TALENT ASSESSMENTTOOLS IN INDIA, 2016A COLLABORATIVE STUDY BY SHRM INDIA AND MeritTrac

As world economies rebound and future prospects look brighter than before; organizations are now,

more than ever before, becoming conscious of the need to make better decisions about their talent, both in terms of selection and workforce development. Human resource professionals are getting a voice

at the table because the leadership is conscious about the need of minimizing the risk from a bad hire or promotion and the need for employees to be deployed as per their interests to challenging opportunities internally within the organization.

We are witnessing organizational maturity in hiring and this has resulted in a greater emphasis on leveraging best

practices from across industries. Recruiting the right resource and ensuring that employees are constantly preparing themselves for emerging talent requirements are two key responsibilities of HR departments. Owing to these

responsibilities, there has been an increasing emphasis on the use of assessments for recruitment and organizational development over the last few years.

While assessments have been used as a tool to filter candidates for recruitment for some time now, there has been an

increasing emphasis on generating data and information about candidates which will play a greater role in their selection / rejection, onboarding and allocation decisions. There is an increased accountability on the HR departments with respect to

talent management and objective profiling of candidates are key to this.

The large number of qualified candidates in the working age group in the country has resulted in a fierce race for talent. Yet, with employability rates still tottering at the 25% mark, business needs to understand who they are hiring and their fitment to job as

well as to the organizational culture. The trend of large multinational organizations recruiting fewer, but the best fit talent means that they are willing to evaluate a larger talent pool for fewer roles. The proliferation of assessment tools has resulted in organizations having a much improved portfolio to choose from. The increasing use of technology for assessments has also

acted as a catalyst in making objective assessment of talent more central to the talent management process than ever before.

This research, conducted between August to September 2016, had respondents from over 130 organizations speak of how they use assessments to drive better people fitment decisions and impact business performance. These assessments that

evaluate employees' or potential employees' skills, knowledge, abilities and competencies effectively, support organizations in developing an accurate profile of their talent.

This collaborative study by SHRM India and MeritTrac on Talent Assessment Tools in India provides a comprehensive look

at how organizations are using assessment tools for hiring and talent management. It provides perspectives on not just the usage but also on reporting, support required and integration of these tools. It also looks at challenges faced by

organizations in adopting these tools and the future of assessments in India.

The report serves as an excellent guide for human resource professionals and vendor/partners in the Assessment Tools space. This is a part of SHRM India's continued effort to bring knowledge and research insights to the HR

community and we hope this report provides you with the support you require to make better people decisions.

Talent Assessment Tools:For Better Business Performance

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Key Insights from the Study

USAGE OF ASSESSMENT TOOLS

• There is a huge market that is yet to adopt the assessment tools. Currently only 58% of surveyed organizations use it for talent management in select stages of employee lifecycle. The use of assessment for fresher & lateral hiring and workforce development, individually, is expected to be much lower (Fig 3)

• Leveraged mostly for senior roles. Impact of assessment tools highest on identification of high potential talent and improving quality of hire (Fig 5 &8)

• HR / Internal teams are the primary decision maker for selection of assessment tools. External vendors / partners yet to be an integral part of the selection process of assessment tools (Fig7)

EVALUATION OF USAGE AND REPORTING

• Only 45% of the organizations measure the impact of assessment tools through data! 25% of organizations do not measure the impact of assessments while another 30% measure it based on gut-feel (Fig 9)

• The highest positive impact is on new hires meeting performance goals, improvement in hiring manager satisfaction and improvement in cost per hire

• There is a need to go beyond the traditional metrics based on manager feedback to more quantitative metrics such as profit, absenteeism, revenue etc. (Fig 10)

SUPPORT AND INTEGRATION

• Top support systems in adoption of assessment tools: Extent of leadership buy in, clearly defined processes and collaboration between line and HR functions (Fig 12)

• Only 6% of organization's review assessment data annually through the use of metrics, indicating the need to have systems in place to regularly capture data and build a case for furthering the use of assessment tools (Fig 12)

