HR Assessments: Everything You Need To Know
Businesses that are particular about growth take their time to assess what they're doing correctly and what needs to be adjusted. This forms a perspective and helps them deal with issues that could mitigate their growth. While assessments should be a company-wide initiative, there is one area that requires more focus – human resources.
The HR department of an organization is an important and sensitive one. Activities in this department can either add to or hinder the organization's overall success.
Businesses need to evaluate their HR department from compliance policies and practices, how the department fits into its holistic strategic goals, and whether additional HR services are needed. A comprehensive understanding of your HR practices will not only help you avoid potential liabilities, but also help you manage your human capital more effectively.
In this article, we will be discussing HR assessment and why it is important to your business. We also look at what to measure, the different types of HR assessments there are, what should be included, and finally, we will look at how you can choose the best type for your organization.
What Are HR Assessments?
HR assessments are a comprehensive investigation and evaluation of the human resources activities going on in an organization. It can also be a review of the HR services that are delivered to an organization. The following is what an HR assessment can do for your business:
- Reveals actionable recommendations for change and best practices
- Evaluates the compliance and effectiveness of workplace policies, practices, and programs.
- Provides a strategic and operational examination of existing workplace policies, practices, and programs.
- Helps to address the strengths and gaps in service and how these services connect with the need of the employees and organizational goals.
- Helps in the evaluation of the structures and competencies of an HR department, its workflow, roles, and obligations.
Why Are HR Assessments Important?
The effectiveness of an organization's HR activities needs to be examined for the following reasons:
- Helps the organization determine if its HR practices are credible. This can be achieved through the internal and external evaluations of HR practices. While the internal evaluation focuses on the costs and benefits of the HR activities, the external evaluation focuses on the general contribution of HR to the organization.
- Helps to enhance the performance of the business. Recommendations from an HR assessment can help the organization to adjust HR activities accordingly in a way that increases profits, market share, and quality of products.
- Helps the organization to ensure that its employee's skills meet the requirements of the organization.
How HR Metrics Impact On Your Business
In HR assessment, most companies measure employee satisfaction, absenteeism, and costs, but only a few can interpret how those metrics impact their business. Let us examine how these HR metrics can impact your business.
Turnover
Organizations generally track employee turnover to determine seasonal trends. For instance, to calculate the percentage of new employees leaving the organization voluntarily within the first 3 months, and divide the total number of employees in the same 3 month period.
In industries with high turnovers, such as retail and customer service centers, a lack of resources can impact the volume of the work that can be handled. A thoughtful evaluation and planning can prevent shortages.
Absenteeism
Examination of absenteeism data might reveal business impact related to product delays, missed deadlines, or longer wait times for customer service. When the percentage of these metrics rises, they usually amount to increasing customer dissatisfaction.
Analyzing HR metrics allows the HR department to make actionable recommendations and propose solutions. To ascertain the cause, or analyze what has happened, why it happened the way it did, and how it can be prevented in the future.
Benefits Costs
Dividing the cost of the benefits by the cost of labor gives you the total costs of benefits. This percentage reports the total cost of benefits as a percentage of the total cost of compensation.
Rising rates might result in a subsequent workforce analysis and may warrant the need to identify another benefit plan, reduce the workforce or hire contingent workers.
Age
To calculate the average of the company's population, divide the total age of the workers by the total number of workers. Potential impacts should be considered as the average age rises. Older and more experienced workers may be ready to take on more responsibility, mentor younger workers, and make recommendations on how to improve the process.
Conversely, they retire soon and leave a gap in the workforce. This will negatively impact the company’s ability to deliver on its business promises to its customers. This is one metric to be given close attention at every point in time
Uses
Workforce-planning systems identify current and future needs for skills and competencies. Maintaining an HR scorecard of key performance indicators allows business leaders to track and monitor HR metrics alongside other operational metrics to correlate and extrapolate.
Analysis techniques, such as predictive analysis, enable the HR department to use employee data and statistics to predict staffing needs, training requirements, and assist employees in career planning. This typically leads to a more productive workforce and better resource utilization.
Who Conducts HR Assessments?
Human resources managers or departments may perform assessments to predict the future performance of employees. Certain assessments are particularly helpful when an individual is being considered as a candidate for an open position at a small business.
What Do They Measure?
Below is a list of items that HR assessments often measure including:
Satisfaction
Measuring the reaction of training course participants helps you to determine if your training course met their expectations. To evaluate satisfaction, you can distribute a survey form after the training events finishes. Ask the participants to rate the value of the training. Encourage them to provide constructive comments. If the scores are low, examine the comments to identify trends and devise possible solutions to the problem.
For example, participants rate an instructor highly but give the course an overall low score. Reading the comments may help you learn that this is because participants do not like printed reference materials and prefer electronic documents. With this information, you can modify course materials and provide learning documents in their most preferred format.
Learning
To measure if participants acquired skills and knowledge, training professionals design tests that cover course topics. These tests sometimes include fill-in-the-blank, matching, multiple-choice, or short-answer questions. Attach these questions to the course's learning objectives.
