It might be tempting to think of pre-employment testing as a “silver bullet”— that is, a quick, simple, and seemingly magical solution to a complicated matter. But such an assumption couldn’t be further from the truth.
In fact, I spoke with Josh Millet, CEO of Criteria Corporation, about this subject, he said that when a testing provider promises that companies that use its services will “never make a bad hire again,” hiring managers should run (not walk) in the opposite direction:
Testing isn’t a crystal ball, and that’s not how the science of employee selection works. Incorporating pre-employment tests into the hiring process is about making more informed decisions and maximizing your chances of hiring people who are likely to succeed. Think of it as improving your batting average.
Although pre-employment testing isn’t the complete solution for hiring needs, organizations can use it to improve their recruiting processes and select the best talent. For example, such tests can predict learning potential—a particularly valuable piece of data in a time when most companies are struggling to find the talent they need. When faced with the choice between hiring a candidate who has most of the needed skills but will need to be trained for the rest or waiting until the candidate who already knows everything comes along, companies can use pre-employment tests to identify and hire candidates with the potential (with some investment in their development) to be rock stars.
Another way to improve hiring is to reduce risk by, as Millet puts it, “improving the number of good people you get in the door and avoiding the truly toxic hires.” And there’s good reason to avoid those bad hires; they are expensive. For example, according to Zappos CEO Tony Hsieh, his company lost “well over $100 million” during its first eleven years because of bad hires. Arte Nathan, former CHRO for the Wynn Las Vegas, highlights the impact that bad hires can have throughout the entire organization.”
Most companies don’t know the full cost of the turnover, so they don’t apply the resources up front to avoid it. If you make a bad hire, there is a ripple effect among all who work for you, your product, and your product quality.
In addition to saving the company the cost of a bad hire, pre-employment testing can also reduce risk by reducing the likelihood (and cost) of workplace injuries, employee errors, and employee theft and fraud. Risk mitigation means different things in different industries and occupational settings, and depends on the business outcomes the organization is trying to achieve. Consider these examples:
Companies want the employees who are most likely to follow rules and avoid accidents. Workplace accidents and incidents can harm employees, thus leading to increased workers’ compensation claims.
Organizations want employees who are unlikely to steal inventory, cash, or customer data.
Companies want software engineers and workers who can motivate and push their teams to deliver projects on time, within budget, and without coding mistakes that could jeopardize security.
Organizations want public relations and social media managers who are not prone to posting inaccurate or inappropriate content that could damage the company’s consumer brand.
Pre-employment testing won’t magically prevent a company from ever making a bad hire again. But testing can provide data an organization needs to reduce the overall risk it faces each time it hires someone. In fact, some insurance companies give discounts to companies whose hiring processes use testing that correlates to reduced risk.
Today’s organizations are focused on retention. In order to accomplish that goal, they must make the best hires possible. After all, no company wants to spend a lot of time and money hiring someone who leaves after six months! At the same time, no one wants employees whose on-the-job practices (such as theft or errors) are costly to the organization. Pre-employment testing can help companies mitigate their risk in hiring: instead of hiring toxic, unproductive employees who bring down the entire organization, they’ll be more likely to hire long-term contributors.
This piece originally appeared in Advanced Resources HR Insights Magazine.