• Quality over familiarity of service providers! Top criteria for selection of assessment- ease of administration (12%), validity of the tool (11%), customizability, content and ability to demonstrate business value (10%) (Fig 15)

CHALLENGES IN ADOPTION

• Top challenges in using assessment tools – Cost considerations and inability to justify ROI of assessments (17%). Technology or negative impact on candidate perception are at the bottom of the list, indicating that these are not barriers to adoption of assessment tools (Fig 16)

FUTURE FOCUS

• The next big thing in the online assessments space! - About 80% of organizations have already adopted or likely to adopt social media profiling tools and online simulations in the near future (Fig 17)

• Top priority to adopt technology based assessment tools – Enhanced employee / talent management pool (15%), expanded candidate base, enhanced candidate management and speed & quality of measurements (14%) (Fig 18)

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Top reason for driving technology-based assessments:

“Identification of high potential talent in the hiring and talent management value-chain, along

with reduction in effort and saving of time for the HR professional

About the Study

Objectives

• To provide insights into testing and assessment practices in India in the Talent Acquisition and Talent Management space

• To provide insights on challenges organizations face in the usage of online assessments / testing, with the intent to develop better assessment tools as per organizational needs

Study participants

For the purpose of the study, a 19 item survey questionnaire was administered to Talent Acquisition / Talent Management leaders.

A total of over 130 responses were collected from large as well as small & medium organizations spread across sectors. The population identified for this study included representation from all sectors and organizations of varying sizes.

Following is the representation of sample size and type:

Table 1: Industry wise sample

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Figure 2: Annual Revenue

Figure 1: Employee Strength

>10000

2000 - 10000

500 - 1999

100 - 499

<100

13.7%

14.5%

28.2%

29.8%

13.7%

13%22%

7%

10%

61%< 100 crore per year

100 - 200 crore per year

200-500 crore per year

500-5000 crore per year

>5000 crore per year

05

06

Section 1: Usage of Assessment Tools

Annual usage

Figure 3: Usage of assessment tools annually

Figure 4: Budget spend in comparison to previous FY

58% of respondents are using Assessment Tools for Hiring and Talent Management either for recruitment (Fresher or Lateral hiring) or for workforce development (Fig 3). Considering the number of tools that are being used, the number of organizations using assessments across the employee lifecycle (recruitment and workforce development) is expected to be much lesser. About 53% of organizations are using the online mode for assessment delivery.

It is also found that larger proportion of sampled organizations (72%) spoke of the budget spent on assessments tools remaining the same or lower in comparison to the previous financial year. One of the reasons attributed to this could be the reduction in hiring that is expected in the current year. (Fig 4)

This brings to the conclusion that there is a huge market available and yet to adopt assessment tools for hiring and talent management. The existing market is also set to expand/grow in the coming years.

Number of assessments used anually

0 - 500500 - 20002000 - 5000>10000

22%

9% 3%

66%

42%

58%Usesassessments

Does not use assessments

Significantly lower than previous year(more than 20% reduction)

Lower than previous year(less than 20% reduction)

Higher than previous year(about 20% increase)

Significantly higher than previous year(more than 20% increase)

Same as previous year16%

38%

14%

13% 18%

07

Extent of deployment

Figure 5: Extent of deployment of assessment tools

Majority of organizations (34%) use assessment tools for managerial/supervisory jobs, followed by another 23% stating that they use them equally across board for all jobs and hierarchy. (Fig 5)

Only 22% of organizations surveyed use assessments while hiring for entry level jobs. The matrix of cost per hire or challenges of the need to improve the speed of hiring with respect to mass recruitment could be reasons for this trend.

Type of tools usage and Selection process

Figure 6: Type of assessment tool usage

Managerial/supervisory jobs

Across board for all jobs and hierarchy

Entry level jobs

Specific roles such as technical, sales, call center etc.