The exam might also include verbal or written answers to case studies and performance tests to ensure that a participant has mastered the course content. It is good practice to put them through a test at the beginning and the end of the course to measure progress.
Behavior
Measuring the effectiveness of assessment for your human resource department typically includes observing employees when they return to the job. This may require interviewing managers about changes in performance, and analyzing whether employees can perform tasks more accurately and effectively after the assessment.
It is good practice to observe employees after 30, 60, or 90 days. This allows for measuring knowledge retention. It also gives the employee time to become familiar with the organization or overcome any possible learning curves.
Impact
To measure the results and impacts on business, you need to evaluate operational metrics. For example, track and monitor customer satisfaction rate, employee retention rate, or completed sales.
This information helps you to determine whether the training/assessment has made an impact on the bottom line of your business. With this, you can justify business expenses associated with the training design, development, and delivery.
Types Of HR Assessments
We’ve added in some popular HR assessment types to consider for your business including:
Personal And Cognitive Assessments
Personal and cognitive assessments also known as cognitive tests help employers to examine a potential employee before making them a job offer. For example, pre-employment tests allow you to identify a candidate's level of energy, cultural awareness, and frustration tolerance.
If you have a global customer service team, you may want to employ only individuals with high scores in these areas. These tests reveal an individual's strengths and weaknesses. Furthermore, employees can make use of results from personal and cognitive assessments to help guide themselves in the development of their careers.
Competency Assessment
Job roles published by HR personnel are usually clearly defined, containing a list of all required knowledge to help in the completion of job tasks. This is so that all employees understand what's required of them. Training courses are aimed at improving the competency of employees. To measure competency, they usually include exams at the end of the sessions to determine if a participant succeeded in achieving the objectives for which the course was designed.
In addition, training professionals may observe employees when they get back on their job, to see how the training has affected their skills and further evaluate competency. Employees may also be required to earn industry-standard certifications to progress in their careers.
A practical example of this is a project manager being required to earn a certificate from the Project Management Institute before earning a promotion or salary raise.
Organizational Assessments
HR practitioners may distribute surveys to find out what works for the company and what needs improved upon. For instance, a survey can be created to find out what types of support programs employees need in the workplace. The result of this may be the inauguration of programs to address issues in work and life balance.
Furthermore, the results of these programs may be used to justify the investments made. They could also be used to discontinue programs that employees believe have little value.
Motivational Assessment
To make sure a potential employee will fit in with the organization, a human resources manager may conduct a motivational inventory and an organizational assessment. The motivational inventory assesses what the individual wants, although motivation may shift over time. The idea is to find people whose motivation is in alignment with the goals of the organization. When this fit occurs, employees tend to achieve a high level of performance. Test results may also be used for career counseling when openings are available.
Common HR Assessments Methods
Here you’ll find some common HR assessment methods to consider including:
Field Review
This is one of the most traditional methods of the HR assessment method. In this method, a person from the HR department looks after and assesses an employee to evaluate their working styles, effectiveness, and output.
This method involves a lot of labor, especially for the HR person who will have to take out a significant amount of time from their schedule to understudy an employee.
One tricky thing about this assessment is that since an HR personnel may not understand the nitty-gritty of another team's work especially if it is a highly specialized field, they may not be able to revert an accurate assessment.
However, if the HR team is concerned that employees would otherwise not be getting an unbiased review from their managers or peers, the Field Review Method can be effective. This method needs to be seriously considered before implementation so that the results are as accurate as necessary.
Assessment Center
The Assessment Center Method takes HR assessment outside the confines of the office, most times to a central place where managers, assessors, and employees can gather. These assessment methods involve assigning a series of tasks to be performed by individuals or a group of people.
This method was first created in the 1930s by the German Army and has since been adopted for modern employment. In this method, assessors can examine very particular work-related skills that employees and applicants will need in a company by giving them exercises, and conducting workshops, role-playing games, and simulations.
Skills that can be assessed using this method include:
- Communication
- Interpersonal
- Leadership
- Problem Solving.
This method is more suited to evaluating general skills than skills that are highly specialized to a specific role. Also, because the exercises in this method are very competitive, it may end up breeding an overly, unhealthy competitive environment.
As a system for checking on interpersonal skills, the Assessment Center Method has its benefits, but it should be paired with another assessment for more comprehensive results.
360-Degree Feedback
In the HR assessment world, this is one of the most popular methods. In this method, the HR manager and the assessor collect feedback on an employee's performance from everyone affiliated with them.
The employee’s peers, reports, direct managers, and managers from other departments that the employee conferred with on a project, are all asked for their feedback on the employee’s performance, work ethic, deliverables, general competence, and behavior.
The 360-degree feedback method ensures that the assessment system takes into account multiple points of view for a holistic report from in-house and remote working staff. And it is an important way to understand how an employee works within a company.
In this method, it is important to ask multiple people so you could get an unbiased point of view. This method will give you an insight into how the employee handles goals, stress, and project management, and help you decide whether they deserve to be moved into a leadership position.
