Personnel Selection – What Works
If you are involved in personnel selection you no doubt have often asked yourself the following question. Which method is best? What combinations can be used for both entry level hiring and promotion of experienced job applicants. After all the demand for talented people is constantly growing. Most of us have had the experience of appointing an individual only to find that the individual’s performance has fallen well below what had been hoped for. I’m sure you would like to know then what personnel selection works best.
Professor Frank Schmidt who has worked for many years in the area of personnel selection has recently published a seminal paper ‘The Validity and Utility of Selection Methods in Personnel Psychology: Practical and Theoretical Implications of 100 Years of Research Findings’. This working paper has built on his previous research into the area of personnel selection. Some of the findings will undoubtedly be a surprise and previously held views on personnel selection will receive a bit of a rethink.
Schmidt & Hunter’s original research summarized 85 years of research findings on the validity of job selection methods up to 1998. Schmidt’s updated paper looks back over the past 100 years has been able to improve the accuracy of the validity estimates and improve the prediction of job performance. The cumulative findings of the research show, that it is possible for employers to substantially increase the productivity, output, and learning ability of their workforce by using selection procedures that work well and by avoiding those that do not.
Financial Benefits of Good Personnel Selection
Do you know?
A superior worker in an unskilled or semi-skilled job produces 19% more output than an average worker
A superior skilled worker produces 32% more output than the average skilled worker, and;
A superior manager or professional produces output 48% above the average for those jobs.
What does this mean financially for an organisation?
If we assume a salary of £40,000 a superior worker, will produce £16,000 more in output than the average worker and a massive £32,000 more in output than a below average worker. You can see therefore that selecting talented people does really have a huge impact on the profitability of any organisation. Remember these gains only relate to for one new hired employee and for one year in the post.
Image if you hire 5 people a year and they all stay with the organisation for 5 years. Comparing a superior worker with an average worker, would mean £400,000 in additional output. When comparing a superior worker with a below average worker this would mean £800,000 in additional output gains.
You can see that the financial gains for any organisation can be massive.
So – What Personnel Selection Methods Will Increase Profits
Professor Schmidt’s research of the effectiveness of selection methods provides substantial evidence in the operational validity for operational job performance. Total job performance is always shown as 1.00, i.e., perfect job performance. The table below illustrates the selection procedures / predictors of job performance and their operational validity. These no doubt will cause much debate and indeed hopefully reflection on your current selection approaches.
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Some Thoughts on Personnel Selection Methods
General Mental Ability Tests – Thousands of studies of the validity of General Mental Ability have been conducted over the last 100 years. By contrast, fewer studies (often far fewer studies) have been conducted on the validity of other selection methods such as interviews, assessment centres etc. The figure of .65 produces a high level of real benefit in that it produces 65% of the gain in job performance that would be realised with perfectly accurate selection. Therefore, as outlined above the financial benefits of using general mental ability tests and identifying gains in job performance is particularly strong.
Structured and Unstructured Interviews – Until recently, the available meta-analytic data indicated that the unstructured interview was less valid than the structured interview. Application of the new, more accurate method of correcting for range restriction has changed that conclusion. With the former less accurate procedure for correcting for range restriction the validity estimates were .51 for the structured interview and .38 for the unstructured interview. The new reliability range restriction now controls for different interviewers, interviewing the same group of applicants, on different days.
Assessment Centres – These are generally a mixture of team activities, analysis exercises, presentations and some psychometric tests (General Mental Ability). They can operate for a full day or even two days. Due to the number of personnel and assessors required they are quite expensive for organisations. They do though have substantial validity (.36) as reported in the research findings. It does though raise questions as to whether or not different approaches will provide better outcomes, at a considerably less financial cost. At Testing Talent we have been actively working with organisations to combine psychometric tests with structured interviews and additional assessments. Our feedback from organisations using this approach is that they are identifying talented individuals who are performing to an above average performance level.
Combining Different Personnel Selection Methods
What if you were to combine different selection methods alongside General Mental Ability tests? Would it be possible to see a greater percentage gain in validity? The answer to this is YES. The two methods that show the highest gain in validity, when combined with General Mental Ability tests are, Integrity Tests with a 20% gain and a Structured Employment Interview with a 15% gain. Integrity tests are not very widely used for selection purposes in the UK or Ireland although more test publishers are developing them. It is certainly an area were there will be further research combined with a range of ethical considerations.
How Can We Help?
Testing Talent are experienced Chartered Occupational Psychologists. We work for our client organisations and are fully independent of all test publishers. With the growth of on-line psychometric testing we can provide testing facilities across the world. With 20+ years experience we have built partnerships with organisations who rely on us to provide unbiased advise and support, in both hiring and promoting individuals.