Talent Assessment Tools in India, 2016: A Collaborative Study by SHRM India and MeritTrac
The talent war that HR has been facing in the recent years is never like before. It's not only selecting the right fit to avoid the bad hire cost to the company that is a concern for HR. It is also equally imperative for HR to ensure that the employees are continuously preparing themselves for the emerging talent requirement to perform to their optimum potential and contribute effectively to the organization's goals. It is for these two reasons that there has been an increasing use of talent assessment tools in the organizations.
These tools provide HR a deeper insight into the thought process and behaviour of talent. Based on these insights, HR can redefine is talent acquisition strategy, streamline the recruitment process, do the right profiling of candidates and filter the best fit candidates from the vast talent pool. However, in India, the market for assessment tools in India is still nascent with 42% of organizations yet to adopt any of these tools. In order to gain a further understanding into talent assessment practices in India, SHRM India and MeritTrac conducted a collaborative study between August and September 2016. This study was released at the 5th SHRM India Annual Conference and Exposition held on the 29th and 30th of September, 2016 in New Delhi.
The objectives of this study were:
- To understand testing and assessment practices in the talent acquisition and talent management function.
- To understand the challenges that organizations face in the usage of these tools.
- To understand the support that organizations require to integrate these tools.
- To develop better assessment tools in the light of organizational needs.
The research team administered a 19 question survey to talent acquisition and talent management leaders from more than 130 small, medium and large organizations across various sectors.
The report revealed some interesting results.
Usage of Assessment Tools
There is a huge market for assessment tools, though it still remains untapped. The good news is that the market is expected to grow significantly in the coming years.
- At present, only 58% of organizations use assessment tools in the select stages of the employee lifecycle.
- The use of assessment for fresher & lateral hiring and workforce development is expected to be much lower.
- 34% of organizations use assessment tools for managerial/supervisor jobs, 23% use across the boards for all jobs/hierarchy and 22% use for entry level hiring. This could be because there is a higher cost per hire and more challenges in mass recruitment.
- Organizations still use traditional assessment tools such as skills, abilities, personality or behaviour tests (26%) and interviews (20%). 360 degree tools and software tools account only for only 11% and 5%, respectively, indicating the need to build awareness about their impact.
- In most organizations, HR/Internal teams (31%) are the key decision makers in the selection of assessment tools. External vendors/partners (7%) exercise a very little discretion, highlighting the need for their greater involvement in the selection.
- The impact of usage of assessment tools is the highest on identification of high potential talent (rating score: 65.5), followed by improvement in quality of hire through inputs at final selection stage (rating score: 63.75) and improving quality of hire for laterals/senior to mid positions (rating score: 61.25).
Evaluation of Usage and Reporting
- Though 75% of organizations track and evaluate the impact of assessment tools on business, only 45% of them measure the impact of assessment tools through data! 25% of organizations do not measure the impact of assessments at all while another 30% measure it based on gut-feel. This is an alarming revelation, which needs to be addressed appropriately and immediately.
- The primary metrics used to evaluate the benefits of assessment usage are managerial opinions (12%) and correlation with performance assessment (12%), followed closely by supervisor ratings on hire (11%) and time to hire/cost per hire (11%). This indicates that organizations need to look beyond the above traditional metrics based on supervisor/manager feedback/opinions to more quantitative and objective metrics like profit, absenteeism and revenue.
- The highest positive impact (verified by data as well as gut feel) is on new hires meeting performance goals, improvement in hiring manager satisfaction and improvement in cost per hire.
Support and Integration
- The extent of support in adoption of assessment tools lies in this order: complete leadership or executive team buy-in (26%), collaboration between line and HR to ensure business alignment (20%), clearly defined process (20%) and employees' understanding of the process (20%). These figures indicate that assessments are delivering value to the organizations.
- Only 6% of the organizations review assessment data annually through the use of metrics, indicating the need to have systems in place to regularly capture data and build a business case to increase the usage of assessment tools.
- 47% of the organizations rely on their HR professionals to interpret assessment tool data, while only 8% depend on internally trained specialist or psychologists and another 9% rely on external qualified professionals. This gap needs to be bridged to ensure the accuracy of the interpretation.
- During the selection of solution/assessment tools, the key criteria laid down by organizations are: the ease of administration (12%), the validity of the tool (11%), customizability (10%), content (10%) and able to demonstrate business value (10%). The provider's experience with organizations of similar needs stands at a mere 3 %. This shows that organizations value and expect quality over familiarity with service providers.
Challenges in Adoption
The top challenges in using assessment tools are cost considerations (17%), inability to justify ROI on the tool (17%), lack of management buy-in for use (12%) and perception that it takes more time and energy (12%). Technology (5%) and negative impact on the candidate perception (4%) are at the bottom of the list, indicating that these two are not barriers to adoption of assessment tools.
- About 81% of organizations have already adopted or are likely to adopt social media profiling tools for candidate selection/screening. Another 80% are considering using online simulations. This shows that online assessment space is the next big trend.
- However, going mobile with online assessment and gamification for training purpose has not received a complete nod from HR.
- The top priority to adopt technology based assessment tools are enhanced employee/ talent management pool (15%), larger candidate base (14%), enhanced candidate management (14%) and enhanced speed & quality of assessment (14%).
- The fact whether industry peers are using or would be adopting assessment tools is not a key criterion. It is the value for money and delivery of expectations that matter the most to enhance the recruitment experience for candidates.
To sum up, the report highlighted that there is an increasing awareness about the importance of assessment tools. However, there are challenges and the HR professionals need to make a strong business case to justify their impact on the bottom line of the organization.
This report is a very useful guide for talent acquisition / talent management leaders and technology vendors. The full report can be viewed here Talent Assessment Tools in India, 2016