Innovative, pragmatic, online psychometric assessment solutions

Objective assessment and ROI (return on investment)18 November 2009 Moscow

Roger HoldsworthChairman, Talent Q International Ltd

the measure of people

► Co-founder of SHL in 1977

► Founded SHL Russia in 1992

► Founded Talent Q in 2005

► Talent Q operates today in >20 countries (including Russia), in >20 languages (including Russian)

► Talent Q aims to increase the ROI of assessment, based on technology

Roger Holdsworth background

the measure of people

► 75% of major Western corporations use psychological tests, but on average they only use them for about 15% of their hires

► The world-wide market for psychological assessment is probably worth about €4 billion

► 82% of organisations do not measure the ROI of their HR practices at all

Assessment in HR today

the measure of people

► An analysis of 92 large studies showed that strategic HRM can improve profitability by at least 4%

► Objective selection alone can improve profitability by 1.3%

► A recent study of UK hospitals showed that the quality of HRM policies accounted for 7.7% of variance in patient mortality

Research on the impact of good HRM

the measure of peopleCalculation of assessment ROI

Job-holders 250

Turnover p.a. 14%

Hires p.a. 35

Average sales 1 525 000

Operating profit 8.5%

Op. Profit 130 000

SD of profit 13%

= (SDP) 17 000

Selection ratio 3:1

Coefficient (SR) 1,00

Sales representatives: Telecoms systems

Selection process:2 ability tests (V + N)

Personality test

CBI

Line manager interview

Cost 450

Validity (Val) 0.65

Benefit (SDP*SR*Val)Per hire 11 000

Net per hire 10 550

ROI per annum 2 346%

Total ROI p.a. 370 000

the measure of peopleCalculation of assessment ROI

Job-holders 250

Turnover p.a. 13,5%

Hires p.a. 34

Average sales 11 million

Operating profit 4.5%

Op. Profit 495 000

SD of profit 11,5%

= (SDP) 57 000

Selection ratio 4:1

Coefficient (SR) 1,20

”DIY” store managers

Selection process:2 ability tests (V + N)

Personality test

CBI

Simulations

Cost 875

Validity (Val) 0.46

Benefit (SDP*SR*Val)Per hire 31 375

Net per hire 30 500

ROI per annum 3 491%

Total ROI p.a. 1 031 000

Talent Q ROI calculator: more complex system, available on-line

the measure of people

► Increase validity

► Decrease cost

► Improve intangible factors

How to improve ROI of assessment

the measure of people

► Use valid methods: Validity

Reference checkingVery low

Unstructured interviews Very low

Competency-based interviews .30

Personality testing .35

Simulation exercises .35

Ability tests .40

Assessment centre .55

► Check local validity

► Validity studies improve interpretation

► Apply consistently, using trained staff

How to increase validity of assessment

the measure of people

► Use low-cost methods: Validity Cost

Reference checking Very low Low

Unstructured interviews Very low Medium

Competency-based interviews .30 High

Personality testing .35 Low

Simulation exercises .35 High

Ability tests .40 Low

Assessment centre .55 Very high

► Remember the main costs are assessor and candidate time spent

How to reduce cost of assessment

the measure of people

► On-line testing to screen out “no-hopers”

► Aim to see only 2.5 candidates per vacancy

► Train assessors on-line

► Use external experts to carry out validation

► Use on-line applicant tracking system

► Involve line managers, but only at final stages

Reducing assessor time

the measure of people

► Reduce test time by 50%

► Focus only on relevant characteristics

► Make tests adapt to candidate’s level

► Provide candidate feedback

► Reduce time to hire

► This all improves employer branding

► For many employers, candidates could be customers

► Or candidates may be existing employees

Improving the candidate experience

the measure of people

Customisation to company’s competency model• Uses company’s own language• Makes interpretation easier• Can be used by line managers• Available at €5 000 in 2 weeks

Re-use of assessment in other HR applications• Team roles• Composite team profile• Types at work• Sales profile• Emotional Intelligence• “De-railers”• Learning styles• All standard TQ outputs

Assessment ROI “intangibles”

the measure of people

► Proper, scientific assessment has a very high ROI (in the widest sense)

► So it’s well-worth doing it, and doing it better - a good investment

► People don’t usually bother to measure ROI of HRM policies or processes. Why not?

► Latest developments in assessment testing offer many advantages, and will lead to increased ROI

Summary & conclusions

Спасибо за внимание!