The real cost of employee turnover varies widely by job and by industry. There are many online calculators out there to help you gage the dollar cost of turnover, and research undertaken by the Australian governments Council for Equal Opportunity in Employment (CEOE) advises that labour turnover costs range from between 50 and 130 percent of an incumbent's salary. But when you consider both the direct and indirect costs associated with staff turnover, this figure could be a lot higher.

So it makes sense to invest a little more into hiring and retaining the right people at the outset, not only to keep costs down, but to set the foundations for future success and growth.

Psychometric testing is often just one aspect of a multi-stage recruitment process, but research shows that when used appropriately, a robust and well researched assessment is the single most effective predictor of job performance (e.g. McDaniel, et al., 1994; Ones et al., 1994).

So with the litany of assessments out there to choose from, how do you know which one is right for you?

When considering the use of a standardised assessment, whether for selection or development purposes, here are five things to keep in mind to help you make the right choice.

1. Understand your requirements
There are many areas that psychometric assessments look at. Are you assessing for job skills or general intelligence? What about personality or emotional intelligence? Do you want to screen out applicants or develop internal staff? Before selecting an assessment you need to be clear about what you wish to measure.  Understanding the job, what it involves, the personal characteristics to do the job, and the performance criteria essential for success.    

2. Validity and Reliability of the test
An assessment should always come with a technical manual containing statistical evidence that the tool is both reliable and valid for its intended purpose.  Reliability is a measure of a tests consistency and stability. Validity ensures that the test measures what it purports to measure.  It is a major red flag if the assessment cannot show you its basic psychometric properties.

3. Norm Groups
The norm group for a test allows you to understand a candidates result in relation to others who have previously taken the test. This allows for the interpretation of the result to be meaningful. You should ensure that the test has a relevant and up-to-date norm group for your purposes.

4. Practicability and Utility
Is the test cost-effective? What are the benefits, risks and alternatives of using the test? Is training required to use the test?  What is the time required to administer, score and interpret the test? Is the test online or offline?  Does the administration need to be supervised?
It is good practice to develop a template that outlines all the questions you need answers to prior to choosing and purchasing an assessment. This will also allow you to compare assessments across publishers.

5. Understand Your Responsibilities
Scientifically developed psychometric tests are robust and powerful tools.  This is what differentiates them from a free quiz you can find easily on the internet. When using valid and reliable assessments for selection and development purposes, it is the test user’s responsibility to:

• Choose the test
• Administer the test appropriately
• Score and interpret the results
• Communicate these results clearly with others
• Review the appropriateness of the test and its use

Need advice on assessment for selection or development?  Contact a Pearson Talent Assessment consultant today.

By Andrew Shirlaw | Thursday November 3rd 2011 - 4:13 pm