This is the second article in a series of three articles (each article being published in two segments) about improving business profitability by implementing strategic measures for managing employees. Find out why sophisticated employment practices make companies more profitable and what ingredients are required in the recipe for success. 

The Single Most Effective HR Strategy for Increasing Profits

The first part of “Are Your Employees Costing You Money or Making You Money?” offered the following two BizTips:

• BizTip #1 – Overcome staffing nightmares by fighting back with state-of-the-art employment tools.
• BizTip #2 – Get the job done right by using the “smart body” approach to hiring.

Additional BizTips

BizTip #3 – Use “job-related” assessments to get the biggest bang for your buck.

Employment tests should be relevant and be based on a thorough analysis of the job. Sometimes, however, organizations use employment tools and procedures that are not suitable for identifying applicants who will make the best employees. For example, a personality test specifically designed for clinical evaluation purposes might be used to hire managers. Or a skills test developed for selecting computer technicians might be used to hire clerical personnel.

The most important thing to remember is to use employment tests that are designed to measure the types of knowledge, skills, and traits needed for successful job performance. If you select assessments simply because they are popular or have been around for a long time, you are probably not using the best yardsticks for making employment decisions.

Companies often overlook the primary objective for using job-related assessment techniques in the employment process. Structured selection tools, which can minimize the risks of making random hiring decisions, can pay big dividends in terms of increased employee productivity, quality of work, and organizational commitment.

The main advantages of implementing well-designed, job-related assessment tools in a company are as follows:

• To save money.  Predictive techniques increase the probability of selecting successful people and rejecting individuals who are most likely to increase your operating costs.
• To enhance efficiency.  By using job-related assessment devices, you can quickly obtain more of the type of information you need for making good hiring decisions.
• To minimize future problems.  If you select individuals who are both competent and motivated, they are more likely to be satisfied with their job and to stay longer with your company.
• To improve legal defensibility.  Structured, job-related assessment procedures make it easier to defend your hiring decisions.

BizTip #4 – Make sure that your employment tools and procedures meet all of your organizational needs.

The following characteristics pertaining to assessments should be part of any hiring process:

• Valid.  Assessments should be supported by empirical studies proving that the selection devices predict successful job performance.
• Comprehensive.  Assessments should comprehensively measure the important skills, abilities, and traits required for job success.
• Efficient.  Assessments should be easy to administer and score.
• Cost-effective.  Assessments should be affordable and should offer an inexpensive way to safeguard an organization’s investment in human resources.
• Contemporary.  Assessments should not be outdated and should relate to the needs of today’s businesses.

Conclusion

Are your hiring decisions making your organization money or making your organization lose money?

All too often, the time invested in selecting people is wasted because the approach is haphazard and relies too heavily on chance. Research has shown that a structured assessment system can help organizations spend time more effectively “up front” where it really counts. The time you spend making more informed employment decisions will pay off in greater productivity, less costly training, lower turnover, and fewer problems with employees.

The appropriate assessment tools and procedures should be incorporated in a company’s business strategy for improving profitability. Just as better equipment and computer systems can help an organization maintain its competitive edge, structured approaches for selecting successful employees can help build a work force that will not only yield immediate dividends, but will also contribute to a company’s long-term profitability.

You invest each time you say “you’re hired.” Do you know what kind of human resources investment you are making each time you hire an employee in your company? Our free business tool, “Human Resource Investment Calculator,” will give you a general idea of how much money is at stake whenever you hire someone.

Interested in Part 1 of this article?  Read "Strategizing for Profitability: The Key to Business Success (Part 1.1)"

Interested in Part 3 of this article?  Read "Strategizing for Profitability: Overcoming Haunting Training Problems (Part 3)"