Measuring the Business Impact of Employee Selection Systems to Improve Performance
Financial Metrics
To most organizations, financial impact is a primary concern and needs the most careful evaluation of the rightpractices for desired results. Much emphasis is given to the selection criteria of an employee to make sure that he/she is productive enough to deliver economic efficiency. Analysis of an employee's impact on the economic productivity of an organization needs data that can be drawn from multiple business metrics tracked by the organization or could come from the team or business unit's financial metrics to evaluate the efficacy of the employee selection system.
An organization that was studied for one of our key global assignments was a global quick service restaurant that was able to achieve an increase in revenues of about USD 6 million. Our assignment with this client mandated us to design customized pre-employment assessments for the store teams. The study was conducted for the global assignment out of North America on a control group set up, wherein two groups of recently hired employees one with low scores on a pre-employment assessment and the other with higher scores were studied over a period of time. The results showed that the higher scoring candidates had multi million-dollar increases in revenue as depicted in the graph below, indicating that pre-employment assessments help in making informed hiring decisions thus driving better business results.
Employee Sales Per Hour
Moreover, in similar assignments conducted in Aon US, it was observed that hiring highly rated manager applicants resulted in equating to 50% higher sales and a reduction of over USD 5000 in labor costs. This information can be used to suggest that an employee who is an appropriate fit for the job can definitely drive the revenue numbers in the favor of his/her organization, inching it closer to its ultimate goal.
Non-Financial Metrics: Quantitative and Qualitative
In addition to the financial metrics, the non- financial metrics are also impacted by the selection systems of an organization in the long run. To estimate a better understanding of their impact on an organization, we have mapped these non-financial metrics and translated them into quantitative financial returns.
Reflecting upon Aon Hewitt's recent projects, it was found that a high scoring applicant (high score on a job relevant assessment, therefore a better fit) during a pre-assessment test was twice as productive as the low scorers. Moreover, the low scorers were also twice as vulnerable to on-the-job accidents as compared to the high scorers as depicted in the graph below.
Employee Accident Rates
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