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The first and perhaps most important step in building a high-performing team is to be extra-careful when choosing team members. Improving your quality of hire will ultimately improve your organization's performance.
It's tough to judge whether a candidate will succeed in a job during a typical hiring process. But the consequences of a bad hire can be severe - and costly. At the same time, hiring a great new employee can have an incredible impact on an organization.
Assessments provide useful information that can help you make better decisions.
A bad hiring decision can impact an organization in many ways. First, they can waste valuable resources and training time. Second, they can impact customer success and revenue. Finally, they can reduce team morale.
 The U.S. Department of Labor estimates that the average cost of a bad hiring decision equals approximately 30% of the individual's first-year salary. That's why the American Management Association (AMA) estimates that over 70% of employers in the United States test at least some of their candidates.
Good hires cause success
A solid new employee is like a breath of fresh air. They can be energizing. They can increase the confidence of customers - leading to increased revenue. They can raise team morale and have a multiplier effect on overall performance.
The cost of an assessment program is trivial compared to the positive financial impact of a great hire, or the negative costs associated with a bad hire. For example, let's assume you are hiring an individual with an salary of $50,000. If you test 10 candidates at $50 each, your total testing cost is $500. Now, if you hire a great employee, the increased annual productivity could be 50% of their salary or more - let's say $25,000. Your return on investment would be 25,000/500 or about 50 to one! If you avoid hiring a bad employee the avoided cost could be %30 of salary - or $15,000. In this case the return on investment would be 15,000/500 or 30 to one!
Beyond the test scores themselves, just having a testing program in place will provide several secondary benefits:
- It will make a positive impression on your candidates that you take the hiring process as well as job performance seriously.
- It will provide structure to your hiring managers, to get them thinking in terms of job-related competencies, and to familiarize them with the various types of characteristics in a person that can contribute to performance.
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