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Sophie Pritchard

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Recruitment: Overcoming budget cuts

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The recession has meant that recruitment and selection processes have to be more slick than ever. Sophie Pritchard advises how to get more bang for your assessment buck.

 
Talks of the worst recession since the Second World War have left the economy drained and deflated. It’s forced a large number of organisations to review recruitment processes, seeking cost-savings and greater value for money wherever possible.  
 
However, with the market bursting with talent from professionals who have recently been made redundant, and upcoming graduates looking to join the workforce, recruitment and assessment processes have to be slick to ensure unnecessary time isn’t spent sifting applicants. Businesses can take some simple measures to reduce unnecessary costs and increase return on assessment investment:
 

Reviewing your selection process

 
Organisations can ill-afford to take risks during a recession; when funds are tight, reviewing selection processes can ensure HR recruits the right people. The costs of getting it wrong can be significant, with large amounts of resource and cost spent on the selection process and subsequent training of new recruits. With many organisations looking to drive the business forward in a tough market, competent and skilled employees are key to ensuring the continued success of the business.
 

Avoiding litigation

 
It is critical to ensure that any selection process is fair to all applicants, regardless of factors such as age, gender, disability, sexual orientation, ethnicity or religious belief. Legislation is in place to protect against discrimination on these grounds, and litigation can be costly to organisations which neglect to adhere to fair and objective selection processes. 
 
Instances of legal action against employers are becoming more and more common. Approximately 64% of legal challenges made in relation to employment are made by ‘new hires’ rather than established employees. The investment in a fair and defensible process is clearly well worth making.
 
Fair and defensible processes are free from ‘adverse impact’. Adverse impact occurs when members of one group are selected disproportionately more or less often that members of another group. Certain kinds of selection tools are more prone to adverse impact than others. For example, ability tests can frequently create adverse impact, whereas others such as behavioural assessment measures are less prone.
 

Optimising your selection process

 
To protect against these risks, organisations can optimise their selection process in two main ways; improving selection efficiency and improving selection accuracy.
 
Improving selection efficiency
 
Organisations can optimise selection processes by making systems more efficient so that the same output is achieved with fewer resources, both time and money. Online selection tools help organisations process greater volumes of applications with fewer resources. Such tools include situational judgement tests, which are a quick and cost effective means of sifting large volumes of applicants. 
 
Even before this stage, many organisations are using self-selection tools, such as realistic job previews, to ensure that only those who are serious about the role enter the initial sifting stage and beyond.
 
Improving selection accuracy
 
One of the most significant ways of optimising the selection process is to ensure that assessment tools enable professionals to accurately select the best person for the job. Such tools are said to have high ‘predictive validity’. These include ability tests or ‘psychometrics’, personality tests, structured interviews and assessment centres.
 
Methods which demonstrate poor predictive validity include biographical data and unstructured ‘traditional’ interviews. By using more valid selection methods, organisations will benefit from better quality hires and reduced staff turnover. 
 

The cost of underperformance

 
The indirect costs of poor selection are often overlooked by organisations but underperformance, incompetence and missed opportunities can cost an organisation dearly. Performance variability between employees in most jobs can be very large. Variability is typically measured by looking at the £ value of an employee’s contribution to the organisation. Research shows that the variation between individuals of the value they generate is, at a minimum, 40% of salary; possibly even higher.
 
Using a graduate role with an average salary of £20,000 as an example, an ‘above average’ employee would be likely to generate £8,000 more value for the organisation per annum than the ‘average employee’. Conversely, a ‘below average’ employee would be likely to generate £8,000 less value for the organisation than the ‘average employee’.
 
There may be a difference of £16,000 per annum in the value generated by an ‘above average’ graduate employee compared to one who is ‘below average’.
 
Clearly, such differences are large enough to have a critical impact on the economic health of an organisation and add significant weight to the argument for investing in appropriate selection processes. 
 

Summary

 
All too often organisations fail to properly articulate the benefits that new selection processes may bring, choosing instead to focus on the more tangible implementation costs. In a competitive world, organisations adopting more valid hiring procedures, can create a competitive advantage, often improving ROI considerably.
 
Sophie Pritchard is a chartered occupational psychologist and senior consultant at A&DC, a consultancy that combines expertise in business psychology and behavioural change to offer the best tools and processes to discover, transform and energise talented people at all levels.
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