recruiting budget assessments

There are few recruiting truths that we hold to be self-evident. Bad hires are costly but so are the good ones. There’s a wealth of information about the cost of hire, including a stat from the U.S. Department of Labor that says bad hires cost nearly 30 percent of that employee’s annual salary. Yikes.

At the same time, we know that the majority of companies lie about their budget for assessments. But why? What’s the challenge? We know assessments work – there’s plenty of science involved and the results are undeniable. So what gives?

A Failure to Communicate

Lest you forget, “Humans, no matter how well trained or bias-averse, are flawed. They sometimes become mentally distracted during interviews, missing key points shared by the candidate. All too often they depend for recall on memory, and/or incomplete and hastily-typed or hand-written notes taken during the interview.”

Now, don’t get me wrong, humans are great, especially those of the recruiter variety. But at the end of the day, we have to account for and cannot be expected to retain every last drop of candidate information gleaned from an interview. Unfortunately, the domino effect is that as we move candidates through the process, with every piece of information that falls off our screen, we, in turn, understand less and less about the person we’re trying to hire. The end result is a not quite perfect but potentially passable hire – should they stay on the job.

If we insert an assessment into the mix, we give the candidate a chance to demonstrate their skills and abilities in an objective setting. And the advantages are quantifiable, as we learned from this research conducted by Aberdeen. From this, we find that companies using pre-hire assessments are 36 percent more likely to be satisfied with their new hires and at the same time, these employees are more likely to be engaged in their work and exceed performance goals within their first year. So again, we ask, why aren’t assessments in your budget?

Budgeting in the Benefits

Let’s hope that this is all just an oversight and maybe this article will serve as your official wake up call. If not, I implore you to look into your existing budget and survey the scene. Rarely does money magically appear – so dig deep. Beyond being able to implement those aforementioned, incredibly useful assessments, there are benefits to being more involved in budgeting (to your company as well as your candidates).

Of course, there will be roadblocks. Budgeting for assessments can be challenging for any number of reasons. From an overall lack of understanding about its value prop to inexperience with the different assessment pricing models (to be fair, there are many). Add in different groups within HR to complicate the matter further and we end up right where we started, which is to say, nowhere.

Knowing your cost-per-hire is equally as important as knowing time-to-hire and other vital metrics. Armed with the right information, you can allocate budget in a way that’s impactful across your open reqs. Chances are, some positions are harder to fill than others and come with a higher price tag. However, once in place, these employees have a more substantial impact on the organization’s innovation and bottom line. They deserve the extra care and attention that comes with spending more.

Finding the Right Fit

Fear not, there’s definitely a solution out there that fits into your budget. But it’s going to take some work to find the perfect one, as Dr. Charles Handler reminds us, “…Remember that you get what you pay for and that taking the time to do a more in-depth job analysis can have tremendous value because it contributes to legal defensibility and also serves as a critical foundation for a variety of other HR activities.”

As a first step, quit lying to yourself and identify the type you need – off the shelf or custom. Figure that a lengthy work sample will cost more than your basic, multiple-choice test geared towards a more general audience. Don’t forget development as custom assessments will also increase your set up and implementation fees. Plus, some solutions come with a cost per-applicant or per-test that you’ll need to take into consideration. Once you have a handle on what’s out there – and what it might cost you – sign up for a trial. What’s right for one req might be wrong for another, and much like the candidates you’re looking to hire, it never hurts to see things in action before you commit.

William Tincup

William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.