken. Previously, I wrote that the difference in sales between an outperformer and an average performer is said to be factor 5-7. Consequently, top performers stand for a quick return on investment. In a market in which jobs are scarce and companies only invest when they will have a quick return on investment, a sound selection process is very interesting for business.

Hiring the wrong people implies huge costs. Costs for recruitment & selection, salaries, lawyers and dismissals easily amount to tens of thousands of Euros. And I still haven’t mentioned the frustration of managers having to cope with underperformers, as well as its negative impact on the team members and their performance. It also costs the company tens of thousands of Euros. Consequently, a sound selection process will pay and allow you to avoid lots of trouble!

It keeps surprising me that, although Human Resources managers are proud of their role as business partners, they often let a crucial business process such as employee selection take its course. Recently, I had a conversation with a HR manager of a company quoted on the stock exchange. He told me that eight managers on average talk to a potential candidate before hiring him/her. When I asked him whether these managers had also been trained in the field of structured interviews, the answer was “No”. To be perfectly clear: the predictive value of unstructured interviews amounts to 0.38, whereas for structured interviews, it amounts to 0,51 (source: Schmidt & Hunter). Is it useful to take eight bad interviews, instead of taking just one good interview?

I told the HR manager that this selection method is very expensive. He replied very laconically: “Well, our organization earns more than enough money and our managers like to talk to candidates (read: like to talk to them about their own work). We could do it in a completely different way, but everyone is satisfied.”

I bet that if the board of directors understands what is happening here, it won’t let things run. However, I even prefer that the HR manager himself would take some action, denounce and professionalize the selection process. This is how to become a real business partner; not because you yell, but because you prove that you’re competent. It is good for the sector.

On the other hand, some organizations are sending everyone to an assessment office for a full assessment. We know that it has the highest predictive value since it combines different selection methods: capacity tests, questionnaires focusing on personality and motivation, assessment exercises, structured interviews etc. In decent terms, the field calls a selection method’s predictive value the ‘predictive validity’. According to the quality of execution, it amounts to 0,7-0,8 at most for a full assessment. Of course, Kenhardt is happy with all these candidates, but it isn’t necessary. We prefer to help organizing the selection process in such a way that the best people are selected at the lowest cost. Eventually, that’s what you want to achieve.

It all starts with a sound recruitment process. When, at the beginning of the selection process, you only have suitable candidates, the selection will be intended to select the best candidate among them; the out-performers in other words. When too many candidates don’t match the desired profile, the selection will be a rejection process intended to keep only one candidate. Probably, it won’t be the outperformer you had in mind.

When organizing a selection process, it is useful to apply the so-called ‘funnel model’. Relatively cheap but useful selection methods are applied at the beginning of the process and relatively expensive ones at the end of it. What is useful, depends on the situation. As mentioned before, a full assessment has a high predictive value, but it is also relatively expensive. So, it is adequate at the end of the process, when unsuitable candidates have already been rejected. Capacity tests (0,51) and structured interviews (0,51) have a high predictive value.

According to the above-mentioned study, assessments based on graphology (0,0), years of education (0,10), interests (0,10) as well as trainings and experience (0,11) are not or hardly useful.

Although Schmidt & Hunter’s study is often being mentioned within the field, in practice, I see too many organizations applying only selection methods with low predictive validity, with all consequences and costs for the business. HR managers or directors wasting their time with these methods, will never be taken seriously by the board of directors! Consequently, progress has to be made in the field of employee assessment, for HRM as well as for the business. That’s Human Profit.

Patrick van Loon
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