Return on Invstment

RETURN ON INVESTMENT (ROI) Hogan assessment tools impact on business outcomes

The Hogan suite of personality questionnaires has built a global reputation based on accurate prediction of employee performance, and improvements in bottom-line business results

Effective employee selection and development are crucial to the continued growth of any successful organisation

Successful business people understand the importance of having the right person in the right job. Talent management teams increasingly rely on hiring solutions that provide a clear competitive advantage, including using personality assessments to select and develop talented individuals. The Hogan assessment tools have a long history of successfully predicting employee performance and improving bottom line business results. Companies are increasingly using the Hogan personality questionnaires to maximise these benefits.

This report on recent business outcomes provides return on investment (ROI) evidence from six unique research studies conducted recently using Hogan tools. These studies demonstrate the relationship between personality and job performance and illustrate the assessment’s impact on key indicators of business performance. These studies cover a variety of jobs across a wide range of industries, and rely on both objective and subjective measures of job performance.

Publishers of the UK editions of the Hogan personality questionnaires Copyright Š 2009, HOGAN ASSESSMENT SYSTEMS

WELCOME TO PCL

PCL published the UK editions of the three Hogan personality questionnaires between 1996 and 1997. For more than a decade we have worked to bring these distinctive and powerful instruments to the attention of UK companies and assessment professionals. Like Hogan Assessment Systems, PCL has adopted an evidence-based approach to consultancy and developed selection systems for clients based on researching the distinctive characteristics of high performers.

RESEARCH THROUGH THE YEARS

Research backed by the business applications of personality assessment dates back to the 1930s, when government officials used assessment centres to select individuals for dangerous wartime assignments. Rooted in this tradition, Dr. Robert Hogan developed the Hogan Personality Inventory (HPI) as the first measure of normal personality designed specifically for business applications. He spent more than 15 years accumulating mountains of evidence demonstrating that this personality inventory would predict job performance.

In fact, one of Hogan’s first large-scale criterion research studies involved the U.S. Navy and the selection of bomb disposal technicians; Robert and Joyce Hogan found that the HPI predicted overall job performance, and documented their findings in the Journal of Military Psychology (1989).

Other successful criterion studies soon followed with several targeting specific industries. For example, Dr. Hogan contacted ten of the highest-revenue transportation companies in the country, and three of them became Hogan clients. These efforts paved the way for Hogan to become a leader in driver selection. As the publishers of the UK edition of the Hogan tools, PCL continues these research studies in organisations across the UK. Researchers using Hogan tools conduct 10 - 15 new criterionreferenced validation studies each year, continuously updating the Hogan research archive with results from these efforts.

Based on the accumulated evidence from over 250 criterionreferenced validation studies, we can confirm that, regardless of job, job family, or industry, Hogan tools predict workplace performance without adversely impacting candidates.

Additionally, because each of the three assessments predict unique aspects of job performance, these tools combine to yield a highly accurate and comprehensive picture of the personal characteristics related to successful job performance. This valuable information allows companies to enhance a variety of personnel applications, ranging from pre-employment screening to leadership development.

ROI RESEARCH METHODOLOGY

• ROI research studies demonstrate the tangible and financial value of using Hogan assessments. These research projects typically use a wide range of existing performance data drawn from management and HR systems and, combined with high quality personality measures, they allow a tight definition of selection criteria for each role.

• ROI research studies put selection criteria on a rational, objective and reliable basis. They also establish a database of employee information on which to continually refine and improve selection decisions. Fluctuations in markets, product

Copyright © 2009, HOGAN ASSESSMENT SYSTEMS

Hogan Personality Inventory (HPI) the measure of everyday personality characteristics needed for success in careers, relationships and life.

Hogan Development Survey (HDS) the measure of counterproductive personality characteristics that derail otherwise successful managers and leaders.

Motives, Values, Preferences Inventory (MVPI) the measure of core values that reflect job satisfaction, culture fit and things we value as leaders.

life-cycles and candidate volume or quality can be monitored to update selection criteria.

• The guidelines below describe the basic requirements for a ROI study. Beyond these factors, each study is designed to provide clients with reliable conclusions about the appropriate measures of their assessment programme. Although each study is unique, these recommendations provide a starting point during initial planning of the study.

ROI study guidelines include: • A sample size of at least 100 individuals to take the proposed assessment solution. Smaller samples may work when the incumbent population does not lend itself to larger sampling designs.

• Tenure of at least 6 months; jobs with a longer on boarding period may require additional tenure.

• Availability of both subjective (e.g. single- or multi- source behaviourally based ratings) and objective (e.g. turnover, sales revenue, absenteeism) performance measures.

• Multiple performance data points matched to each individual, across 6 -12 months when available, that illustrate a variety of key areas and stable job performance data.

OVERALL FINDING:

ROI increases when using Hogan tools Over the past two years, 27 ROI research studies for clients across several industries, including finance, transport, and government sectors have been conducted using Hogan tools. In the UK, PCL studies include projects within telecommunications, car manufacturing, insurance companies, global banks and a large clothes retailer. Using Hogan tools to link personality to performance data, this ROI research identifies the characteristics that differentiate the best from the rest.

