This Is No Joke! What Makes Best-in-Class Companies So Much Better?

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This Is No Joke! What Makes Best-in-Class Companies So Much Better?

This is no April Fool’s Day joke!

Nearly four times more employees “exceed expectations” in Best-in-Class companies (the top 20%) than Laggard companies (the bottom 30 percent.) And more than 7 times the hiring managers are satisfied with new hires after one year in Best-in-Class organizations. What do best-in-class do differently?

One thing is they use employee assessments and their utilization is on the rise faster in these top performing companies than all others.

When asked why they use employee assessments, most managers reply “to avoid making another mistake” or “to hire better employees.”  While those are two common outcomes, what if employee assessments could improve both employee and customer retention, increase engagement, and identify more high-potentials?

Since 2011 assessment use has grown over 20 percent just for pre-hire alone. This desire to incorporate objective data into the hiring decision making is the primary reason that 59 percent of organizations use assessments. That is one finding from a 2014 study released by Aberdeen Group.

But according to the study, those reasons are just the tip of the iceberg how and why best-in-class organizations use assessments.

The most compelling reason might be improvements in performance – employee and company performance.  Compare the difference between the best in class and laggard companies.

Best in Class Laggard
New hires meeting performance goals 81% 63%
1st year retention 89% 76%
Employees highly engaged 85% 57%
Positions filled internally 74% 50%

Best in class companies also saw an 11 percent year over year improvement in customer retention compared to 5 percent in all other organizations.

When is the right time to use assessments?

When it comes to improving hiring decisions, the best time seems to be as early as possible.  Sixty-one (61) percent of best-in-class companies used assessments at the “top of the funnel” to screen external job applicants compared with only 33 percent in the laggard category.

Sixty (60) percent of the best-in-class companies used assessments at the “bottom of the funnel” too in making final hiring decisions compared with just 46% of the laggard companies.

But the assumption that assessments only add value before you hire is largely exploded by best-in-class organizations. Half of best-in-class companies use assessments as part of their succession planning process. Only 18 percent of laggard companies do.  The same holds true for identification of high-potential talent. Fifty-two (52) percent of best-in-class companies used assessments while only 25% of laggard companies did.

The right time to use assessments doesn’t stop at hiring and promotion.  Forty-five (45) percent of best in class companies used them to prescribe learning and development needs. Only 22 percent of the laggard companies used them.

A business case is being made for the use of employee assessments.  It is not coincidence that best-in-class organizations experience better business outcomes than those that don’t.

Assessment use is on the rise. I expect this trend to continue.  The linkage between having the right people with the right skills and meeting organizational goals is becoming clear. For any organization dependent on delivering consistent results and high-quality experiences for customers, the link between positive customer experience and having the right employees “on the bus” has been established.

The Aberdeen Group offers these recommendations for organizations to get the most out of assessments.

  1. Understand what success looks like first. Make sure all managers are on the same page when defining success. Do your best to tie success to measurable behaviors.
  2. Use assessments consistently. This is not only a legal consideration but a functional one.
  3. Use a variety of assessments. Despite the urge to do so, one assessment cannot accurately assess job fit, skills, abilities, behaviors, and values for all positions and roles.
  4. Adapt with the business. The decision to stick with or stop using a particular assessment should be linked to business outcomes, not a manager’s opinion of the test results or an expedient way to cut the budget.
  5. Leverage the technology. Too often a pre-employment assessment is filed away after the job offer never to be seen again. The results of many assessments can follow an employee throughout his or her life cycle – helping him or her develop new skills and reach his or her potential.
  6. Take on assessment data. Simply getting a “score” isn’t enough. Assessments include a lot of useful data and it’s time companies begin to use the information sitting right under its noses.