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This is a very straightforward example showing the potential value and gains from using psychometric tests.
Potential Productivity Gains from Psychometric Testing
Let's begin by assuming that a company needs to recruit 10 new employees. The organisation has done its homework, and already knows the 'value' of its employees. In this example, company XYZ knows that for the position they wish to fill, a high calibre employee is worth £40,000 per year to the company, and a low calibre employee is worth £20,000. From previous experience, the company also knows that by using their existing selection techniques (application form, interview, reference check), they would typically be able to recruit 7 high calibre people, and 3 of low calibre. That is to say, using their traditional recruitment methods, the company can expect an annual value of:
(7 X £40,000) + (3 X £20,000) = £340,000
Now, let's say that by incorporating psychometric testing into the selection process we can make a marginal difference. For example, by incorporating tests at the selection stage, the company manages to recruit 8 high calibre people and 2 low calibre people. The annual value to the company in this case would be:
(8 X £40,000) + (2 X £20,000) = £360,000
This represents a net gain to the company of £20,000 per year, for each year of service! Given the costs associated with assessment, which are only a tiny fraction of the potential gains, there is no wonder that successful companies see the benefits of using psychometrics.
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