Problem and Setting
PsyMetrics was engaged by one of the largest banks in the U.S. to implement an online pre-hire selection test to assess applicants for the (bank) Teller and Banker positions as part of the client’s automated hiring process. On an annualized basis the bank administers over 100,000 assessments.
PsyMetrics commenced a Concurrent, Criterion- Referenced validation study. Although this specific study relates to banking employees, the principles are applicable to all industries and job positions. The approach taken in this instance reflects the industry best practices process taken by PsyMetrics in implementing pre-hire assessments; which, not only produces a more targeted product and better prediction, but also provides assurances of legal compliance with applicable regulations. Competencies identified via a job analysis were matched to 8 scales from the PsyMetrics test library. Ninety-seven Tellers and 104 Bankers completed these 8 scales. Their supervisors then rated them on various important aspects of job performance identified in the job analysis. Statistical analyses were performed comparing test scores to these job performance ratings.
The results of the statistical analyses concluded that the PsyMetrics scales/content were statistically correlated with overall job performance. Using the Client’s annualized year-to-date data, it was determined that the test (using the 28th percentile cut score) will reduce the number of incumbent employees rated as “unsatisfactory” by 60%. It is estimated this would save the client approximately $4 Million (assuming the cost-per-hire to be $5,000). Additional savings included time saved in interviewing applicants that were likely to be poor performers (in this study, the number not interviewed would be 17,000), managing and counseling unsatisfactory performers, the cost of error corrections, lost opportunities for up- selling, the cost of poor customer service, lower unemployment compensation costs, etc. In addition, the recommended refinements and revisions to the process will enable the Client to substantially reduce its recruiters’ interview burden by further reducing the number of candidates that are interviewed on the telephone by an approximate additional 20,000 applicants. Assuming a cost (based on recruiter time) of just $20.00 to $25.00 per interview there will be additional hard dollar savings in excess of $400,000 to $500,000 per year.
60% Reduction in Unsatisfactory Performers
$4,000,000 Estimated Recruiting Cost Savings