Mary Clarke considers why regular assessments can help HR professionals make informed and accurate decisions about employees in a redundancy situation.

In these tough economic times, managers in companies across the UK are examining how to make the best use of their employees and increase productivity and competitiveness. In many cases, they are making decisions about redundancies too.

According to the latest Labour market report from the Chartered Institute of Personnel and Development (CIPD) and KPMG, one in three employers plan to cut jobs in the first quarter of 2009. Making people redundant is a difficult task for all managers, but for some, it is compounded by the fact they don’t have a clear picture of their employees’ skills, competency, efficiency and knowledge.

A separate report out in February this year from the CIPD stated that almost one in five companies are now putting more effort into identifying their corporate talent. But managers should be certain of where their talent is at all times, whatever the economic climate. Knowing the strengths and vulnerabilities of employees will help executives avoid ill-informed and costly misunderstandings when downsizing.

Last year a report from IDC entitled ‘Counting the Cost of Employee Misunderstanding’, revealed that one in four employees do not understand certain aspects of their job role and that major knowledge gaps are unaddressed in many companies.

A misunderstanding can range from misinterpreting company policy, business process or job function, to a combination of all three. In any organisation, these kinds of misunderstandings are of course inevitable, but they can also be incredibly costly – businesses are losing £18.7bn a year as a result of employee misunderstandings. They can also damage relationships with key customers and clients – 99% of the 400 companies questioned confessed these misunderstandings had put their sales and customer satisfaction at risk.

In this competitive market, companies need to be able to pinpoint their best talent and utilise it in the most beneficial way. They also need to know where their vulnerabilities lie so they can do something about them to minimise business risk. Worryingly, the research showed that a third of companies who do know where their knowledge gaps lie does nothing to rectify them.

Customised assessments

Managers need to have a clear picture of what employees truly understand versus what they think they understand. One effective way of doing this is by administering bespoke employee assessments that test both an individual’s knowledge of every aspect of their job and their confidence in performing their role.

Whilst many companies have invested in employee assessments, they are used most commonly in the pre employment stage to ensure the right people are recruited. Sadly, this is often the last time people are assessed. Most people move through several different jobs and ranks in their lifetime, and their jobs often become increasingly complex.

Therefore, managers cannot be certain these individuals understand their new roles if they have not assessed their knowledge, understanding and confidence since they were initially hired.

Individuals might be called upon to handle new processes and systems in their new roles or deal with new regulations or compliance that may have legal ramifications if misunderstood. The Health and Safety Offences Act 2008, which came into force on 16 January 2009 and broadened the range of health and safety offences, demonstrates how a new regulation could seriously impact an organisation if its principles are misunderstood.

Under the act, any health and safety offences could lead to a prison sentence for anyone within a business and a very hefty fine if the case is taken to higher courts. The only way for managers to be confident that every individual in their organisation understands and can adhere to such a regulation is to assess their knowledge. They can do this most effectively by placing them in assessment scenarios where they have to demonstrate their knowledge and understanding – any knowledge gaps are then immediately visible and can be addressed through training.

Potential risks

Another important area where assessments are useful is in identifying potential operational risks. This enables managers to develop bespoke employee training to improve individual skills and performance, as well as help employees reach their full potential. Along the same lines, employers should eliminate expensive ‘one size fits all’ training and focus on pinpointing the exact training needs of individuals instead.

The expense of such ‘one size fits all’ programs is twofold; not only in terms of monetary value, but also in terms of overlooking important knowledge gaps that put the company at risk – like with new regulations such as the Health and Safety Offences Act 2008 mentioned above.

Delivering bespoke training will also make employees feel more confident in their roles and consequently, more productive. A report from Proudfoot Consultancy in December 2008 revealed that 26% of UK workers’ time is spent unproductively, with 1.3 days of every week spent doing things that don’t deliver productive results. Improving employees’ understanding of what their job roles truly entail would not only eradicate expensive mistakes, boost productivity levels, improve efficiency and increase employee confidence.

Regular customised assessments can also help managers make more accurate decisions about who to promote and when. It is a big risk to promote someone who doesn’t possess adequate knowledge, confidence or competence to succeed at a higher-level job with greater responsibilities.

Assessments will show clearly when an employee is ready for such a move and highlight that they have the necessary skills, capabilities and confidence to perform well at a higher level. Promoting employees at the right time can motivate them, help retain the workforce and reduce turnover. Conversely, companies may lose some of their best employees if those with the skills and competency to be promoted are constantly overlooked.

The information gleaned from assessments is not just invaluable for knowing when to promote staff, it could help managers in a redundancy situation make far more accurate and informed decisions about employees. Having a clear picture of the skills, capabilities, and the training and development needs of every individual in an organisation is critical if managers are to make fair, informed and rational decisions, which includes an evaluation of training costs versus the cost of redundancy.

An added benefit of measuring staff understanding is the identification of ‘knowledge custodians’ who can act as champions or be highlighted as examples of best practice. There tend to be clusters of these individuals in every organisation; they are the people that other employees go to for specific work-related questions when no one else knows the answer. Knowledge custodians can also be invaluable in providing training and mentoring for underperforming employees.

While there are many benefits of employee assessments, one of the most important advantages from a business perspective is that they provide managers with clarity about the people working for them, how productive they are and the value they add to the business. This knowledge is vital in a downturn when companies need to be as strong as possible and keep their best employees on board. Managers need to know who is indispensible and how they can pull together their workforce in the best way to be competitive and ready for the upturn. Uncovering the knowledge gap is just the first step.

Mary Clarke is CEO of Cognisco