Talent has replaced capital as the most valuable asset in an organization. As a result, organizations cannot afford to spend time and money investing in the wrong talent, particularly those individuals in leadership roles. According to industry expert Josh Bersin, voluntary turnover can cost an organization 1.5-2 times the annual salary of the departing employee, with “total costs” coming from:
- Cost of hiring a new person (advertising, interviewing, screening, hiring)
- Cost of onboarding a new person (training, management time)
- Lost productivity (a new person may take 1-2 years to reach the productivity of an existing person)
- Lost engagement (other employees who see high turnover, disengage and lose productivity)
- Training cost (over 2-3 years you likely invest 10-20% of an employee’s salary or more in training)
- Cultural impact (whenever someone leaves others take time to ask “why?”)
However, other experts estimate that the cost could be even higher, with some estimates coming in at 3 times the annual salary of the departing employee. According to these estimates, the average CEO in the U.S. earning $250,000 a year in compensation would cost your organization $375,000 – $750,000 to replace.
One way to avoid missteps in the talent management process is by administering assessments to potential new hires and existing employees. Scientifically researched and tested assessments can reduce risk and bias associated with talent decisions.
3 Pillars of Talent Assessment
At Right Management, we believe there are 3 main areas, or pillars, of the talent management process where assessments can be a valuable tool.
According to our studies, only 13% of people surveyed believe their organizations have ample leadership pipelines. One way of filling leadership pipelines is by grooming internal candidates to become the next generation of leaders. Assessments can be used to identify individuals who might be the best fit to succeed current leadership. Not only can assessment results predict future performance, they can be used to develop onboarding and training programs tailored to meet the needs of the candidate.
Helping employees develop their skills and gain valuable experience is vital in keeping them engaged and productive. Our studies show that employees who feel engaged with their jobs can account for a 4.0% increase in revenue growth and a 10% increase in customer satisfaction. Employees who feel engaged and valued are less likely to leave an organization in search of better opportunities
Managers can gain insight into what employees want and need to feel engaged by utilizing assessments. Assessments can also provide insight into the skills and strengths of current employees, and how they can be leveraged to the benefit of the organization and for the personal growth of the employee.
Evaluating Potential Hires
Ensure that the right candidates are being chosen for the right roles with assessments. Gain insight into a potential candidate’s soft skills, including: communication, collaboration, organization and critical thinking. Evaluate whether they will be able to perform the role by testing hard skills or specific, teachable abilities that can be defined and measured.
Why Right Management?
Administering your own assessments can be difficult. Even the most savvy HR teams struggle to find options that are within their price point, evaluate key areas, and provide valuable insights. As a result, more companies are turning to 3rd parties, like Right Management, for their assessment needs.
We are assessment experts. We listen and learn from our clients as they tell us about their experiences with different models, selecting only the best assessment options, some of which include:
- In-basket exercises to see how leaders organize and prioritize in time-constrained situations
- Live, assessor-led role-plays with simulated peers, direct reports, and customers
- Presentations where participants present a business plan to showcase strategic thinking skills
- Interviews to better understand the participant’s accomplishments, goals, and aspirations
- Leaderless group discussions where the participants demonstrate communication, teamwork, and meeting facilitation skills
We create custom assessment methodologies that meet the unique needs of each of our clients. Each of our assessment partnerships are selected based on the criteria that they provide premium products and services that are validated and legally defensible. One such partnership is with Hogan Assessments, the leading provider of leadership assessments. We partner with firms like Hogan to customize assessments that measure an individual’s leadership and performance predictability. Our process is designed to select the right assessment tools that will generate the right data, and can be used across the talent life cycle for selection, development and succession planning.
If you have questions about our Talent Assessment services, or would simply like to learn more, contact us today!