During a recent meeting, a colleague mentioned that he attended a lecture by a South African economist who stated that the SA economy will take at least three-years to recover from the consequences of the COVID-19 pandemic. This will lead to companies cutting budgets and being hesitant to take decisions with financial cost implications. He continued to state that his employer is considering cutting the budget for selection activities but still intends to continue to employ the envisioned number of employees.
This situation is probably true for a lot of organisations trying to survive the economic downturn! But, is cutting the budget for selection activities an appropriate decision when people still need to be employed and promoted by your organisation? Is it not a situation of being "penny wise, but pound foolish" when only considering the short-term consequences of such a decision, without understanding the medium- to long-term consequences of such a decision?
Before providing an answer to the previous questions, it might be a good idea to understand the variables influencing an individual's job performance. Figure 1 provides a handy framework to understand the importance of both contextual and task requirements likely to influence successful job performance.
Figure 1: Factors Influencing Successful Job Performance
When selecting individuals for a specific job, emphasis should be placed on the enablers, gatekeepers, and compatibility factors that influence job performance. Enablers are the technical, functional and leadership competencies that are based on knowledge, skills and experiences. The enablers refer to mostly learned competence that enhance the person-job fit. Gate keepers refer to intra-personal capabilities (some also learned) and preferences that also impact the person-job fit. Examples are cognitive ability, specifically General Mental Ability (Schmidt, 2016); personal preferences (personality), values, emotional intelligence, and integrity. Compatibility factors refer to whether the individual can associate themselves with, and support, the organisation's purpose and whether the individual can fit into the organisation's way of being and doing. This refers to person-environment fit. Examples are: can the individual associate with the organisation's strategic focus and company brand; can the individual support the company's values and work within the organisation's culture; does the individual have the organisation's competencies?
A job analysis is conducted to identify the task and contextual requirements. The information obtained from the job analysis must be verified by subject matter experts. Once verified, the information from the job analysis is used to design and develop an assessment centre that can measure these different variables that are likely to lead to successful job performance. Table 1 provides examples of possible measures for some of the variables that form part of an assessment centre.
Combining the use of psychometric tests (measuring the gate keepers) with simulations (measuring the enablers), allow the decision-makers to base their hiring decision on the candidate's potential, as well as what the candidate is currently capable of doing. Supplementing this with an interview to assess some of the compatibility factors can provide additional information that can be used when making a hiring decision about a specific candidate.
A well-constructed assessment centre better predicts successful job performance (with a mean corrected criterion related validity of .44) than just using ability measures (with a mean corrected criterion related validity of .22) (Sackett, Shewach, & Keiser, 2017). This means that by using an assessment centre (consisting of numerous assessment methods that provides rich candidate information), instead of using only one of the methods, can improve the accuracy of making a correct selection decision that an individual is likely to be successful in her/his job within the organisation. Considering the complexity of the phenomena being measured and predicted, as well as all the influencing factors, being able to predict more than 40% of the likely job performance is not something to frowned upon!
Although a well-constructed assessment centre focuses on multiple factors that predict job performance, it is impossible to measure all possible factors that are likely to influence an individual's job performance. Therefore, the following factors (in general) should also be noted (Schmidt, 2016):
• The accuracy of the job analysis on which the selection instruments were based
• The onboarding of the individual
• The job resources the employee has available (social support; feedback; coaching; autonomy)
• Quality of leadership from the immediate supervisor
• The tools and methodologies available for job performance
• Team / organisational climate (which includes relationships)
These factors emphasise the importance of Talent Management interventions that take a wholistic perspective of the employment life cycle to improve the chances of new employees being engaged when working in your organisation.
When decision-makers want to cut the budget for selection activities, it will influence the choice of assessment instruments to be used during a selection assessment centre. Using fewer instruments can lead to less evidence-based information being obtained to inform your hiring decision, possibly negatively impacting the predictive validity.
Before cutting the budget for selection activities, also consider the possible implication and collateral cost of making the wrong selection decision. Calculate the cost over time of the following:
• Separation Cost (of those employees who resign due to the impact / influence of the wrong appointee)
· Cost of the Exit interview (s)
· Cost of the exit administration
· Separation pay (if applicable, e.g., when a case of constructive dismissal can be proved)
• Replacement Cost (for those employees who resigned due to the wrong appointee)
· Job advertisements
· Pre-employment administration costs
· Interview and other selection costs
· Pre-employment medical costs
• Training Cost (this includes cost of training programmes; coaching; etc. to get the new appointee to the required proficiency level)
• Cost of the difference in Performance levels (from being appointed to being proficient)
The above costs exclude possible legal costs, and the wrong appointee could possibly still be in your employment!
A calculation of the total utility of using an assessment centre for selection can be determined (i.e., the financial gain, in rand value, of using a particular selection technique leading to more accurate decisions). Using the Brogden-Cronbach-Gleser selection utility analysis, Roodt, de Kock, and Schlebusch (2012) calculated the possible utility of using an assessment centre (R965 440) compared to an interview (R675 552) when selecting a manager (at manager of manager level) in an organisation. They found that the financial gains when using an assessment centre clearly outperformed the financial gains when using an interview to select managers. This utility cost should be used as motivation for the immediate financial cost of conducting a well-constructed assessment centre using various instruments to obtain information about both contextual and task requirements that influence successful job performance.
If your organisation is considering reducing its spending in terms of selection, the short-term gains may look promising (first order consequences). However, the long-term consequences of such budget cuts are likely to influence the sustainability of your organisation, not to speak of the financial implications of selecting the wrong candidates (second order consequences)!
Ensuring that your organisation allocates enough money to the budget for using selection assessment centres will allow you to be "penny and pound wise" with the limited money your organisation has. It is, after all about the sustained prosperity of your organisation for the good of all stakeholders.
With thanks to an anonymous reviewer for providing valuable input
10 December 2021