October 27, 2015

ROI for Best in Class Talent Assessment at the 2015 GVFHRA Human Resources Summit

Last week, I had the privilege of attending and speaking at the Greater Valley Forge Human Resource Association Annual Summit in Malvern, PA.  The theme of the event was “ALIGN – Action-Based Leaders Inspiring Growth and Navigating Change” and the content of my invited presentation was focused on a Return On Investment (ROI) - using a TSP case study as a discussion topic.  In my experience, HR practitioners who follow three key tenets are able to overcome common barriers to best in class talent assessment.

  • Project ROI (build a business case before putting an initiative in place)
  • Design for ROI (begin with the end in mind)
  • Demonstrate ROI (think broadly about how you define the impact of your programs).

Yes, there was talk about math.  Fortunately, everyone survived with minimal mental injury.

The gist of my presentation was that ROI is all about getting to a single number – for example:

  • How much time a manager saves by interviewing three people for a role instead of four
  • Increased productivity from a sales rep
  • An executive ramping up 25% faster

Multiplying these single numbers across 1000 hires, for example, can yield some very impressive figures.  After the presentation, an audience member asked me, “What happens if you only have five hires? How do you show ROI then?” 

A great question, and given the prevalence of small businesses in the US, has significant importance.  In the statistics, you can never be as certain about a result in a small sample as you can in a much larger sample.  However, making an improvement to a process resulting in making five more efficient hires, or increasing the productivity of three sales representatives, or getting the “right” executive into a small start-up is extremely meaningful for small organizations. 

Too often, smaller organizations think “this is something big companies do…this is not for us.”  An argument could be made that PEOPLE make even more of a difference.  By adopting some of the strategies of the larger players, smaller firms’ people practices can deliver major bottom line results.

Showing ROI in the people business requires creativity and paying attention to what will resonate with your audience. Your ROI strategy is personalized to your circumstance, find out the "single" number you're after, then work to understand how you can get there.

 

Tags: consulting & assessment, conferences

Author
Chad Thompson PhD

Just because Chad has a Ph.D. in industrial/organizational psychology, doesn’t mean he can’t talk to you about sports, craft beer, tech buzz or the most recent episode of The Bachelorette—a show whose outcome he has successfully predicted more times than most people admit actually watching it. In the people business—and even in pop culture—Chad uses data, tools, and his professional experience to develop and interpret insights about how to measure, develop, and retain people.

Chad joined TSP in 2011 to lead the talent consulting practice, where he delivers executive-level evaluations, both in conjunction with TSP searches and for internal client teams. He also consults with clients on a wide variety of talent acquisition and management projects.  

Prior to TSP, Chad was a consultant at Aon Hewitt, where he had responsibility for leading the design and management of large-scale selection initiatives and leadership assessment programs for Fortune 500 clients. Chad’s research on selection has been published in peer-reviewed journals, and he is a frequent speaker at national conferences. He has also been quoted in publications such as HR Magazine. Chad received his Ph.D. and M.S. in Industrial/ Organizational Psychology from Wright State University and a Bachelor’s Degree in Psychology from Wittenberg University.  

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