The Role for Assessments in a Tight Labor Market

Dr. James Longabaugh also contributed to this article.

Assessments based upon rigor and sound science are generally a reliable and valid approach for identifying a qualified shortlist of candidates from a large talent pool. But, in today’s tight labor market, a large talent pool may be a rare luxury. When potential candidates are in short supply, some HR and hiring managers are rethinking their use of assessments: “We don’t want to scare away the few candidates we have by making them take assessments. Especially if our competitors aren’t making candidates take them.”

So, is there a role for assessments in a tight labor market? Yes, absolutely. In fact, assessments could be more important than ever when great candidates are hard to find.

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The dangers of dropping assessments

Before we consider the best way to use assessments if talent is thin on the ground, let’s be fully aware of the dangers of deciding not to assess candidates.

You risk a lower quality hire. Making a decision to stop using an assessment due to a small labor pool is short-sighted. It may help an immediate hiring need, but the long-term effect is likely to be counterproductive. That is, you risk making a poor hire, which will lead to negative outcomes for the business (e.g., poor performance, poor fit, increased turnover, low engagement). If that poor hire then leaves, you’ll be back in the same position you were in before with an open requisition and few candidates to choose from. In the meantime, the organization’s resources and money to hire, train, and attempt to retain will have been wasted. SHRM estimates the overall replacement costs of an employee can range from 90% to 200% of that employee’s salary. Attrition not only negatively impacts the employee concerned and the HR or hiring manager, it can also hurt the morale of employees remaining in the organization. This is because the remaining employees have to absorb the extra work, help train another new employee, and so on.

You may not be addressing the underlying problem. Before we jump into making changes to assessments, we should also understand a little more about the labor market issue that your particular organization is facing. Is the labor market tight for all roles or just some? Are you finding it difficult to attract candidates, but competitors aren’t? Answers to these questions will help guide your remedial actions. For example, if you’re alone in finding it hard to attract candidates, your solution may be to review your employer branding, pay and benefits, exit surveys, and how and where you’re advertising open positions to better understand the root cause, rather than changing your use of assessments. Also take a look at the wording of your job postings to determine if the language is potentially discouraging qualified candidates in any way, or if you’re overstating the qualifications required for the job.

Using assessments in a tight labor market

Once you’ve verified a shortage of qualified candidates exists for the jobs you need to fill, consider the following ways to better maximize the utility of assessments in a tight labor market.

Use assessments to expand your talent pool while keeping quality high. If your talent pools are small for particular roles, then an assessment could help you to reach out to new segments you hadn’t previously considered. For example, many organizations in India prefer to hire engineering graduates for their software roles, but when those candidates are in high demand and short supply, they turn to graduates of other non-engineering science disciplines. In the absence of an engineering degree, and to avoid any relaxation of hiring criteria, an assessment provides an objective measure of the traits, abilities and skills needed for job success. Crucially, an assessment enables an organization to hire from outside their usual talent pool, while maintaining quality of candidates who have the aptitude to succeed in the given job.

Relax cut scores temporarily to increase hires and help target post-hire learning. If expanding the talent pool isn’t an option for you, or you’ve already done what you can in that area, you may want to consider reducing your assessment threshold for hiring. However, this should only be considered for roles where the consequences of the lower expected performance do not outweigh the benefits. Examples where you would not want to relax cut scores include assessments designed to predict safety related behaviors, or in selection for positions with influence or responsibility for others.

Timing for filling the requisition and the role may influence your decision to relax cut scores. Does the hiring need to be immediate? Are managers able to accept an average hire because they need a person in the position today/tomorrow, or are they prepared to manage in the short term until the right candidate comes along? For all jobs, carefully consider the longer-term impact of a poor or average performer on downline metrics (e.g., customer satisfaction, safety, turnover, sales numbers, etc.).

You may also consider using assessments in post-hire HR processes to enhance ultimate employee performance. For example, look at whether it’s possible to implement tiered training, where those with higher assessment scores have shorter role training and those with lower scores have more extensive training to close skill gaps. An assessment can provide hiring managers with necessary data to understand their new hires in terms of their likely behaviors and skill proficiencies, and guide where to provide focused developmental opportunities for upskilling.

Assess to enhance the candidate experience. Assessments don’t always have to be a turn-off for candidates. The right assessments can actually enhance the candidate experience, which has been linked to increased job offer acceptance. Consider switching to assessments (validated obviously) that candidates enjoy taking or find representative of the competencies and skills needed to succeed in the job. When the right assessment is clearly aligned to the job requirements, candidates may also view them as a more representative demonstration of their traits and skills.

Assess to make the most of internal candidates. Job movement is more likely in a tight labor market, and organizations would be well served by keeping more of those inevitable moves inside the organization (i.e., enabling internal mobility). Assessments of existing employees can be very valuable in identifying learning and development interventions that will help prepare your internal job seekers. By utilizing assessments, organizations can objectively identify the skill gaps and strengths of their employees and identify who may have the aptitude and skills to transition successfully to other types of jobs in the organization. This is especially relevant when internal employees lack previous experience with jobs outside of their current domain and expertise.

Don’t be tempted to abandon assessments in a tight labor market. Rather, use them in the right way to enhance quality of hire and ultimately improve productivity and reduce attrition.

Learn more about IBM Talent Assessments.