Hiring/development of senior leaderhsip positions 3%

34%

23%

22%

18%

Skills, abilities, personality or behavior tests 26%

20%

14%

12%

11%

11%

5%

1%

Interviews

Assessment centres

Resume/profile screening tools

Cultural/value fitment assessment tools

Multi-rater/360 degree tools

Assessment or test building Software tools

Others

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Fig 7: Selection process of assessment tools

Traditional set of tests top the usage graph even today. Skills, abilities, personality or behavior tests account for maximum usage (26%) across organizations, followed by interviews (20%) as a close second. While assessment of knowledge, skills, abilities and behaviour will continue to be used across the board, there is a need to build awareness and showcase the impact of newer tools such as 360 degree or assessment centers in talent management / acquisition space. (Fig 6)

Additionally, it is also found that for most organizations, HR/Internal Teams are the primary decision maker for selection of these assessment tools / tests. Recommendation from vendor / partner / consultant still appears to be the least priority for selection of tool (7%), indicating that they are not yet involved in the process of selecting the tool. Organizations have the opportunity to increase reliance on experts as the selection of the tool plays a critical role in the success or failure of assessments. (Fig 7)

Impact on HR areas

Impact of usage of assessment tools is highest on identification of high potential talent (Rating score: 65.5), followed by improvement in quality of hire through inputs at final selection stage (63.75) and improving quality of hire for laterals/senior to mid positions (61.25). It can be also seen that several organizations are equally positive about impact of these tools in areas like promotion readiness assessment and training needs identification; again indicating the diverse usage HR professionals are putting these tools to. (Fig 8)

It is clear that the organizations that are using assessments place it up the value chain in terms of impact in both talent management and hiring, for high potential identification and candidate selection.

Figure 8: Impact of assessment tools

Identifying high potential talent

Improving quality of hire through inputs in final selection stage

Improving quality of hire laterals/mid to senior positions

Improving quality of hire at fresher/campus level

Improving time to hire through screening candidates

Identifying skill/competency gap for training purpose

Evaluating promotion readiness of employees

Assigning to team/career move decisions basedon person fitment

RS65.5

63.75

61.25

60

59.5

58.75

56.25

56.25 RS: Rating Score

Internal/HR team decision

Combination of all processes

7%31%

18%

21%

23%

Recommendation fromconsultant/vendor/partner

Formal RFI/RFP Process

Informal decision making

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Section 2: Evaluation of usage and reporting

75% of organizations track and evaluate impact of assessment tool usage on the business, of which only 45% validate this impact through usage of data. 55% of the organizations do not objectively measure the impact of the assessment tools on business out of which 25% do not measure the impact at all. These are alarming figures which could influence the possibility to measuring the impact and returns of use of assessments. (Fig 9)

Figure 9: Is the impact of assessment tools measured in the organization?

Metrics used to evaluate benefits

Figure 10: Metrics used to evaluate benefits of assessment tools

Managerial opinions and correlation with performance assessment (12%) feature as the lead metrics used to evaluate benefits of assessments usage. This is followed by supervisor ratings on hire and traditional recruitment metrics (11%).

There is a considerable percentage in usage of analytics and reporting in all spheres of hiring and talent management. However, there is a need to up the ante and move beyond traditional metrics based on supervisor/manager feedback /opinions to more quantitative and objective metrics like profit, absenteeism, revenue etc. (Fig 10)

Measurement of impact of tools

25%45%

30%

Yes, and validated through data

Yes, but done on more of a gut feel basis

No

Correlation with performance assessment

Managerial Opinion

Supervisor rating on hire Traditional recruitment metrics

(time to hire/cost per hire)Pre and post evaluation of hire

Turnover/Retention

Training performance

Sales/Revenue from these hires

Do not evaluate ROI

Profit

Absenteeism

Others

12%

11%

8%

12%

11%

10%

10%

10%

7%

3%

3%

1%

10

Impact on metrics due to assessments usage

Across metrics, positive impact has been perceived through the use of assessments. Amongst these, highest positive impact (both verified by data and through gut feel) is on new hires meeting performance goals, improvement in hiring manager satisfaction and improvement in cost per hire. This shows that participating organizations feel that assessment tools, as such, are overall positively impacting 'hiring metrics' from a perspective of getting the right person in the right role at the right time. (Fig 11)

