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Certainly, small and medium-sized businesses like yours are incredibly sensitive to poor hiring decisions. This is primarily because, with a smaller team in place, each of your employees has much greater power and responsibility than they would at a larger company and, as a result, their actions have a much greater impact. In other words, the fewer people in the boat, the easier it is for one bad rower to take your ship off course (or sink it!).

Unfortunately, SMB owners and managers are also much more likely to depend on relatively weak assessment methods for exploring candidate fit, such as the resume review and unstructured interview, which typically do not provide enough objective information with which to make fully confident selection decisions. This leads to feelings of uncertainty, mistakes due to personal biases and assumptions, and ultimately to hiring employees who underperform or turnover within a short period of time.

“Increased confidence requires having more of the right type of information with which to make decisions.

In the case of hiring decisions, this means not only evaluating candidates’ level of knowledge and experience, through the typical resume and interview, but also using the right assessments to objectively assess their ability to perform critical job tasks, their personal habits and work style, and their motivation to invest time and effort into job success.”

The solution to this problem is to build better assessment programs that provide you with a wider variety of information on candidates’ backgrounds and capabilities, using the most sophisticated and objective evaluation methods available. However, this can be very confusing and frustrating, considering the overwhelming number of approaches available to you, including all of the different tests and questionnaires on the market today.

To give you an idea of how many tools are out there, consider that the Buros Institute of Mental Measurements, publishers of the Mental Measurements Yearbook and Tests in Print series, have reviewed and gathered information on nearly 4,000 commercially available assessment instruments, produced by over 900 publishers.

Clearly, there are many more ways to evaluate candidates than are being currently used in most small companies, and the sheer number means that managers are likely to need assistance in selecting the right tools.

With that in mind, here are a set of questions you can ask yourself when choosing which assessment methods would best strengthen your current hiring practices.

What qualities are required for employee success?

Before deciding on the type of assessments you should use for your next hiring project, you need to find out what makes someone successful in the job, and why certain people fit in better with the team and company than others. In other words, the attributes that help to explain:

• Competence, and
• Compatibility

A job analysis is critical to uncovering these qualities, but does not have to be as complicated or expensive as you might expect. For example, you can read about one approach in the white paper “Knowing What to Look for When Hiring Your Next Employee: Developing Practical Job Descriptions for Small or Medium-sized Business.” Alternatively, you may wish to contact a professional in Industrial/Organizational Psychology to help uncover key job and candidate criteria.

Once you’ve established the qualities required for success in the position, you can then turn your attention to specific types of methods with which to assess them, including:

• Behavioural style, or personality questionnaires, which help explore individuals’ typical approach to people and problems at work, and determines fit and compatibility with the job, team and organization.
• Ability tests, which measure enduring aptitudes that are stable over time (such as “intelligence”), difficult to train, and help determine employee potential.
• Skills and Knowledge tests, which evaluate capabilities that can be learned and enhanced through practice, and which provide clues about how best to train and develop candidates once hired.
• Interests questionnaires, which help determine the types of jobs that engage a person’s attention and curiosity (usually used in career counseling, but can be useful in succession planning).
• Motivation questionnaires, which uncover the type of work environments and management styles that are most engaging to employees, and are particularly helpful in maximizing effort and retaining staff.

Ability, Skills and Knowledge assessments are best for evaluating Competence, particularly candidates’ job proficiency and future performance potential. For example, although the resume review may not be an ideal screening method, it does help to assess knowledge and skill indirectly, through education and experience. Used with a valid cognitive ability test, the resume can provide good information on whether applicants have had the opportunity and ability to learn critical skills.

Behavioural style, Interests, and Motivation assessments, on the other hand, are ideal for determining Compatibility, or how well candidates will fit in with the job, team, and company. An example of such an assessment is a personality questionnaire, which asks candidates to provide ratings on items that each describe different approaches one may take to managing people and problems at work.

What would be the impact of making the wrong decision?

Next, and before you invest in certain instruments for your next hiring project, you need to establish the cost of the making a poor hiring decision. This will provide you with an idea of the type of assessments that should be included in your hiring program, and how comprehensive the program needs to be in order to mitigate these risks.

Certainly, every selection decision is an important one and you need to do your best to avoid making hiring mistakes for any position. However, just as there are a diverse number and range of approaches to assessment, there are a wide range of costs and time investments required to use them. The key to knowing how much is appropriate is to first determine the impact of the hiring decision, and then consider the time, money and effort you’re willing to invest in order to offset the risk of a bad hiring decision.

