Measuring the Value of Psychometric Assessments

How can you measure the value that psychometric assessments add to an organization? How can you communicate the financial impact of the benefits to senior management? Are the assessment tools that you are using having the desired effect? These are questions that users of psychometric assessments in the work place need to ask themselves. As psychologists, we call the measurement of a tool’s effectiveness a validity study. For those of you in the business world, the term used is return on investment.

At first it may seem difficult to measure the value of using psychometric assessments, but it really is quite straightforward. With a few steps you can quickly identify what you need to do, measure the impact of the tools, and communicate the return on investment to those who need to know.


Step One – Define your problem

The first step in measuring the impact of assessment tools is to go back to the beginning and ask yourself the following questions:

• Why did we start using assessments?
  
  
• What problems/issues led us to use assessment tools?
  
  
• What aspects of organizational/personnel performance did we want to improve?

A well defined problem is much easier to solve than a vague one. When you have clearly identified the problem you can then move on to the second step.


Step Two – Define Success

Having refocused on the original problem or issue that lead you to use assessments in the first place, you can then consider how to identify if you have been successful or not. Ask yourself the following questions:

• What will success look like? Is it decreased turnover, improved communication, the hiring of better employees?
  
  
• If your problem has been solved what changes will have taken place in the organization?

 
Defining success is clearly outlining your end goal. This will help you in a number of ways. First, you will know what you are working towards, and second, you will know when you have achieved the results you set out to accomplish.


Step Three – Measure Success

Your definitions of success will point you in the direction of how to measure it. Unfortunately, this is where many organizations fail to follow through. When the assessment tools have been implemented, the project is seen as complete, and the review to measure success does not take place. However, to measure the return on investment of your use of assessments you need to implement measures of success.

So how do you proceed? Well, by reviewing your definition of success you will know what you need to look for. Then you simply need to implement ways to measure whether that success has occurred. You can use surveys to measure changes in work place communication, engagement and satisfaction. HR metrics will help you identify changes in the rates of turnover, absences, and accidents. Performance reviews will help to identify the increase in employee effectiveness. You then have all you need to show the impact of using assessment tools in your business.

A Quick Example

Let’s assume that you want to use psychometric assessments to hire more effective employees. The problems you are facing are a high rate of turnover, and too many candidates whose performance is not living up to your expectations. To best define your problem you should know your current rate of turnover and the aspects of job performance that you want to improve (this could be increased sales, improved communication, high production quality, improved customer satisfaction).

You can then outline the goals you are hoping to achieve. What do good employees do that you would like more of your new employees to be doing? How much of a change in the turnover rate will have a significant impact on your recruiting and training costs? Your goals will show you what you need to measure to determine your successfulness, and how this is best done.

To then measure success you can create performance reviews that collect information on the aspects of job performance you defined in the first step. Current employees could be rated on their sales, communication skills, production quality, and ability to satisfy customers. You can use your HR metrics to identify the change in the rate of turnover.

Psychometric assessments lend themselves to the easy measurement of their effectiveness. As you can see, identifying the true impact of an assessment program is relatively straightforward and can provide a realistic picture of the time and money saved. Measuring the return on investment of psychometric assessments goes a long way in championing your work.