Today, the biggest challenge for HR professionals is measuring and predicting personality – the most sustainable asset for business success. In terms of accuracy, today’s personality tests are three times better than a job interview, and they will only get more sophisticated in the future. Even so, most corporations are still using unreliable, biased methods for personnel decisions.
Why start from the ‘80s?
In the 1980s, business leaders began to realise that knowledge of their employees’ personalities provided not only interesting “fun facts” for psychological research, but that it was also essential for business success. During these years, two key factors helped the development of complex, automated HR-procedures and web-based HR-systems.
- On the demand side, the globalisation of business, numerous mergers and acquisitions in corporate life and the technological revolution dramatically increased the diversity of the workforce, creating new challenges in the fields of logistics and communication. This, and the growing competition for talented employees, brought about an urgent need for the optimisation of the workforce
- In terms of supply, the use of computers has become increasingly widespread in every area of life. Due to these circumstances, HR professionals have had to get used to an ever-changing environment, intense competition, and an increased need for efficient workflow. To minimise personnel risks, new methods emerged for the most accurate assessment of employee personality – such as the Five Factor Model, which has been rigorously tested and accepted by the scientific and business communities, and has been widely used since the ‘80s.
The impact of the technological revolution
During the ‘90s, personality assessment started to gain even more ground in the workplace. The technological revolution favoured scientifically valid and commercially profitable assessment methods – such as 360-degree feedback and internet-based surveys and tests.
As the methods have been perfected and their efficacy has been backed by scientific evidence and business results alike, data-driven personality measurement tools attracted the attention of the HR sector. Dr. Louis Galambos, Professor Emeritus of Business and Economic History at Johns Hopkins University emphasises their usability on almost all levels as a main reason for breakthrough: “The new approach was based on the measurement of specific aspects of personality that had a proven relationship to job performance. The tests and reports were designed to deal with different job situations, ranging from entry-level work to manager and even executive performance.”
Data all around
Today, most studies show that changes in HR and the development of assessment methods are omnipresent and constantly accelerating, and affect nearly everything in the workplace. This is especially true for talent acquisition. According to Josh Bersin, new social recruiting, talent networks, big data, assessment science and recruiting platforms are launched every month. Because of the availability of accurate data and personality assessment solutions, HR teams are already expected to understand and assess people based on facts, not just personal impressions or opinions – the biggest corporations just cannot afford to shake up their employees’ lives based on subjective judgements.
As Dr. Galambos puts it: “Most businesses are no longer satisfied with interviews and with other forms of soft (relatively subjective) information. Nor are they willing in most cases to equate intelligence scores with potential high performance; they need data that will enable them to compare different persons and select those that have a combination of social skills and other personality characteristics that will be likely to result in successful performance within the firm.”
How data-driven assessment affects business
But what kinds of improvements are these changes leading to? And in what terms are modern assessment tools better than the traditional ones, such as an interview?
For hiring new employees, a study by Hogan Assessments shows that the more rigorous the process, the more likely the potential employee will be right for the job. Specifically, the study showed a low correlation between an unstructured interview and the actual aptitude of a potential employee, while structured interviews showing a moderate correlation when it came to predicting the suitability of a candidate. Adding a mental ability test improved outcomes when hiring, but the use of a personality test proved the strongest correlation; resulting in more successful job appointments than the other methods.
Studies also demonstrate that screening candidates through scientific assessment tools in a retail company reduced turnover by 50%, improved productivity in an insurance company by 48%, decreased lost time accidents among hospital workers by 20%, and increased financial sales in a bank by $308,000 per year per sales representative.
A major European telecom provider also decided to make drastic changes to its HR policy in 2004, after experiencing a 13.1% dropout rate among its call centre assistants. The problem was identified in the field of hiring and, after comparisons of psychometric and business data, they could pinpoint better and poorer performing employees. One year after incorporating this data into the selection process, the fluctuation rate dropped to 8.64%, and to 6.57% after two years.
The new science of HR – danger or opportunity?
With the help of the most innovative data-analytical tools and the rapidly changing expectations of employees and employers alike, HR has become a field of science. It has to make accurate decisions based on the most unpredictable and immeasurable factor: human personality. This activity is supported by volumes of psychological research and sophisticated, scientifically validated assessment tests. Unfortunately an assessment test in itself does not serve as a guarantee of accuracy without supporting psychological research and there are still thousands of publishers selling technically invalid tools.
Dr. Robert Hogan is an international authority on personality assessment and founder of Hogan Assessments, a company which has been present in, and a leading innovator, of the scientific and the business fields. Hogan’s research archive contains information on several million working adults, from over 1000 research studies conducted since 1981 to the present day. Regarding current trends and the future of HR assessment, Dr. Hogan claims that, “one trend that most captures the fancy of HR people is ‘talent analytics’. This is good news and bad news. The good news is that this trend focuses HR people on data and the possibility of making hiring and promotion decisions based on evidence and not politics. Data-based decisions are always preferable. The bad news concerns the data that will be fed into ‘talent analytics’. For HR people, there is no difference between data derived from good and bad assessments. As we used to say, ‘Garbage in, garbage out’. To the degree that talent analytics are based on poorly constructed assessments, nothing will be gained”.
Big data and talent analytics are decidedly the future of HR and every business, as incredibly powerful predictive and descriptive tools for personnel decisions. But their power is in their scientifically valid, expert and competent interpretation – so select your assessment methods wisely.