Unemployment in the United States has dipped to its lowest rate in seven years — 5.5% in March. The good news is job seekers are finding work amid an improving economy. The bad news is the competition to attract talented tellers, financial services specialists, branch managers, and even CEOs is tough.
As organizations work to backfill behind a steady exodus of retiring baby boomers, many of whom are in senior-level positions, consumer demand is turning up the pressure to find new staff members that not only have the right skill set but are also a good fit culturally.
Under those conditions, it’s no surprise HR managers and corporate recruiters are looking for ways to navigate the great talent search. One of those tools is an employee assessment, an evaluation of how a job applicant's talents match the job requirements — and how they might perform on the job.
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Such tools have been around for decades. Many are typically available online, but others can involve face-to-face interviews with a trained test administrator that can last 90 minutes. Questions measure various factors, including cognitive skills, knowledge, work skills, personality, emotional stability, and even integrity.
“Selecting the right talent has always been an important part of our strategy,” says Vandi Theriot, vice president of talent services at TDECU ($2.4B, Lake Jackson, TX). “Putting the right person in the right role is one of the most important decisions you’ll make.”
All About That Talent
Theriot’s role — VP of “talent” services — underscores the emphasis TDECU places on talent acquisition in addition to those traditional HR roles. Of course, there’s a good reason for that — employee turnover costs the institution an average 1.5 times the employee’s annual base salary.
Unfortunately, the longer the applicant search, the greater the cost in terms of lost training and experience. On the other hand, choosing too quickly and hiring an unqualified candidate can create undesirable results.
In 2014, TDECU — which has 724 employees who support 210,000 members — was facing a short-term attrition problem in that employees were leaving after less than 12 months at the credit union. To address this, TDECU implemented pre-employment tests, which have helped reduce short-term turnover from 20% to 5%.
“Putting the right person in the right role is one of the most important decisions you’ll make.”
Although it is still a little early to declare victory, Theriot says the credit union is pleased with the progress.
A 19-year veteran in HR, with a career background of working in the manufacturing industry and later as a contractor for NASA, Theriot is quick to point out that pre-employment assessments are just one component of the evaluation process. And they’re not the same as pass-fail screening tests such as aptitude, mock simulation, or drug testing. Rather, assessments provide advice on whether a hire would be a low, high, or conditional fit.
“Any assessment only provides you with half of the equation — the talent to role,” Theriot says. “The other 50% is the fit to the culture and personal aspirations. This comes from good experimental and behavioral-based interviews. We believe the formula for selecting great talent is: T+F+A/GM = GT. That is, ‘talent’ plus ‘fit’ (culture and values) plus ‘aspiration’ divided by a ‘great manager’ equals ‘great talent.’”
Assessing Critical Demands Of The Job
Vandi Theriot, VP of talent services at TDECU
According to Theriot, the key to getting the most out of an assessment is accurately defining the talents needed for the job.
“One of the things we focus on first is: What are the critical demands of that role?” she says. “What are the recurring patterns, thoughts, feelings, and behaviors that are needed to be successful in that role? Does the role include a high level of influence, execution, strategy or relationship building? These really translate into key talents.”
Credit Unions have many assessment vendors to choose from these days. Polling firm Gallup, which has leadership research spanning more than 40 years, has interviewed and studied more than 50,000 leaders in a variety of industries, including healthcare, education, government, financial services, manufacturing, retail, hospitality, and telecommunications. Other firms offer faster, less expensive options.
Ensuring Validity and Reliability
Regardless of vendor, credit unions want to make sure the tool they use is valid, which means it can measure specific requirements and predict future performance, as well as reliable, which means it offers consistent test results. These factors play an important role in an organization’s hiring success and avoiding legal challenges, Theriot says.
“To ensure that the selection tool remains a valid predictor of actual job performance, it is correlated with relevant, reliable performance measures for a given role,” she says. “Positive correlation indicates that those who score higher on the interview are also better on the job. In the event of a legal challenge, it is essential for an organization to have the documentation produced by a predictive validity study. That study becomes one of the organization’s main lines of defense of the selection tool used within the hiring process.”
Some of the helpful features available in assessments today are a predictive validity study or utility analysis, which demonstrate the degree of the tool’s positive impact on productivity and financial performance. However, to be accurate, organizations must collect and archive objective criteria for success in a specific job in the months after a person is hired. It requires an adequate pool of people tracked in the database as well as a suitable amount of time-series performance data.
“A predictive validity study or utility analysis can be used to show, for example, increases in per-person productivity, percentage to sales goal, employee engagement, customer satisfaction, customer engagement, profitability, and so on,” Theriot says. “It can also show the associated cost savings in terms of training dollars and reductions in turnover.”
HR managers must consider other practical sides of the assessment process — namely time and cost. Job positions with a high volume of applications — such as tellers, or “service champions,” as they’re called at TDCU — might necessitate a shorter online assessment used as part of the up-front screening process to fill vacant positions as quickly as possible. Senior managers — including C-level hires — might require a more comprehensive assessment administered near the end of the selection process to a small group of applicants.
Choosing The Right Senior Manager
Not all senior personnel need to have the same talents. For example, outside loan officers require a different skill set from inside loan officers. Both are senior-level, operational positions. As such, both leaders need vision. However, one has considerably more influence over the enterprise than the other.
TDECU tracks talent requirements for different types of leaders:
Executives: Responsible for the success of the organization. They must plan, direct, or coordinate enterprise activities.
Senior Leaders: Responsible for operationalizing the executive leader’s vision. They must create a clear and compelling plan and build an engaged team.
People leaders: Responsible for leading others as well as leading and supporting other managers. They take care of department productivity, workplace engagement, selection, and employee development and retention.
Operational leaders: Responsible for the functions of workflow or processes across the organization. They manage smaller groups of people and are in a technical or specialized field, such as IT or legal.
A thorough interview process goes a long way toward evaluating where a candidate’s talents lie, but a valid and reliable assessment test can shed light on factors that even a skilled interviewer might miss. It can also help the organization be more proactive in improving talents to ensure the best fit for the job. For example, a credit union can pair an applicant for a management role who is weak on assertiveness with a senior-level mentor to develop that talent and ultimately help ensure positive performance.
No matter how strong the pre-assessment tool is, however, it cannot replace a proper interview.
“We’ve been asked before: ‘Can’t we have a magic scanner that says this is the right person in terms of fit and culture?’” Theriot says. “Managers would love that.”