Assessment Strategies and Standards:
10 Best Practices for Companies
By Terri Baumgardner, Ph.D., SPHR
February 1, 2022
The use of assessments in companies today is a very common practice. Having assessment strategies and standards that guide companies in their assessment practices is not.
Examples of the frequent use of assessments in organizations today include:
- Eighty-two percent of companies are using some form of pre-employment assessment testing in their hiring process1. Generally, there is more than one stage in the hiring process, with more than one type of assessment used across the process, including interviews.
- While it is unclear how many companies use assessments for development, it is clear that leadership development is a $366 billion industry, and that assessments have been a major stable in leadership development for decades. This includes 360-degree feedback assessments, which are often used to improve leader insights on strengths and development needs.
- The majority of large companies today employ the use of assessment in their performance management and succession management process. Typically, this is not assessment testing, but rather manager judgments about performance in the case of performance assessments, and performance and potential, in the case of succession management. Both types of assessments have implications for a person, whether related to salary, bonuses, rewards, or career progression. An important point here is that these internal company processes involve assessment.
Despite the prevalence of the use of assessments in companies, and while many companies now understand the importance of people strategies to drive business strategies, most companies do not articulate the assessment strategies and standards needed to drive both people and business strategies.
Types of Assessments
There are many different types of assessments, including some that many companies might not naturally think of as assessments. Some assessments are used for making hiring decisions; some are used for making promotion and other reward decisions; some are used for development only.
While not exhaustive, the types of assessments used in making hiring decisions include:
- Cognitive tests - assess reasoning, memory, perceptual speed and accuracy, and skills in arithmetic and reading comprehension, as well as knowledge of a particular function or job
- Physical ability tests - measure the physical ability to perform a particular task or the strength of specific muscle groups, as well as strength and stamina in general
- Sample job tasks (e.g., performance tests, simulations, work samples, and realistic job previews) - assess performance and aptitude on particular tasks
- Medical inquiries and physical examinations, including psychological tests - assess physical or mental health
- Personality tests and integrity tests assess the degree to which a person has certain traits or dispositions (e.g., dependability, cooperativeness, safety) or aim to predict the likelihood that a person will engage in certain conduct (e.g., theft, absenteeism);
- Criminal background checks - provide information on arrest and conviction history
- Credit checks - provide information on credit and financial history
- English proficiency tests - determine English fluency
The types of assessments often used in making promotion and reward assessments include:
- Performance appraisals - reflect a manager’s assessment of an individual’s performance
- Succession assessments – reflect a management team’s assessment of both performance and potential for an individual
- Assessment centers – which typically include interviews, testing, and simulations and can be delivered individually or for cohort groups
The types of assessments used for development include:
- 360-degree feedback or multi-rater assessments
- Other popular personality-type assessment tools, such as Myers-Briggs Type Indicator (MBTI), Strengths Finder, or DISC
The above assessments represent individual-level assessments. Sometimes, results across individuals are aggregated to show group or aggregate average results. In addition, though, there are assessments that are focused on the group or organization as a whole. These might include the following:
- Employee surveys
- Engagement surveys, as one type of employee survey
- Organizational effectiveness assessments
- Organizational health assessments
In a discussion of assessment strategies and standards, consideration of group-level and organizational-level assessments is also important.
The following section considers the various types of assessments and the strategies and standards that companies should establish for the use of assessments. These best practices are not provided in order of importance, although the first two provide the foundation for a company’s overarching assessment strategies.
Best Practices for Assessment Strategies and Standards
- Link assessment strategies to people strategies and business strategies – Assessment strategies should be defined based upon the people strategies and business strategies of the organization. For example, if one of the company’s business strategies is entering into a higher technology market rather than people strategies should include a clear build and/or buy technology skills component. Assessment strategies should include, as a component, targeting technical skills or the ability to learn and develop technical skills. In addition, if the company is trying to create a more technically-adept workplace, it may also want to consider how to model this with the use of higher technology assessments.
