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There’s a new twist coming to talent assessment – a service pioneered and largely perfected by executive search firm Egon Zehnder decades ago in Europe. What’s on the way is likely to shake up the well-established ‘evaluations’ business popularized by Zehnder and its headhunting rivals and could set off a new wave of competition in the increasingly expansive leadership solutions sector.
Global HR and corporate recruitment teams are hurriedly turning to talent assessments — but the online and mobile variety, not person-to-person — to predict which candidates will be successful in their roles and to enhance their talent strategy with assessment analytics, according to a study by international assessment specialist Aon. The ‘Global Assessment Barometer 2016’ report, which questioned 2,776 HR, recruitment and talent practitioners across 14 countries, provides a snapshot of the key issues and trends in psychometric assessment, offering insights into its role and value.
Why Assessments Matter
The study shows that the global market for online assessment has grown some 18 percent in the last three years alone. Fifty-two percent of organizations now use online assessments, predominantly to recruit and develop key employees such as managers, white-collar workers, graduates and apprentices. Assessments are also helping to achieve greater diversity, as employers strive to make faster and more objective selection decisions.
“We’ve been monitoring worldwide trends in psychometric assessment since 2010, looking at how HR practitioners, hiring managers and leadership & development teams use different tests in different countries,” said a managing director at Aon.
Assessment used to be about reducing the risk of making a bad hire, he said, “but this year, we’ve seen a marked change.” Shorter, more customized, brand-relevant tests are now being used earlier in the candidate selection process to better identify people and supplement the search process. “Increasingly,” he said, “employers want to predict which candidates in their applicant pool will ‘fit’ their organization and be strong performers who will add value to the business.”
Companies like Futurestep, Korn Ferry’s online recruitment division that helped germinate the field of online assessment years ago, are likely to see a mass of new entrants jostling for their share of a larger slice of this burgeoning, and highly profitable, pie. Among them, companies themselves who’ve already successfully brought their recruitment capabilities in-house.
More Disruption for Recruiters
According to the study, the fastest growing assessment tools are development centers, assessment centers, integrity and values questionnaires and situational judgement questionnaires. The key topic areas for assessment are ethical working (loyalty, honesty, integrity, commitment), leadership, creativity, cultural fit, emotional health / ability to cope with stress and long-term potential. Two new trends have emerged this year: pre-application assessment and testing via mobile devices.
“Pre-application assessment is about educating potential applicants on the role and the organization, before they apply. This helps employers to find the right people and it stops browsing candidates from applying for jobs that aren’t suitable for them.” Mobile assessment, via smartphones and tablets, he said, allows candidates to complete their assessments whenever they want. Employers are now trying to ensure that their tests can be taken on mobile devices without compromising the user experience and fairness.
With the growth of mobile assessment, organizations are now adopting a ‘packaged approach’ that combines a range of assessment measures. Precisely who this affects, and when it affects them, is unknown — though recruiters told about the study seemed to show genuine concern that yet another round of ‘disruptive competition’ might be ahead.
New Growth Areas
The study reveals that organizations, generally, are becoming savvier in the way they utilize assessment data. “Over the past two years, it has become much easier to measure and evaluate the impact of psychometrics on business outcomes. There’s now a greater demand for accessible and interpretable analytics which can give fresh insights about all aspects of an organization’s talent strategy.”
Employers, he said, want to ask sophisticated questions and get real-time answers from their pre-hire data and their employee performance data. “Talent analytics and using validity studies to establish the best predictors of success are likely to be the growth areas in assessment in the future."
One of the first executive search firms to offer a dedicated practice providing leadership assessment was Egon Zehnder. The global talent provider started its leadership assessment and management audit businesses decades ago in Zurich, and over the years its consultants began spreading those services to more of its worldwide outposts. It took years for the concept to take hold in the U.S., but gradually the firm succeeded in signing up company after company, with Citigroup becoming its largest client for talent appraisals.
Growth is now slowing for several of the largest search firms — softness coming mainly from an industrial client base that had been in hiring overdrive since the recession ended. And while the same is true for Zehnder, the firm has nevertheless grown exponentially in the American market with annual revenues here last year exceeding a quarter billion dollars. Globally, the number exceeds $650 million. A big part of that revenue stream is driven by its assessment business.
“We have long been focused on developing and evolving the competency model, on a scale of competencies,” said Brian Reinken, who leads Egon Zehnder’s global assessment and development practice. “In today’s environment, there’s a common language in which most companies are very comfortable with an approach of assessing experience, competencies, and past behavior as a predictor to future performance. It is an area that has long been a focus for our firm and one that we’ve continued to invest in.”
Driving Better People Decisions
McKinsey & Co. is still developing its understanding of how data analytics drives better people decisions – and the management consulting powerhouse is now actively using these techniques to improve everything from talent acquisition to performance management, diversity hiring and retention.
“Our work confirmed that while top-notch technological capabilities are critical, they are not a silver bullet,” said Bruce Fecheyr-Lippens, a leader in McKinsey’s people and organizational analytics efforts based in Brussels. “Getting the right talent – be it experts in risk, marketing, or behavioral economics – to interpret and act on the data is just as important. So are leadership engagement and alignment.”
McKinsey will be the first to say that HR analytics is no substitute for engaging directly with employees in an effort to understand their mindsets, challenges and needs. But if done well, human resource analytics can generate data-driven, organization-specific insights for executives and human capital professionals to make more strategic decisions about their people.
London-based eg.1, a business insight and talent consultancy dedicated to elevating organizations through what it calls ‘game-changing talent and data,’ works with companies that are looking to scale up, make a strategic step change or simply to disrupt the status quo. The firm works within a self-developed market intelligence framework, and has recently launched the ‘GC Index’ which identifies game changing leaders and helps to create game changing teams. Leaders use it to assess the contribution and impact of all individuals across their entire organizations. London-headquartered, the firm recently opened a satellite office in New York, led by Victoria Gumbley, where it hopes to bring its proprietary assessment model to U.S. businesses, as well as extend the reach of its core business insight and talent consulting services.
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