Starting the hiring process with a bad hire is like starting a race with a flat tire – it’s disappointing, frustrating, and can end up costing a fortune. Imagine investing time and resources into bringing someone on board, only to realize they’re not the right fit for your financial services team. According to CareerBuilder, businesses can lose up to $15,000 annually due to the repercussions of a bad hire, from replacement fees to downtime while the position remains vacant.
The success of a financial services organization hinges on having the right people in place. After all, employees are the backbone of any company. But with so much at stake, how can employers ensure they’re making the best hiring decisions?
Traditional methods like resume screening can fall short, often leading to wasted time and inaccurate candidate information. In fact, research from Criteria Pre-Employment Testing found that a staggering 78% of resumes contain misleading information, with up to 46% containing outright falsehoods.
Whereas, pre-employment testing – your secret weapon in the quest for talent, is like having a reliable GPS guiding you through the hiring track. These tests provide an objective and systematic way to gather crucial information about potential candidates. Professionally crafted and rigorously validated, pre-employment tests offer invaluable insight into the skills and traits of prospective employees.
Here are some other reasons why financial services executives should consider jumping on the pre-employment testing bandwagon:
Top-4 Reasons to Use Pre-employment Testing
- Objective screening
Interview results may be distorted due to the interviewer’s subjectivity, bias, and the candidate’s communicative qualities. Resume screening, as we noticed before, is not a reliable method at all. On the other hand, pre-employment tests allow using objective data to make more informed recruiting decisions. They can provide standardized, relevant applicants’ skills evaluation, as well as forecast work success and corporate compatibility.
In contrast to personal interviews, pre-employment testing is suitable for the assessment of a vast array of applicable talents and personality traits. These may be cognitive ability, problem-solving skills, organizational skills, subject-area knowledge, confidence, leadership ability, agreeableness, analytic skills, initiative, dependability, collaboration, and many others.
Finance employers are able to hire specialists who are the best fit for both the position and the organization due to pre-employment testing. That’s not only great news for hiring managers, but it also improves the overall quality of hires.
- Effective hiring process
All hiring process steps, from posting the position to hiring the talent, usually takes an average of 45 days. According to the CEB research, only 43% of vacancies are filled within a month, and the other 57% may stay open for up to 90 days or even more.
Recruiters find it increasingly challenging to manage the applicant flow of hundreds of resumes for each position, while discovering qualified prospects amidst the vast sea of the unqualified. The incorporation of pre-employment testing into the recruiting process can significantly accelerate this process.
Moreover, the Society for Human Resource Management discovered that 75% of HR managers reported skill gaps in job applicants. That’s why, when performed at the beginning of the hiring process, pre-employment tests are at their most effective. Financial services employers can clear out many unsuitable applicants with false information in resumes by asking applicants to take assessments early on. Candidates who complete the tests are, at the very least, committed enough to the employment opportunity to devote the time required to perform the assessment.
- Boosting employee retention
It is equally critical for financial services sectors to retain personnel and reduce turnover as it is to hire the perfect match. Why spend so much time and money on finding educated and qualified talent who won’t stay long enough to make a positive impact?
According to Aberdeen Group research, businesses that use pre-employment assessments report a 39% reduced turnover rate. Pre-employment testing and assessment allow screening candidates more quickly for ability and personality, as well as determining a candidate’s likelihood of staying in the position and their cultural fit.
To determine whether a candidate is qualified enough for a position, numerous elements, such as a passion for learning, ownership, initiative, overall ambition, empathy, communication skills, cooperation skills, honesty, and curiosity, might be examined. It can be quite challenging to assess these skills during a typical face-to-face interview, and candidates who fall short in these areas will eventually begin failing and, therefore, are more likely to quit. Pre-employment testing and assessments can minimize recruiting and training costs by giving reliable data that enables the financial services company to hire the most qualified candidates for a job the first time around.
- Strong legal defensibility
Surprising as it may sound when done properly, pre-employment testing and assessments increase the legal protection of your hiring process. As with any other piece of the recruiting process, pre-employment testing must follow the same legal principles.
But because pre-employment testing provides employers with objective, standardized, and evidence-based predictors of job success, unlike other subjective hiring methods, they provide an additional layer of legal defensibility. This data gives financial services companies the opportunity for better protection of their hiring procedures if anyone questions their legitimacy.
Nevertheless, pre-employment testing has a number of drawbacks. Pre-employment testing may be prejudiced towards specific groups of individuals, for example. For instance, pre-employment assessments emphasizing logical reasoning can be biased against women, who tend to score lower than men on these types of tests.
Secondly, pre-hiring assessments are not free of charge. If a major financial services company with hundreds of job openings asks applicants to take a $50-per-person pre-employment test, this can quickly mount up an impressive cost.
And finally, pre-employment tests may not be reliable predictors of job performance. A candidate may perform well on a pre-employment test for a position that requires mathematical skills, only to learn later that the position also requires interpersonal qualities, which the individual lacks. So, for best results, different kinds of pre-employment testing should be included in the hiring process.
Types of Pre-employment Tests
Before a finance employer extends a job offer, he will often choose a few types of pre-employment tests for comprehensive screening. These tests can assess a variety of skills, abilities, and even psychological features and are an effective way for employers to narrow down their pool of candidates.
