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Hire Learning — Personality Testing Cost Effectiveness

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Every company in corporate America would like to retain their good employees and get rid of the others. Turnover and Retention have become important HR topics, ever since the DOL quoted the cost of hourly turnovers in the $2K - $6K range, and salaried turnovers in the 100%-150% of annual salary range.

With the unemployment hovering around 6.5%, the challenge of hanging onto the most productive employees has taken on more importance. The more new employees a company has, the less it has of service, sales and profits during training periods. The stockholders of today are not patient. They want quick returns on their investments.

So why isn’t every company using personality testing? The immediate dividend of testing is that the company can stop hiring the wrong people, or hiring the better people and putting them into the wrong jobs for the wrong reasons. When we compare the average cost of testing, which is about $100 per candidate, to the turnover costs stated earlier, what’s not to like?

A typical company of 200 employees may have 25% turnover. Assuming that 40 of them are hourly, and 10 of them are sales and among peers, members, employees, or vendors. We are looking at turnover costs annually of about $1,000,000. This is a hidden expense, which doesn’t show up on any divisional P&L, but does disappear from the bottom line.

If you want to impact your turnover costs positively, you must compare your present turnover to your industry benchmark, and consider how much a small investment in personality testing would save the company. If the HR Manager went to the Executive Committee and said that they could invest $5K in testing to realize a potential savings of $200K, would it look like a wise investment?

HR Departments must consider the bottom line implications of their operation, and come up with ways to improve company earnings.

The most important transaction each day, in every company, is the next hire. Either the company gets a little stronger, or it gets noticeably weaker. If we are willing to invest thousands of man-hours and dollars in evaluating some new technology, why aren’t we willing to spend a few bucks on our next personnel acquisition?

LD Moran, Achievement Tec Press

ANOTHER RULING LIMITS ADA

Disabled people cannot demand jobs that would threaten their lives or health, the Supreme Court said in a victory for employers who argued they could be forced to hire people who would turn around and sue over workplace injuries.

The unanimous decision makes it clear that employers can turn away people who want a job, even if they would be risking their lives to do it. The ruling also makes it easier to fire disabled people who already have jobs that put their health in jeopardy.

The case is the latest in a line of rulings that limit worker rights under the ADA, the landmark 1990 civil rights law for the disabled. It is the second major ADA ruling this year that strengthened employers’ hands while making it more difficult or impossible for some workers to claim the law gives them special protection.

This latest case involved a former Chevron refinery worker with liver disease, who wanted his job back, whether chemical exposure would worsen his condition or not. Mario Echazabal said he has no symptoms, can physically do the job and should be able to decide for himself.

Dallas Morning News, Associated press release.

WORKERS BRACED TO BOLT

“When you hire the wrong person, and put them into the wrong job, that’s usually the precursor to litigation.”

Unknown Labor Attorney
Before the recent economic downturn, companies in all industries were clamoring for people to staff their organizations. The severe shortage of people impaired the ability of companies to deliver their products and services effectively to their customers. This chronic shortage of delivery capacity affects productivity, service levels, quality, profit generation and turnover.

During that period, we saw excessive job-hopping with employees becoming free agents going to the highest bidders. The impact on the remaining employees was longer hours, more stress, and less effectiveness in servicing the customers.

Recent work force surveys indicate that as the current economy recovers, there are significant increases in work week and overtime hours. Many workers are, in fact, planning on leaving their current positions as soon as the economy is back on track. The fact is that the recent economic slowdown only served to mask a chronic labor shortage. The coming shortage is expected to be worse than ever, and experts predict it will last for decades. Consider these statistics:

  • By 2006 there will be 151 million jobs in the USA, but only 141 million people in the work force;
  • By 2003, 20% permanent IT positions will remain unfilled;
  • There is currently a shortage of 600K IT workers;
  • One-third of the federal work force will be retiring by 2008.

Remember- when things start to look brighter, your employees are going to bolt. Be prepared!

Robert Supplee, Supplee Consulting

 

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