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Benchmarking And Human Capital

Benchmarking And Human Capital

Is your organization effectively engaging the human capital it needs to compete? Most companies understand that effective management and deployment of assets can mean the difference between success and failure. But many companies fail to consider their most critical asset—human capital.

“A” performers can be 50-100% more productive than “C” performers. Clearly, identifying “A” performers can help enhance an organization’s overall output.  So how does an employer identify “A” performers and retain them?

The answer to both of these questions is simple: Benchmarking.

Benchmarking has long been an effective, yet underutilized tool to help employers utilize human capital.  

Why Benchmark?

To effectively manage human capital, organizations need to have as much information as possible. Unfortunately, the employee selection and management process is often clouded by subjectivity and incomplete data.  

Benchmarking applicants and employees clears the air by providing the following benefits:

  • Identifying an individual’s true talents
  • Clear basis for comparison with other candidates
  • Comparison of actual abilities with those required by the job
  • Provision of questions to ask in an interview
  • Introducing objectivity into the selection process
  • Evidence of due diligence in the event of litigation
  • Ability to benchmark successful performers
  • Basis for developing specific training and development programs
  • Insight for managers on how to best manage subordinates

Benchmarking Tools

There are hundreds of tools available for employers to use. Excluding specific skills tests and generalized honesty/integrity tests, most employers want to understand an individual’s mental abilities and personality traits. The challenge is to choose a tool that fits your company culture.

Intelligence and reasoning tests can be helpful, but are not adequate predictors of job performance. Similarly, the hundreds of personality tests available can’t provide a complete picture of an individual’s mental abilities.

Overly simplistic scoring scenarios implemented by many test developers only add to the confusion.  The majority of tests provide single-score or pass/fail scoring.  While quick to read, such scoring systems contribute to hasty hiring decisions and create the potential for future litigation concerns.

The solution is one instrument that includes mental and personality measurement, with diagnostic feedback that is not based on pass/fail methods.

Choosing a Benchmarking Tool

When considering testing options, you should keep three critical factors in mind:

  1. What the test measures
  2. How results are presented
  3. Job relevance

There are other items to consider when choosing a test, but most are covered by these three areas.

What Is Measured

Intelligence tests do not take a candidate’s personality into consideration, they only provide a partial account of one’s potential for success. Conversely, an analysis of an individual’s personality is incomplete without gathering insight into how that person learns and processes information.  

Since both are needed, you should choose an instrument that combines mental and personality measurement in one tool.

How Results Are Presented

Single-score or pass/fail scoring can not only create overreliance on test results, but also subject companies to compliance and litigation concerns.

These drawbacks can be avoided by choosing a test that provides scores on a scale that can be related to the Normal Distribution (Bell Curve). This system makes it easier to relate scores to the job requirements via a benchmark of successful performers.

Benchmarking

To be truly effective as a selection tool, a test must have a means of comparing the scores of applicants to those of successful performers in the job for which an applicant is being considered. Benchmarking existing employees provides the basis for analyzing an applicant’s likelihood of success on the job.

Benchmarking involves identifying an employer’s top performers in a job category, and testing them with the assessment to be used in the selection process for new candidates. Each employee’s assessment score is plotted, and the scores for the entire group are statistically analyzed to determine the traits the group has in common. This analysis results in the benchmark for the job category.  Following is a score sheet for a leading job-fit assessment, The Sales Achiever, showing how a benchmark is used.

 

Mental Aptitudes 

      
MENTAL ACUITYSlow Learn          ………X          Fast Learn
BUSINESS TERMSUninformed                 X            Knowledgeable
MEMORY RECALLUnaware             ……. X      Aware
VOCABULARYLimited          ……X…        Strong
NUMERICAL PERCEPTIONImprecise                ……X…  Accurate
MECHANICAL INTERESTIndifferent              X               Interested
 

Personality Dimensions 

       
ENERGYRestless          X………        Calm
FLEXIBILITYFlexible       ……X…           Rigid
ORGANIZATIONDisorganized     X ……….           Planful
COMMUNICATIONReserved         ………X        Interactive
EMOTIONAL DEVImpatient          ……X……     Tolerant
ASSERTIVENESSCooperative         ………. X      Authoritative
COMPETITIVENESSTeam Player          ……X………  Individualist
MENTAL TOUGHNESSSensitive        X ……….        Tough
QUESTIONING /PROBINGTrusting          ……X…        Skeptical
MOTIVATIONSecurity                …X……  Recognition
 

Validity Scales 

                                                    
DISTORTIONFrank Answer…………X…           Exaggerates
EQUIVOCATIONChoose Alter.…………X…           Choose Middle


In the above example, The Sales Achiever scores are presented for comparison against a benchmark pattern.  A benchmark pattern represents the range of scores on The Sales Achiever of successful performers for a particular job category. By utilizing a benchmark, an employer can “see” how an individual who has been tested compares to successful performers in the job category under consideration. Comparison of an individual’s scores to a benchmark provides concrete data as to a person’s likelihood for success on the job based on results, and ensures that use of The Sales Achiever is related to the relevant job.  

With a benchmark in place, employers can clearly view how an applicant compares to successful employees. The benchmark makes applicant selection much easier and, just as importantly, provides a consistent basis for the selection of applicants—a critical tool for preventing litigations.

In Summary

Benchmarking has a long history of providing employers with valuable, objective insight into an individual’s likelihood of successful job performance, but not all tests are equally adept at providing the specific information you may need. When making a decision to implement a pre-employment testing program, consider the following questions:

  •            What do we expect to achieve, and in what time frame?
  •            Can the results of the test investment be measured in dollars?   
  •            What is the dollar investment vs. the potential dollar return?   
  •            What is the experience of the testing vendor?
  •            How long has the testing vendor been in operation?
  •            Has an employer been involved in litigation related to a particular test?

We can help you with answers to these questions, contact us for the information you need to make an educated decision about using pre-employment testing to maximize the effectiveness of your greatest asset—human capital.

To learn more about our assessments, visit our website.

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