Common pre-employment tests include aptitude tests, personality tests, and skills tests, but there are many specific tests for analyzing other factors.
Aptitude tests
Pre-employment aptitude tests are a common and essential part of the hiring process. They measure a finance candidate’s ability to learn new information or master new skills. Aptitude tests are typically used to assess candidates for roles that require high levels of analytical and logical thinking.
There are numerous pre-employment aptitude tests, each measuring a distinct set of talents and abilities. These are some of the most prevalent:
- Numerical Reasoning Tests measure a prospect’s ability to understand and work with numerical data. They are used to assessing roles that require strong math skills, such as accounting or financial analyst roles.
- Logical Reasoning Tests determine a person’s critical thinking and problem-solving skills. They are frequently used to evaluate positions requiring strong analytic abilities, such as risk analysis and portfolio management.
- Verbal Reasoning Tests assess a candidate’s ability to comprehend and interpret written material. Commonly used to evaluate positions requiring excellent reading and comprehension skills, such as customer service and administrative functions.
Personality tests
Personality tests, on the other hand, are used to evaluate an applicant’s personality traits and social skills. They can be helpful in predicting how well an applicant will handle certain job-related situations. For example, a test that measures agreeableness may be able to predict whether an applicant will get along well with co-workers. These assessments can also evaluate a candidate’s ability to work under pressure, meet deadlines, and handle stress.
A personality test might assess whether a candidate is extroverted or introverted, emotional or stable, etc.
Skills tests
Finally, pre-employment tests can also include skills assessments. Skills assessments evaluate a candidate’s specific skills and knowledge related to the role they are applying for. Predicting hiring success requires evaluating a mix of two basic groups:
- Technical Skills (data search, analytics, accounting, financial modeling, investment management, etc.)
- Soft Skills (organizational skills, strategic thinking, leadership, team building, communication, etc.)
For example, a skills assessment for an investment analyst role might assess the candidate’s abilities in financial analysis, data interpretation, etc.
Instead of designing a traditional skills exam for every potential member of a financial services firm, you should personalize skills assessments to the specific responsibilities of an open position. A range of question formats and immersive activities should be included in well-built tests.
Tips to Assess Your Candidates
Using pre-employment testing effectively can be a great approach to assessing candidates. Here are a few tips for prospect testing:
- Make certain the test is relevant to the job. The most effective pre-employment tests are those that are closely related to the role at issue. Consider administering a marketing aptitude test when recruiting a marketing manager, for instance.
- Avoid bias. The interviewer should administer the pre-employment testing in the same conditions to all candidates. It will guarantee that the results are not influenced by any personal preferences the finance employer may have.
- Combine assessment methods. Pre-employment assessments should not be administered solo. Instead, they should comprise a small portion of the entire evaluation procedure. Other pre-hiring methods, such as interviews and reference checks, can also provide valuable insights into a candidate’s suitability for the job.
- Ensure the test’s validity and dependability. Pre-employment testing uses a series of validity criteria to validate the collected data. For instance, an evaluation presents content when the parameters it measures align with the job description and performance. Alternatively, a pre-employment test is criterion-relatedly valid when its outcomes can be used to predict work performance. It requires statistical analysis and the comparison of test results to the performance of employees.
Hence, considering pre-employment testing for your financial services team is both a wise and essential move. By utilizing objective screening methods, you can effectively mitigate the risks associated with making a bad hire, saving valuable time, resources, and future headaches.
Interested in learning more about comprehensive pre-employment testing and exploring its legal considerations and potential pitfalls? Feel free to call our team at Volar LLC today. We’re here to guide financial services leaders like you through practical and effective strategies for enhancing your team with top talent, leveraging validated pre-employment assessments. Together, let’s take the next step towards building a stronger, more successful team!
FAQs
- Are pre-employment tests legally compliant with anti-discrimination laws?
Pre-employment tests must comply with anti-discrimination laws to ensure fair and unbiased hiring practices. Employers should validate tests to ensure that they do not disproportionately disadvantage certain groups based on characteristics such as race, gender, or disability.
- Are there any ethical considerations associated with pre-employment testing in financial services?
Ethical considerations in pre-employment testing include ensuring confidentiality, protecting candidates’ privacy, and using assessments responsibly and transparently. Employers should communicate clearly with candidates about the purpose and implications of testing and obtain informed consent before administering assessments.
- How do pre-employment tests account for candidates’ previous work experience and educational background?
Pre-employment tests may include questions or scenarios that allow candidates to demonstrate their knowledge, skills, and abilities relevant to their work experience and educational background. Employers can use these assessments to validate candidates’ qualifications and assess their readiness for specific roles.
- Can pre-employment testing be conducted remotely or online?
Yes, many pre-employment tests can be administered remotely or online, making them convenient and accessible for candidates regardless of their location. Online testing platforms offer secure and user-friendly interfaces for administering assessments and collecting candidate responses.
- Can pre-employment testing predict a candidate’s long-term success in a financial services role?
While pre-employment testing can provide valuable insights into a candidate’s potential fit for a role, it cannot guarantee long-term success. Factors such as job performance, adaptability, and career development also play a significant role in determining an employee’s success over time.
