Though high turnover costs may not produce recordable associated losses, many employers and HR professionals underestimate the high impact of “hidden costs.”
According to a study done by New York’s William M. Mercer Inc., 45% of employers report turnover costs of $10,000 per lost employee and 20% reported costs closer to $30,000. After losing an employee, employers often bear the financial burden of recruitment, interviewing, hiring, training, learning curves, a decrease in employee morale, and lost company knowledge, credibility and customers. To reduce such costs, employers must align their retention strategies with their hiring practices.
To further complicate things, many employers are now facing a constant shift in skillset requirements, rendering many current employee skills ineffective. Advances in technology have eliminated many positions while others require new skill sets and a specific ability to adapt to ever-changing markets and job roles. According to Forbes contributor, Greg Satell, this shift is sure to send firms scrambling for adaptable and customer-oriented talent. However, adaptability is rarely learned through training and without matching employees’ skills to their job roles before hiring, employers will increasingly suffer high turnover costs due to an unsatisfied, misaligned and overwhelmed workforce.
In spite of this, with talent matching tools, there is hope! In a recent PwC study, commissioned by LinkedIn, it was found that just by correctly matching talent to employers, the 11 countries studied, could unlock as much as $150 billion annually.
Match Talent to Company Skillset Requirements
Talent matching means doing a little background research before hiring to make sure applicants’ skills, adaptability, values, enthusiasms, and goals match with those required for their roles within your company. By using talent matching tools, instead of finding yourself going through the recruitment process again in six months, you increase the chances of a long, fruitful, and mutually beneficial relationship.
To correctly match talent while avoiding discriminatory litigation, recruiters and HR personnel should use various screening tools and tests to objectively assess candidates. Many reasonably priced online firms are now available for test administration and interpretation purposes. Here are four suggested tools to objectively match candidates:
Phone Screening Interview
Phone interviews are a great way to avoid any first impression biases that may stand in the way of correctly choosing your new hire. In addition, they are a great way to test applicants’ communication and people skills. Without relying on body language or professional attire to set the stage for them, when interviewing on the phone, applicants must make their communication and people skills speak for them.
While you surely have heard the saying that “it’s not personal, it’s business,” today’s customer expects it to be personal. They want to work with company representatives who can empathize with them and meet their needs, even as they are changing. This means building a strong team environment within your business and building relationships locally and globally. By testing for emotional intelligence, you can find out if your candidate can positively channel their own emotions, empathize with your customers and use emotions to build strong bonds, even when dealing with changing or diverse environments. Psychometric Tests help match potential employees with company culture, the workforce, and the surrounding community to ensure a sustainable fit. The objective nature of such tests enables hiring managers to focus on company needs as opposed to company tastes.
Skills Assessment Tests
A skills assessment test should be part of every hiring manager's recruitment strategy. These come in all shapes and sizes and can be adapted to your specific needs. If you are hiring an administrative assistant, for instance, you may ask them to take a typing and data entry test and a Microsoft Office test. Likewise, if you are hiring a potential expatriate, a skills assessment test can test for their foreign language knowledge. With online technologies and, consequently, reduced associated costs, these types of tests are helpful to determine success and job satisfaction, both factors that lead to higher retention rates.
Using a simple ROI calculator will, in fact, help you understand the financial benefit of using online assessments for hiring, and reducing turnover. After calculating all associated factors, for example, we at Mettl determined that a simple simulation test can incur a return as high as 37233% of the original investment.
Simulation tests are highly adaptable to each company environment because, in using the tests, the company simply allows the candidate to do what he or she would naturally do during a typical workday. In this way, you can determine if your candidate can handle customers effectively, deal with conflict positively, communicate well or even work cross-culturally. With two different distribution methods, the tests themselves are quite adaptable to each company’s needs. Either you can have your candidate participate in a real-world scenario, or you can provide your candidate with a written multiple-choice test where they can choose the best response to a given scenario. If you are hiring a programmer, you may ask him/her to take a coding stimulator assessment to test their practical programming skills.
Pre-employment testing is a great way to explore candidates' abilities, personalities and natural tendencies objectively, quickly and thoroughly. With advances in technology and employees scattered throughout the globe, online testing by a third party distributor is increasingly the way to save time and money. In addition, by using a third party test assessment firm, you can decrease the chances of any discriminatory-based lawsuits that can arise from administering and interpreting the tests yourself. So, the next time you are looking to hire, don't just rely on your gut to make a decision that may impact your company for years to come. Instead, set up an appointment with a good testing firm.
Topics: Employee Retention