Regardless of job, job family, or industry, Hogan tools predict workplace performance without adversely impacting candidates

The next section provides an overview of ROI evidence for 6 key studies, representing a wide range of industries and job type Study 1: Higher-Performing Employees The Hogan tools were used to improve the selection process for probation professionals. An HPI profile was developed where successful agents were identified as rule-abiding and conscientious (high HPI Prudence), energetic and goal oriented (high HPI Ambition), concerned with building jobrelated knowledge (high HPI Intellectance), and enjoying working with others (high HPI Sociability). Appointees who met this profile were nearly three times more likely to be rated as a high performer by their supervisor compared to those not meeting the profile.

Study 3: Greater Advancement Potential A large pharmaceutical company sought to enhance its high potential identification process by incorporating the use of multiple Hogan tools in their leadership development program.

Over one hundred job incumbents completed the HPI, HDS and MVPI while their supervisors provided performance ratings on technical skills, overall performance, and advancement potential. The profile accurately classified below-average performers 66% of the time and above-average performers 60% of the time. More importantly, candidates meeting the profile were almost three times as likely to be rated as aboveaverage performers and had greater promotion potential than those not meeting the profile.

Study 4: Improved Promotion Procedures Study 2: Better Safety Practices An international provider of industrial gases looked to the Hogan tools for help in improving their selection process for transport drivers. Drivers passing the HPI profile were four times more likely to be identified as a high performer relative to those not passing the profile. Furthermore, the HPI accurately differentiated good drivers from those characterised by performance problems, rule breaking and safety concerns. In particular, high-fit drivers had a lower accident rate (12%) than those not fitting the profile (28%).

PCL continuously partners with clients to conduct ROI research studies to demonstrate the value of Hogan assessment solutions Copyright Š 2009, HOGAN ASSESSMENT SYSTEMS

A Fortune 500 global communications company wanted to improve promotion procedures for senior management.

The HPI and HDS were used to assess both the positive and negative aspects of personality. The HPI showed that successful senior managers take initiative and are eager to advance (high HPI Ambition), work well independently (low HPI Sociability), are perceptive, thoughtful, and cooperative with team members (high HPI Agreeability), and hold high standards for their own and others’ performance (high HPI Prudence). Several negative characteristics lower leadership potential, such as being overly critical and fault finding (high HDS Shrewd-Mistrustful), procrastinating when performing

uninteresting work (high HDS Focused-Passive aggressive), preferring an intuitive (rather than fact-based) approach to decision-making (high HDS Charming-Manipulative), and being preoccupied and lacking in follow through (high HDS ImaginativeEccentric).

Study 5: Improved Selection A food/warehousing company wanted to standardise hiring procedures for six different job families (i.e., clerical, professional, managerial, operations/trades, customer service, and sales). We recommended using the HPI and MVPI to identify individuals who remain calm under pressure and exhibit a positive work attitude.

Hogan customised selection guidelines using scales from the HPI and MVPI to address the unique aspects of each job family. To illustrate how these selection recommendations would work in each job family, Hogan compared those passing each profile to those not passing the profile. These comparisons showed that, across all six job families, high-fit workers were at least twice as likely to be rated as a high performer as those not fitting the highfit profile. For professional (3x) and clerical (7x) job families, high-fit workers had an even greater likelihood of being a top performer.

Study 6: Reduced Employee Turnover There was high attrition within the Direct Sales force at the UK division of a global media/telecoms company. With some regions running at 120% turnover, there was an urgent business need to improve performance and retention. PCL conducted an ROI study of existing staff using the HPI. Our goal was to identify the personality factors that distinguish the ‘best’ from the ‘rest’. We were able to identify existing HPI scales that were predictive of performance and to create an HPI Suitability Template, containing ‘essential’ requirements plus other ‘desired’ characteristics, and this template coded staff into three categories - Red, Amber and Green. The results were very conclusive. Four performance indicators were investigated and in each area the Greens performed much better than the Reds. For example the Greens achieved, on average, 21% above their sales target while the Reds missed their sales target by 2%. The retention analysis similarly showed a very positive link with the attrition rate for Greens, which was less than half that of the Reds.

GREEN HPI FIT

- 2%

+21%

RED NO HPI FIT

SALES TARGETS ACHIEVED Copyright © 2009, HOGAN ASSESSMENT SYSTEMS

THE BOTTOM LINE

Bad appointments are very expensive and can destroy businesses. In this economic climate, companies need evidence that assessments function as intended, and should demand strong ROI for their assessment solutions.

PCL focuses on ROI from the outset, and ensures that key data reference points are set up for post-project analyses - the ultimate evidence of effectiveness.

Reflecting the demand for Hogan ROI research in a difficult global economy, we are conducting increasing numbers of studies of this nature. As these research projects demonstrate, the Hogan suite of assessments add value to any talent management system. Overall findings demonstrate that, regardless of industry or job type, Hogan assessments provide a significant, long-term return on investment.

Hogan assessments provide a significant, long-term return on investment

PCL

Psychological Consultancy Ltd 8 Mount Ephraim Tunbridge Wells TN4 8AS t 01892 559540 w www.psychological-consultancy.com