For example, selecting your next executive, who will have a great deal of responsibility over the company and its people, is a High Impact hiring decision. In other words, the risks and consequences of a bad hiring decision are severe, which necessitates a greater investment into a quality assessment program. However, hiring someone to clean your warehouse is a relatively Low Impact hiring decision, as the consequences of selecting a poor employee are relatively limited.

“The ideal assessment program evaluates a variety of mutually-exclusive job-related attributes, in the least amount of time it takes to mitigate risk and make an informed hiring decision. ”

The impact of the hiring decision will inform you about:

• The variety of methods to use.
• The level of detail you need from your assessment program, and
• The extent to which you should explore and verify the information gathered.

Variety refers to the different types of instruments you decide to use, based on the qualities you determined were important to success in the role (see previous section). For a High Impact hiring decision, it would be in your best interest to increase the variety of attributes that you measure, perhaps by including instruments to assess all of behavioural style, ability, knowledge, skills, interests and motivation. With a wider variety of information about your candidates, you would then have more information with which to gauge their competence and compatibility for the role, and would be much less likely to overlook an attribute that could be a critical strength or weakness for the candidate.

Detail refers to the depth of information that a single method can provide with regards to certain candidate attributes. For example, “All in One” instruments like the ProfilesXT are excellent tools for Low (and some Medium) Impact hiring projects, as they require little time and cost to administer and provide a good overview of candidate performance across a variety of attributes. However, for High Impact hiring, it may be best to use an instrument that provides deeper information on a single attribute, like Ability or Behavioural Style, perhaps at the cost of a longer administration time or higher price tag.

Verification includes all of the effort you invest into confirming and exploring the results of your assessment. Again, because the consequences of a bad hiring decision are so severe in High Impact roles, it is recommended that the verification process be that much more comprehensive for such positions. So, in this case, you may want to conduct a thorough background check, invest in a structured interview conducted by a trained professional, and gather comments and ratings from a relatively large number of references. The increased comprehensiveness of the process will help to raise your certainty in the accuracy of the results. However, for a Low Impact role, you may be satisfied with what was provided in a resume or computer-generated assessment report, with the understanding that you are at greater risk of choosing the wrong candidate in such situations.

A Quick Guide to Determining Hiring Impact

People
Low Impact - Decisions only affect the individual.
Medium Impact - Decisions affect the team or department.
High Impact - Decisions affect many people across many departments.

Money
Low Impact - No budget responsibility and/or the cost of mistakes is low.
Medium Impact - Minor budget responsibility and/or the cost of mistakes is moderate.
High Impact - Large budget responsibility and/or the cost of mistakes is high.

Health & Safety
Low Impact - Actions have no or little impact on people’s health and safety.
Medium Impact - Actions may affect some people’s health and safety, but serious injury is unlikely.
High Impact - Actions may affect many people’s health and safety, and/or the injuries could be serious or life-threatening.

Examples
Low Impact - Blue Collar. Administrative.
Medium Impact - Professional. Technical.
High Impact - Executive. Management.

How do I confirm the quality of specific instruments?

Finally, once you have a good idea about the structure of your assessment program, you need to figure out whether the methods you’re considering have solid research support and accurately measure the job-related attributes you’ve established. Industrial/Organizational Psychologists refer to validity and reliability when determining the quality of assessment methods, two factors that determine whether an approach has been proven to relate to job success and is stable in measuring related qualities.

We’ve provided a graph that helps to show what researchers have found about the quality of certain types of measures, in terms how well they relate to job performance (note that a correlation of 1.00 indicates perfect prediction and 0.00 indicates complete randomness). Those methods that are higher on the scale provide information that better predicts success on the job, and are highly recommended to be included in your assessment program. However, keep in mind that a combination of methods (e.g., an ability test and structured interview) can better help you predict success than each method alone. This is why we increase the variety of assessment methods as the impact of the hiring decision increases.

You will also need to consider the quality of a specific instrument from a specific publisher, before making any final decisions about your assessment program, as each is not created equal. Unfortunately, for example, there are a large number of companies that are publishing ability tests and personality questionnaires without conducting their due diligence, likely because these tools are becoming increasingly more popular and profitable. This is why it is so important to look past the publisher’s marketing campaign and make sure that the instrument has been proven and is legal for use in selection.

Conclusion

We hope the this article has been helpful in highlighting the value of modern assessments and in helping you put together a hiring program that is ideal for identifying top quality talent for your company. If you have any questions about assessments and the development of programs for sourcing, screening and evaluating job candidates, please contact us.