- Clearly define capabilities/competencies/skills and link directly to assessments - The capabilities/competencies/skills that a company needs to build and/or buy need to be clearly defined, and linked to any assessments. Any company that has not clearly defined these factors is not using assessments in the most valuable way. For that matter, they are not using any people process as it could ideally be used. Every people process, and every assessment, should be contributing to the type of workforce, capabilities, competencies, and skills that the company needs to be successful. Today, the difference between capabilities, competencies, and skills is much discussed, and if companies are building or improving their competency or capability frameworks, or skills taxonomies now, they should reference this research. For the purposes of this article, suffice it to say that a clear articulation of what type of workforce the company needs to build is critical to whether it will build it or not.
- Clearly define the purpose of any assessment, and stick to it – Assessments are used for making hiring decisions; they are used for making promotion and reward decisions, and they are used for development. Time and again, companies will decide to use particular assessments for “strictly” development, and then want to look at the data as a factor in making other determinations. For example, perhaps a company rolls out a 360-degree feedback process for development, and in a succession meeting, references the feedback to determine who is on the succession slate. Multi-rater assessments are not typically designed for use in making any kind of employment decision, in whole or in part, so this should not happen. Beyond likely being unethical (if the company has told people that their data is confidential), this decision is subject to legal scrutiny.
- Ensure the validity and reliability of assessments used for employment decisions – There are thousands of tests/assessments on the market today, and almost every test developer/publisher will say that their test is valid and reliable. Companies need to conduct their own due diligence to ensure that these claims are true. When an assessment is used as the basis for any employment decision, their use is governed by the Uniform Guidelines on Employee Selection Procedures (1978). Employment decisions include but are not limited to hiring, promotion, demotion, membership (for example, in a labor organization), referral, retention, and licensing and certification, to the extent that licensing and certification may be covered by Federal equal employment opportunity law. Other selection decisions, such as selection for training or transfer, may also be considered employment decisions if they lead to any of the decisions listed above. Employers should ensure that employment tests and other selection procedures are properly validated for the positions and purposes for which they are used. The test or selection procedure must be job-related and its results appropriate for the employer’s purpose. While a test vendor’s documentation supporting the validity of a test may be helpful, the employer is still responsible for ensuring that its tests are valid under the Uniform Guidelines on Employee Selection Procedures (1978). These guidelines are applied by the Equal Employment Opportunity Commission in the enforcement of Title VII of the Civil Rights Act of 1964, as amended by the Equal Employment Opportunity Act of 1972.
- Protect against, and monitor for, potential discrimination – Discrimination is an ethical and moral issue. It is also a legal issue. Title VII of the Civil Rights Act of 1964 (Title VII), the Americans with Disabilities Act of 1990 (ADA), and the Age Discrimination in Employment Act of 1967 (ADEA) prohibit the use of discriminatory employment tests and other selection procedures. Discrimination can be of two types: disparate treatment (intentional discrimination based on race, color, religion, sex, or national origin) and disparate impact (when tests or selection procedures have the effect of disproportionately excluding persons based on race, color, religion, sex, or national origin, where the tests or selection procedures are not “job-related and consistent with business necessity”). The disparate or adverse impact should be evaluated consistent with the standards set forth in the Uniform Guides. Specifically, a selection rate for any race, sex, or ethnic group which is less than four-fifths (4⁄5) (or eighty percent) of the rate for the group with the highest rate will generally be regarded by the Federal enforcement agencies as evidence of adverse impact, while a greater than four-fifths rate will generally not be regarded by Federal enforcement agencies as evidence of adverse impact. If a selection procedure screens out a protected group, the employer should determine whether there is an equally effective alternative selection procedure that has less adverse impact and, if so, adopt the alternative procedure. For example, if the selection procedure is a test, the employer should determine whether another test would predict job performance but not disproportionately exclude the protected group. Overall, the company is ultimately responsible for monitoring its assessment processes used for making employment decisions for evidence of discrimination, whether tests, interviews, simulations, performance ratings, succession ratings, or other assessments.
- Do not use unstructured interviews; use structured, behavioral-based interviews – While this should be a well-known governing principle related to using assessments, even today, many organizations still use unstructured interviews. These are interviews in which interviewers typically just ask any questions they want, the questions are not always clearly job-related, and there is no preferred way for interviewees to answer the questions. In a structured, behavioral-based interview, the questions ask about past behavior because past behavior is the best predictor of future performance. The goal is to find out how candidates behaved in similar job situations to get an understanding of how they may respond in a similar future situation. Aside from gains in an interview’s ability to predict future job performance (validity), using structured interviews can reduce a company’s exposure to legal challenges. In a review of federal court cases involving various selection devices, unstructured interviews were the most frequently challenged step in the hiring process. Companies were found at fault in almost half of these cases. Conversely, the few cases in which a structured interview was challenged, the decision was in favor of the company 100% of the time.