Figure 11: Impact on metrics due to assessments usage

New hires meeting performance goals

Improvement in hiring manager satisfaction

Improvement in cost per hire

Reduction in time to deploy

Reduction in training time and cost

Positions with ready and willing successors

First year retention

Change in profit per FTE

Positive Impact verified by data Perceived/Gut Feel Positive Impact

No evaluation done (neither data nor gut feel)No positive impact received

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Section 3: Support and integration

Extent of support in usage

Figure 12: Extent of support for assessment tool usage

Figure 13: Interpretation of assessment tool data

47%

24%

9%

8%

6%

Internal HR Professionals

Line Managers

External qualified profession(psychologies/specialist)

Internal psychologies/specialist

Vendor/partner consultants

Other internal staff

6%

26%

20%

20%

20%

8%

6%

Complete leadership or executive team buy-in exists

Collaboration between line and HR to ensurebusiness alignment

Clearly defined process

Employees understand of the process

Clearly defined process to assess new employee

Impact of assessment on business metricsreviewed at least annually

12

In the organizations where assessment tools are used, extent of leadership buy in is paramount (26% positive). There is also a good amount of support provided through clearly defined processes to assess candidates using assessments and collaboration between line function and HR on ensuring that the assessments are delivering value (20% positive on both). (Fig 12)

However, in terms of annual review of assessment data through the use of metrics, only 6% of the respondents replied in the affirmative, indicating the need for organizations to have systems in place to regularly capture data and thus build a business case for furthering the use of assessment tools. (Fig 12)

Most organizations (47%) rely on their HR professionals to interpret assessment tool data, with only 8% relying on internally trained specialist or psychologists and another 9% relying on external qualified professionals. While the reliance on HR professionals speaks well for their impact in organizations, it is also important to note that reliance on trained professionals (internal or external) is low. (Fig 13)

This coupled with the fact that metrics linked to assessments are not reviewed on an annual basis across several organizations may point to a lacuna in building a business case through use of assessments and the possible gap arising also from not using trained professionals, which could perhaps drive greater impact of usage of these tools.

It is also found from Fig 14 that of the organizations where online HR systems are prevalent, assessment tools are well integrated with other such online systems such as HRMS, Hiring Technologies, Talent Management Software and Learning Systems. Technology based integrations to enhance operational efficiencies is anticipated to be an expectation in the future.

Figure 14: Integration with other online systems

Other hiringtechnologies including

Applicant Tracking,Candidate

Management Systems

26%

25%

PerformanceManagement or

Talent ManagementSoftware

25%

Complete integrationwith HRMS

24%

Raining andDevelopment or

Learning Systems

13

Criteria for the selection of assessment

For selection of solution/assessment tool, the primary criterion comes out to be the ease of administration (12%), followed by validity of the tool (11%), customizability (10%), content (10%) and ability to demonstrate business value (10%) (Fig 15)

Interestingly past experience of working with organizations of similar needs and candidates' past reaction to using the tool have significantly lower weightage. This is an interesting insight for providers of such tools, clearly demonstrating that across industries organizations value quality over familiarity of service provider with similar assessment requirements.

