Why Use Assessment Centers? Because They Increase Quality of Hires

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The use of assessment centers (simulation assessments with live role plays) has been on the rise with 66% of North American companies reporting that they use virtual assessment centers to identify talent (Mercer, 2018). Even though going virtual has reduced the cost of assessment centers, they still remain more expensive than traditional pre-employment tests that measure personality or cognitive ability. Is the added investment in assessment centers justified?

There are many pre-employment tests available on the market ranging from $10-15 personality or cognitive ability tests to thousand-dollar executive assessment centers. The distinguishing feature of an assessment center are live humans who act as role players during simulations and observe and score applicants’ behaviors in different exercises. It’s the labor intensity of this type of assessment that drives its cost up compared to per-employment tests that are completely automated.

Despite the higher cost, the use of assessment centers is on the rise, especially their virtual version. Last year, Mercer reported that 66 percent of North American companies had virtual assessment centers in place. Why are organizations willing to invest more in assessment centers compared to the cheaper pre-employment tests?

 

Assessment Centers Are More Accurate

It’s a truism in talent acquisition that cognitive ability and some personality traits (esp. conscientiousness) are the best predictors of job performance across roles and industries. However, a recent meta-analysis confirmed that assessment centers measure applicants’ competencies that are more than just their personality or cognitive ability. Through different simulation exercises, assessment centers measure applicants’ ability to plan and organize, solve problems, drive for results, influence others, show consideration of others, tolerate stress, and communicate. Together, these competencies add to the accuracy of prediction. While cognitive ability tests showed a correlation of 0.32 with job performance, and cognitive ability plus personality showed a correlation of 0.45; when assessment center ratings were added to the mix, the overall predictive validity increased to 0.54. It means that applicants who do well on the tests and in the assessment center are 10 times more likely to be high performers than applicants who do poorly.

 

Applicants Prefer Assessment Centers

Research on applicant reactions to pre-employment tests points to the fact that applicants for professional and leadership roles want to be assessed fairly and given ample opportunity to showcase their skills. When compared to just a single cognitive ability test, applicants who completed an assessment center perceived it as more relevant to the job and the selection process as more satisfactory. In the same research study and as a result of their favorable experience with the assessment center, applicants who completed the assessment center were more likely to accept the job than applicants who just completed the cognitive ability test.

With so many cheap pre-employment tests available on the market, why are organizations willing to invest more in assessment centers? Because assessment centers increase the quality of hires, especially for professional and leadership roles. Recent research has shown that assessment centers increase the accuracy of prediction of who’ll be successful in the job and elicit favorable reactions from applicants, who are then more likely to accept the job offer.

 

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About the Author

Martin Lanik is the CEO of Pinsight, a leadership assessment and development firm. Pinsight’s mission is to bring fairness to leader selection, development, and succession through unbiased people insights and highly personalized leadership development solutions. More than 100 companies - including AIG and CenturyLink – have implemented their programs, which have been featured in Forbes, Fast Company, Chief Executive, Chief Learning Officer, and Investor’s Business Daily. Martin holds a Ph.D. in industrial/organizational psychology from Colorado State University. Learn more at www.pinsight.com.

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