By Elaine Pulakos, CEO of PDRI by Pearson
While job candidates and employers have always been concerned with how long it takes to get candidates through their hiring processes and on-the-job, HR is facing immense and increasing pressure to fill positions quickly. A 2024 study from The Josh Bersin Company , an HR consulting and research firm, found that filling skills shortages (60%) and improving the efficiency of recruiting processes (58%) were HR executives’ top two issues. Labor and skills shortages have accelerated hiring processes so organizations can hire workers before their competitors — leading recruiters to prioritize “butts in seats” as their primary success criteria. But the tide seems to be turning, raising the question of whether HR is over-emphasizing speed of hiring to the detriment of quality. Indeed, the Bersin report notes that, “[Talent acquisition] teams must strike a fine balance between the speed of hiring and the quality of candidates brought into the organization.”
Certainly, the longer positions are vacant, the more challenges this creates. Current employees may be asked to pick up the slack and take on additional duties they may or may not be able to perform effectively. Even if other employees can cover vacant positions, the additional workload can cause them to become over-loaded, disengaged, or burned out.
But filling a position with a poor hire is often worse than leaving the position open. While it’s difficult to determine the exact financial impact of a bad hire, estimates range from $18,000 to as high as $250,000 per employee, depending on the position, level, organization, and industry. Even at the lower end, a few bad hires goes beyond financial losses. Hiring someone who breaks under stress or is unable to work alongside others could lower team morale or, more seriously, create dangerous or violent situations in the workplace.
The Benefits of Hiring for Quality Using Standardized Assessments
The importance of hiring for quality goes beyond risk management. There are significant benefits, as well. Research from the field of industrial and organizational psychology highlights substantially improved business outcomes from using hiring assessments to identify candidates who possess the skills, abilities, and personality traits essential to successful job performance. Higher productivity, reduced absenteeism and employee turnover, and lower costs are some of the benefits of using standardized assessments to assess and hire candidates.
The value of assessments was recently highlighted by a number of US universities including Dartmouth, Yale, Brown, and MIT. The standardized testing requirement for undergraduate admissions was reinstated by the prestigious institutions after it had been paused during the global pandemic. In her letter to the Dartmouth community, the university president explained that bringing back the assessments “was guided by social science research that suggests we can improve our ability to identify students from a wide range of economic backgrounds who will succeed at Dartmouth. SAT/ACTs can be especially helpful in identifying students from less-resourced backgrounds who would succeed at Dartmouth but might otherwise be missed in a test-optional environment.” She also stated that “test scores are an important predictor of a student's success in Dartmouth's curriculum.” Likewise, there is a significant body of research that shows the value of using professionally developed hiring assessments to predict how well applicants will perform in a job.
The Shift to Skills-Based Hiring
Recently, we’ve seen a shift in hiring practices to increasingly focus on job skills as a basis for hiring rather than degree-based hiring. Google and Walmart, along with nearly 60 other corporations have made a formal commitment to ‘Tear the Paper Ceiling’. These companies believe that requiring college degrees creates an unnecessary barrier that excludes a vast pool of potential talent. This is not only unfair to strong candidates who lack a degree, but also puts pressure on companies facing labor shortages and struggling to build a reliable pipeline of skilled workers.
The U.S. federal government is also moving in the direction of skills-based hiring. In 2020, an Executive Order directed merit-based reforms to expand the use of valid, competency-based assessments, and limit the use of educational qualifications in the Federal hiring process. More recently, the U.S. House of Representatives approved the Chance to Compete Act with strong support from both parties. This bill aims to eliminate degree requirements from federal hiring processes and requires the use of standardized assessments to assess candidates’ job-relevant skills and abilities.
Using assessments in the hiring process does not extend the time it takes to hire or add inefficiency. In fact, PDRI data shows that government time-to-hire metrics improved with the introduction of hiring assessments. To best balance speed and quality of hire, companies should focus on assessing the subset of skills that are most predictive of job performance rather than assessing all the skills that may be required in a job. Often even an assessment that is as short as 15-20 minutes can act as a helpful screening device, without putting candidates off the hiring process.
The judicious use of high-quality, scientifically developed assessments for hiring not only ensures that job candidates’ capabilities are accurately and fairly assessed, but that the hiring process also provides important insights about candidates’ skills and how well they are likely to perform in the job. By doing this, HR can improve quality of hire, increase retention and performance, and reduce downside risk without compromising the organization’s ability to fill positions quickly.
An expert in building organizational and team capabilities that translate into business growth, Elaine is well-known for her research and writing on assessment AI, organizational agility, resilience, and performance. Elaine has extensive global experience serving as an advisor to business and HR leaders.
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