Fig 15: Criteria for selection of assessment

12%

11%

10%

9%

8%

7%

5%

4%

3%

Ease of administration

Validity of the tool

Ability to customize the content/assessment tool

Content of the tool

Ability to demonstrate a business value byhelping build a business case

Analytics and reporting/interpretationprovided by the tool

Cost of procuring the tool

Time take to take the test

Ability to integrate with other HR ortalent management software

Amount of resources required

Past reactions of the candidates on using the tool

Provider has experience with organizationof similar needs

10%

10%

9%

14

Section 4: Challenges in Adoption

Top challenges

Figure 16: Challenges in using assessment tools

Cost considerations and inability to justify ROI of the tool (17%) top the list of challenges when it comes to adoption of assessment tools for hiring and talent management. This gives the indication that for many organizations that do not leverage assessments, cost is a key measurement matrix for hiring decision. Due to lack of measurement of ROI, assessments are often looked upon as costs. This is followed by lack of management buy-in (12%) and perception of it taking more time and energy (12%). (Fig 16)

Interestingly technology being new and the chance of a negative impact on candidate perception are at the bottom of the list, indicating that these are not barriers to adoption of assessment tools. Juxtaposing, it is imperative for HR teams and vendor/partners to create a business case around the use of assessment tools, both from a management buy-in and justifying the investment perspective; so as to increase adoption of these tools.

17%

12%

9%

8%

5%

4%

1%

Cost Considerations

Inability to justify ROI of the tool

Lack of management buy-in for use

Perception that it takes more time and energy

Logistics or technical issues

Lack of knowledge in organization

Other

Might negatively impact candidate exp

Technology is still too new

No obstacles

Inability to include culturally and linguisticallydiversified candidates

17%

12%

8%

5%

15

Section 5: Future focus

Next steps on technology based assessments

81% of the responding organizations spoke of having already adopted or likely to adopt social media profiling tools for candidate selection / screening shortly. Another 80% of the respondents opined about using online simulations as part of assessment centers or standalone. These appear then to be the next big thing in the online assessments space. Organizations are yet to be completely comfortable with going mobile with their assessments and gamification for training purposes is also still to be fully adopted. (Fig 17)

Figure 17: Likely to incorporate as part of technology based assessment

Already Adopted Already evaluating Likely to adopt in next 2 yearsNot likely to adopt innext 2 years

Going mobile with our online assessments

Social media profiling tools for candidateselection/screening

Gasification for training purpose

Online simulations as part of assessment centresor standalone

16

Enhanced employee/talent management pool (inputs for training/succession) emerge as the top priority for adopting technology based assessments (15%), followed closely by the ability to target a larger candidate base, enhanced candidate management and speed & quality of measurements (14%). (Fig 18)

Clearly the reasons driving technology-based assessments are to bring in improvements in the hiring and talent management value-chain, along with reduction in effort and saving of time for the HR professional.

Whether or not peers are using the same and if the assessments integrate with other online systems are least on the priority ranking, clearly indicating that for the HR professional it is a matter of the assessment tool providing value for money and delivering on promises with respect to enhancing the experience of the talent management or hiring professionals.

Fig 18: Reasons to adopt technology based assessments in future

Future reasons for adoption

Enhanced employee/talent pool management(inputs for training/succession)

Enhanced speed and quality of assessments

Enhanced candidate management

Ability to target larger candidate base

Improvement in candidate experience

Impact on employer brand

Seamless integration of assessments with other talent management technology

Industry peers using the same

15%

14%

13%

12%

11%

8%

14%

14%

17

Conclusion

This report showcases the importance of assessments in the hiring and talent management space and will provide a strong base for HR professionals seeking to recommend the adoption of such tools in their organizations. This is of key importance since the market for assessment tools in India is still nascent with 42% of sampled organizations yet to adopt any of these tools. To add to this, there is a huge opportunity for the rest of the organizations (58%) to use assessments across the employee lifecycle (hiring and workforce development). The vendor / partners also has the responsibility to move up the value chain to becoming consulting partners in introduction of assessments, selection of tools and interpretation process.

Overall, tried and tested tools measuring knowledge, skills, abilities, personality and behavior continue to be the most common type of assessments used. However, the good news is that the market is maturing to the use of assessment tools for interviews and assessment centers. Also, assessment usage is becoming more strategic, with an increasing number of organizations using them for managerial / supervisory jobs and for the purpose of identification of high potential talent and the need for improvement of quality of hire.

