In the film Jerry McGuire, the most memorable line of dialogue is straightforward but unforgettable: “Show me the money!” Cuba Gooding Jr., playing a pro athlete, shouts in the direction of his agent, played by Tom Cruise.
Extending that mindset to employers seeking a successful talent assessment outcome, the phrase that eventually will pay boils down to “Show me the validity!” The money, in the form of productivity and cost savings due to reduced attrition and other factors, is sure to follow.
According to Ryne Sherman, chief science officer, at Tulsa, OK-based Hogan Assessments, talent assessment suppliers who can’t offer hard data on validity are mainly about marketing, not results. So buyer beware, Sherman says.
“Today’s emerging assessment firms might say some exciting things, but talking up the validity of their talent assessment outcomes typically is not among them,” Sherman says. “It’s often a case of eighty percent marketing, twenty percent science.”
In Hogan’s 30-year-plus history providing effective talent assessment to customers, that equation is flipped: Science is the focus; marketing ranks a distant second.
“It seems like new firms in the personality assessment space are appearing every day,” Sherman adds. “It reminds me of a Wild West scenario, where people come in with snake oil and say, ‘Here, we’ve got a miracle. It cures this. It’ll cure that.’ But in this case, without data-driven validation, it doesn’t really cure anything.”
Sherman explains that there are many new age-sounding, glittery assessments out in the marketplace, most alluding to emerging buzzwords including neuroscience, artificial intelligence, big data, machine learning, etc.
“Admittedly, it can sound impressive. But, in the end, can they say their results are valid?” Sherman says. He explains that unlike the medical or pharmaceutical businesses, personality assessments have no regulating body. No FDA-like approval or licensing is required.
However, effectively validating assessment results takes much time, research, paperwork and investment.
“Literally anyone can say they’ve created a personality assessment and start selling it tomorrow,” Sherman says. Unfortunately, he explains, potential customers who are not well-versed around the most critical topics for validating personality assessments often are caught unaware.
“Based on our experience it’s hard to describe validity in everyday terms, but the easiest way to describe it is to say, ‘Does the assessment being offered actually predict workplace performance?’ It’s that simple.”
In addition, not only does it predict performance, but to what degree does it predict it? Does it predict performance/outcomes very accurately or not? Many newcomers in the space are using gamified assessments that don’t really address that question.
“You can’t find it in their technical manuals, and you can’t find it in their marketing materials,” Sherman says, adding that the reason is the data to show their assessment efforts predict actual performance and/or success doesn’t exist. And that’s the whole raison d’etre of talent assessment.
“They just say, ‘Well, we’re fun, we’re neuroscience-based, and we’re fair to everybody,’” he says.
At Hogan, Sherman points out that heavily investing in research is the cost of doing business and what ultimately drives success – for both Hogan and its clients.
“We have a large research staff and we invest a lot paying salaries in research, but most other assessment companies don’t,” he says. “They spend on marketing and tend to forget about the research.”
Unfortunately, many HR professionals don’t have scientific backgrounds, so for them evaluating the scientific merits of any particular assessment is a challenge. Sherman says that from their point of view, any two assessments look very similar from the scientific standpoint, especially when they are inundated with buzzwords like neuroscience and big data.
Hogan has actually seen that effect in its own data. The firm conducted an analysis of about 2,000 HR professionals in its database and a large percentage scored low on the science knowledge dimension. As a result, an HR professional who scores low on science is more prone to go with gut reactions or intuition. Conversely, people who score high on science favor making data-driven decisions about talent.
“The critical thing I would look for is a company’s history of validity, the history of predicting workplace performance,” Sherman says. “If they couldn’t show me a history of predicting workplace performance, I would just say, “No thanks.’ ”
In the science world, performance success is determined by what are called criterion-related validity studies. That simply means Hogan measures personality and builds a profile that predicts performance six months, twelve months, two years down the road.
“We have more than four hundred of these criterion-related validity studies, and they are not always performance focused. Sometimes they are focused on turnover. Sometimes, it’s absenteeism. Sometimes, it’s workplace safety,” he says.
Core assessments, in fact, can solve problems common to all organizations—safety solutions, high-potential identification, leadership development, according to Sherman. Hogan’s research archive also has performance data for most jobs in the global economy, and its assessments help individuals, teams and organizations across the world. Finally, its research team develops customized assessments to solve unique problems for clients.
“Personality assessments can reduce turnover and workplace accidents while boosting engagement and productivity,” Sherman says.
That can mean a serious boost to the bottom line. Based on data accumulated over three decades, Hogan found an employer hiring 200 people out of 1,000 applicants can conservatively expect a return on investment when using Hogan assessments at $1,000,000. On the more liberal side, the estimate of ROI using Hogan’s help rises to $2,620,000. Also, Sherman cites a Hogan case study that showed financial service agents who were hired using Hogan assessments performed at three times the level of the average agent and earned the same multiplier in average annual commission.
“Employers making data-based decisions, whether within HR or in other strategic areas, are just killing it in the modern economy,” Sherman says. “Think about all the tech companies who are among the highest-valued, successful companies. They are all believers in data-driven people strategies. In other words, they bank on the validity of the data to make their talent assessment decisions.”