Management By Objectives (MBO)
Management by Objectives (MBO) was coined by Peter Drucker, author of several management books and well-known management consultant (one of the most popular assessment types used by HR managers as well). This method requires employees and managers to sit together at the start of every year, or quarter and outline goals and process the need to achieve those goals they have set.
This assessment method is ideal in an environment that is collaborative and fosters strong interpersonal relationships between managers and junior staff. It is important to set goals that are achievable, measurable, and time-bound. An example of this type of goal is a 15% increase in social media followers in the first quarter. Note that this goal is achievable, can be measured, and has a particular time allotted to it. When goals are met, employees are better motivated.
However, it is important to ensure that there are enough goals for an employee to be engaged and motivated, but not too many, as that will put undue pressure on the employee.
While this method yields good results, it does not consider interpersonal and communication skills. Hence, it should be done alongside another method to make up for that deficiency.
What Should A HR Assessment Include
Your HR assessment should often include the following factors.
Analytics
This includes a review of what organizational analytics are currently available and which might need to start being tracked, for example, time to hire, turnover rates, identifying top performers, employee engagement, etc.
Performance Management
This area examines how employee performance is analyzed and how to communicate improvement opportunities to the employees.
Development And Training
What training is offered internally to all employees? New employees? Managers? Is attendance at external training programs encouraged/allowed? Is there a budget for training? Are there gaps in hard or soft skills that need to be addressed?
HR Staffing
An HR assessment should include information about what each member of the HR department is responsible for and whether or not the department is understaffed or overstaffed and include recommendations for changes or reorganization in positions.
Benefit And Compensation
This is a review of how compensation is decided, what benefits should be offered, and to whom. It also reviews a recently done salary survey and any other thing related to compensation for employees.
Administration And Compliance
This encompasses whether an organization is meeting legal obligations in areas such as file retention, medical leave, employee classifications, anti-harassment/discrimination, and other legally essential items. The administration function includes documentation of policies and procedures, organizational charts, and other organizational data.
Talent Acquisition
Reviews the process for new employees to join the organization – how positions are advertised internally and externally, who is involved in the interview process, how offers are made, and applicant tracking systems.
Choosing The Best Type Of Test For Your Company
With dozens of assessments on the market, choosing one can be very difficult. HR and recruitment professionals are left with the task of narrowing options with the need to show immediate results and return on investment. This can be a very rigorous task. The following are the things you need to consider when choosing the best test for your company.
Set Goals for Recruitment
Recruitment goals should align with long-term business goals, short-term business changes, and meeting team and culture needs. Chances are, these goals are already defined inside your organization and you can simply adopt them.
Most recruitment professionals also have secondary goals such as:
- Creating a better recruitment experience for candidates
- Reducing the cost versus quality of hire
- Reducing turnover
- Improving employee happiness and therefore reducing churn
- Making unbiased but quality hires
Each of these goals can help you target which assessments you might need depending on selection criteria.
Set Goals for Assessments
What should your assessment do? In most cases, a good assessment will fulfill at least the following goals:
- Deliver objective and legally defensible information into the hiring process
- Create a cost-effective and efficient interview process by integrating behavioral and personality testing to highlight desirable or undesirable traits
- Reduce the need to use hunches and impressions in the hiring process
- Increase understanding of the candidate’s skills, behavior, preferences, and personality
- Equip HR with the tools to develop employees and teams and make selections based on that goal
Most assessments fall into a few categories including:
- Technical skills test (e.g., Excel test)
- Cognitive ability test (OPM or Harver)
- Situational judgment test
- Communication skills test
- Job simulation test
You can then choose which of these is most relevant to your organization.
Reliability And Validity
Reliability and validity are two incredibly important factors to consider when choosing HR assessments. Here, most are scored based on data on how often individuals score the same on a test.
However, most assessments are scored by their manufacturers or by companies selling those services, so you may want to invest in personal research if you doubt the results.
Reliable Results
Any test must have anti-faking measures and have measures with which to measure that candidates are lying, giving the answers they think you want to hear, and quite simply, panicking. Any test that relies on questions like “I am a hard worker” without using alternative measures to test those results in more subtle ways to validate those answers probably won’t function very well.
Once you have a test, it’s important that any HR or recruitment professionals using it take the assessment themselves, and hopefully multiple times. Understanding the assessment, what answering it is like, and what candidates are likely to see concerning their role is critical to assessing whether the results are reliable or not.
Customization
HR assessments are usually not black-and-white and may not work the same way for different organizations. While some can be executed out-of-the-box, it might take a deliberate effort of testing and optimizing different methods to come up with a custom solution for your business.
Conclusion
Running a company requires a great deal of ongoing assessment of all the company’s resources. But when it comes to human resources, the techniques used to assess people need more understanding.
The above methods are the most commonly used in HR but not all of them may be the right fit for your team and company. Because, as outlined above, no one assessment method gives you a complete overview of an employee’s role and achievements. You might want to speak to a professional about a custom solution for your business.