Those using assessment tools feel positively about its impact, with data clearly proving that the new hires meeting performance goals, improvement in hiring manager satisfaction and cost per hire being the greatest value offered by it. Results also demonstrate that most organizations do not validate this impact through data. Further, systems are not in place for regular capture of data. This is of concern also because scepticism about cost implications and ROI justifications emerge as primary challenges in barriers to adoption of assessment tools. It is important for the ecosystem to push for processes that will foster systematic measurement of impact of assessments.

Overall, while assessments are continuing to gain in popularity, uptake is still limited due to lack of understanding about the value-add that it brings to the table. For the HR professional seeking to increase this adoption, it is imperative to build a business case for the same and ensure that the selected assessment tools fit the specific business needs. Organizations that are struggling to justify the use of assessments should consult with testing and assessment service providers to develop or identify suite of assessments for their requirement and devise systemic measurement plans. Further, user teams in organizations should work with the leadership / key stakeholders to identify operational challenges, define and evaluate metrics and collaborate on delivery. This will ensure alignment between assessment tool usage and business objectives and enable assessment tools to become a key component in the talent management and hiring process.

Premjith ACSenior Manager – Marketing,

MeritTrac Services

Research Team

Dedeepya Ajith JohnSenior Advisor – Knowledge & Advisory, SHRM India

Nida ShahidConsultant, SHRM India

Somdev ChaudhuriHead – Assessment Products, MeritTrac Services

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19

Notes

ABOUT SHRMSHRM India provides a platform for thought leadership, sharing of best practices

and professional networking within the Indian and global HR communities in order to take the profession higher through continuous and collaborative learning. It is a one-stop shop and the

go-to resource for solutions and services to handle all people-management challenges

With more than 285,000 members globally, membership is truly a unique offering that provides rich content through comprehensive online resources on both www.shrm.org/india and www.shrm.org. This huge repository of

articles, research papers, case studies and related material on every aspect of HR within the Indian and global contexts constitutes the most current and comprehensive body of knowledge in HR. Supported by a bank of over 50 subject matter

experts and internal expertise, the SHRM India Knowledge Center offers cutting-edge resources, across all the key and emerging HR disciplines. These include thought leadership, advisory panels, tools and templates, virtual events, forum and research.

As the leading advocate for HR professionals' worldwide and providing HR research and education, SHRM launched an unparalleled study to define not only the knowledge, but also the competencies required of today's HR leaders. The result of this rigorous research

was the SHRM HR Competency Model which forms an important foundation for the new SHRM Certifications - SHRM-CP and SHRM-SCP.

ABOUT MeritTracMeritTrac is India's leading Testing & Assessment services company. MeritTrac provides innovative assessment services to leading

Corporates, Public Sector Units, Government Organizations and Educational Institutions.

MeritTrac is a 100% subsidiary of Manipal Global Education (MaGE) which is a highly rated education service provider. Since its inception in the year 2000-2001, MeritTrac has been developing and administering tests for over 400 organizations supporting them in assessing

Knowledge, Skills, Abilities, and Personality & Behaviour. All MeritTrac tests and assessments are designed for easy understanding of non-native speakers of English. They feature simple, easy to understand reports which do not require expert intervention for interpretation.

Snapshot reports enable quick on-the-spot selection/development decisions.

MeritTrac's assessments are delivered using a right mix of technology coupled with robust and certified testing processes. The scientific test development and delivery capability allows MeritTrac to offer Industry best-in-class reliability, validity, and quality for

talent measurement.

MeritTrac has been supporting the following customers:

• • • 8 of top 10 IT companies Largest IT Product MNCs 7 out of top 10 BPOs in India

• • Largest Private Sector Banks Largest Pharmaceutical Companies • Leading global Automobile and Manufacturing Brands

MeritTrac has been recognized as Testing and Assessment Company of the year 2015 by World HRD Congress and Silicon India.

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