- Leverage group and organizational assessments and assessment data – Thus far, the discussion has focused primarily on individual-level assessments, noting that at times, results across individuals will be aggregated to show averages for particular groups of people or for the organization as a whole. Companies should identify the cases for which aggregating individual-level assessment data will be beneficial for the company overall, and consistently pursue these opportunities. For example, if the company uses 360-degree feedback at the individual-level, they can run aggregate reports (for which no individual results are visible) to reveal themes in terms of strengths and development needs across the company as a whole or for particular geographies, functions, or levels. These themes can be used to guide the content and design of leadership development programs, for example. In addition to just aggregating individual-level reports, companies should also leverage group or organizational-level assessments. These are assessments, often surveys, that address things like organizational effectiveness, or effectiveness of particular functions, or organizational health. In deciding what group or organizational-level assessments to use, be sure that they link to the organization’s business strategies. Is the data produced by the assessment useful to realizing the business strategies? If so, how often should the assessment be employed, and how will the data be leveraged?
- Don’t do it just because everyone does – Just as there are trends in any field, there are trends in the field of assessment. The business world becomes enamored by strong marketing of particular types of assessment or because of how the assessment seems to be important in the context of today’s world and culture. For example, today, the importance of the employee experience is on the minds of many business leaders. High-technology solutions taut their ability to improve the employee experience in the hiring process, or the learning and development process, or the manager-employee interaction experience. So, often huge investments are made in these high-technology solutions. Related to the employee experience, today, the importance of employee engagement is also at the top of mind for many leaders. Many an organization is rolling out surveys on an annual basis to gauge the engagement of their employees, put plans in place to improve, and then assess again to determine the extent of improvement. In fact, there are so many things an organization can improve to improve engagement and the employee experience. Most of these exist without high-technology assessments, and most can be identified and made without a survey process in place.
- Integrate assessment data into talent analytics –Talent analytics, also known as “workforce analytics,” “HR analytics,” “HR business intelligence,” and other labels, is the attempt to understand patterns in an organization’s workforce through analysis of employee-related data, and to use the information in beneficial ways for the company. Work done in talent analytics typically falls into three areas: data infrastructure and reporting to capture, store and report HR-relevant data and metrics; advanced analytics focused on data exploration, analysis and modeling primarily at the enterprise level; and organizational research comprising scientific studies related to specific organizational problem statements. While a complete discussion of talent analytics is beyond the scope of this paper, organizations should consider all of the assessment data they have and how they can use it to convey important information, research the answers to key questions, and make organizational and talent decisions.
- Build teams that understand the science of assessment and the links to organizational effectiveness – Large organizations today will often have teams comprised of Industrial/Organizational (I/O) psychologists in the Talent Management arena or in Centers of Excellence devoted to Assessment, Selection, and/or Organizational Effectiveness. Smaller organizations often lack this expertise. Many people do not know the range of expertise offered by I/O psychology, including the years of learning about the science of: recruitment, assessment and selection, performance management, succession management, employee and leader development, rewards, leadership, motivation, organizational effectiveness, and more. If a company adds the right people to the team (whether internal or external), these people will understand the science of assessment and how to influence the organization in the right ways for best practice – best-fit assessments. In addition, they will know how to build effectiveness at three levels: individual, team, and organizational. They will always be looking at talent and organizational opportunities through all three lenses.
Using assessments strategically and well will have a return on organizational investment. Among other outcomes, a company will select the right people, develop the right skills, build diversity, abide by legal guidelines to protect the rights of all people, reinforce its brand through its assessment choices, improve organizational effectiveness, and make progress toward critical business strategies.
Terri Baumgardner, Ph.D., SPHR is the
President of Assessments International and has worked
with the executive leadership of some of the most successful
companies in the world over her 30- year career.
1Zielinski, D. (2019, August 16). Predictive assessments give companies insight into candidates' potential. SHRM. Retrieved February 4, 2022, from https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/predictive-assessments-insight-candidates-potential.aspx