A contribution by Michael Kühner for the e-book “GmbH-Geschäftsführung 2021“.
Personnel diagnostics as an investment in corporate success
Diagnostic procedures have so far rarely been used by small and medium-sized companies for personnel decisions. Experienced GmbH managing directors like to rely on their knowledge of human nature when selecting suitable candidates. Even key positions are often filled based on resumes and personal interviews. In some cases, the CEO makes his decision alone, without involving the team or trained observers. However, anyone who relies solely on likeability, gut feeling and biographical key points when making personnel decisions will not receive a valid statement about how successfully a candidate will fill the new position. In the worst case, the blinder gets the nod: the applicant who can sell himself best, not the one who is best suited for the vacant position.
Personnel decisions and the consequences
Studies show that one in three advertised positions is not filled. The cost of wrong decisions in employee selection is between €30,000 and €100,000, depending on the position (source: Recruiting Trends 2014). Replacements gobble up to three times an employee’s salary. At management level, the costs of the recruitment and induction process average €140,000. Personnel decisions have a direct impact on a company’s bottom line and may harm the company’s image. Candidates today share their experiences publicly on social media channels and employer review platforms. With increasing demands, external applicants and internal talent expect comprehensible and fair decisions. Companies should therefore view recruiting processes as an opportunity to position themselves as attractive employers.
There is a lot of marketing potential in the entire recruiting process that GmbH managing directors can use for themselves. A mix of structured interview, exercises/work samples and psychometric procedures minimizes the risk of miscasting and is a sensible investment in the future success of the company considering the cost of re-staffing, especially at management level.
It is not about replacing people skills and intuition in personnel decisions, but about combining personal impressions with a validated, diagnostic assessment. Diagnostic procedures are complex, objectified analyses that measure a candidate’s competencies, experience, characteristics, and personality traits.
As international studies show, the use of personnel diagnostic procedures in Great Britain, Scandinavia and other European countries is more than 80 %, in Germany only just over 50 %. Especially in smaller companies, personnel diagnostic instruments are used even less frequently. This could be due to a large number of reservations that prevent a factual discussion.
Reduce reservations, seize opportunities
Contrary to prevailing opinion, customized recruiting processes are also suitable for small and medium-sized companies. Psychometric online tests can be used quickly and inexpensively, have a high informative value with regard to competencies and potentials, and some can also hardly be manipulated.
It has been scientifically proven that reputable aptitude tests are very good at mapping skills and potential and can therefore accurately predict a candidate’s chances of success in the job. They are also less of a deterrent to applicants than many decision-makers assume, provided they are accompanied by a trained professional. And when filling a position from within the company, transparent test results and development-based statements can help maintain the employee’s motivation despite job rejection if alternative perspectives are presented. Structured, standardized procedures also help to better compare candidates. Assessment centers also have a motivating rather than intimidating effect, provided they are designed to be interactive. And every candidate is happy to receive feedback at the end to find out where they still have room for development.
Indeed, aptitude tests and other procedures reduce the everyday reality and can neither depict all facets of the personality nor the job profile, but they can secure the subjective impression as an important objective decision-making aid. An international management consultancy has found that around 62% of companies have difficulty filling vacant positions, due in no small part to an inadequate recruiting process. Professional and at the same time appreciatively applied personnel diagnostic procedures can even be decisive for applicants to decide in favor of a company.
Targeted application possibilities
The prerequisite for personnel diagnostics to work in the recruiting process is a precise definition of the job profile, which specifies the necessary competencies, characteristics and motives. The question of whether a candidate with potential for future tasks or competencies or a candidate with competencies for a narrowly defined position is more likely to be sought should also be answered at this point. Search criteria can be derived from the requirements profile and divided into central must-have and optional nice-to-have requirements. In this way, you address precisely those candidates who have a genuine interest in the available position, are very likely to have the right skills and, in the best case, also bring with them the appropriate potential for future roles. Demographic, social change is intensifying the search for the right talent. This makes it all the more important to pick up your desired candidate directly from the market with a clear job profile.
Precisely tailored recruiting concept
Based on the requirements profile, an individual recruiting concept is developed that takes into account a multimodal diagnostic. According to the specific objective, a mix of methods may prove useful in the selection process. The greatest added value for a company is the combination of online tests to capture personal character traits, reality simulations to determine behavioral potential, specific exercises and work samples to tap into competencies, and biographical interviews that provide information about experiences made. Via the Critical Incident Technique (CIT) in interviews and exercises, even behaviors in critical situations can be made visible. This allows a prediction of whether an applicant will successfully overcome difficult challenges.
A variety of streamlined online-based tools are available for short-term selection decisions of internal and external talent. These should measure current or potential capabilities of a talent in as scientifically sound a manner as possible. Nowadays, there are sophisticated psychometric tools that measure hidden values and attitudes, i.e., they do not capture behavioral preferences based on superficial self-assessments, but deeper personality traits within the framework of personal profiling. At the end of the online test there should be a meaningful report that summarizes the patterns of perception, thinking and action, inner attitudes and reactions to problems.
Recognizing and promoting potential
Careers are hardly stringent these days. Constant changes and new job profiles shape the employee life cycle. In order to identify future leaders and promote the right minds, potential analyses or development centers are becoming an increasingly important personnel development tool. While selection procedures focus on the suitability of a candidate for a specific position, such perspective-oriented procedures focus on the potential of a talent.
Potential describes the discrepancy between current competencies and the possibility of developing certain competencies with targeted support. Potential analyses not only measure long-term basic skills such as emotional, cognitive and social competencies. They also capture stable parameters such as motives, values, orientations, character traits and affinities, some of which were genetically passed on or anchored in childhood and are highly informative with regard to long-term development potential.
The scientifically best founded model of the Big Five assumes that personalities can be described by a mixture of five factors: Openness, Conscientiousness, Extraversion, Agreeableness (Cooperativeness) and Neuroticism (Emotional Stability). From a precise analysis of the Big Five with correspondingly differentiated sub-facets, conclusions can be drawn as to whether, for example, a personality is suitable for certain roles (e.g. leadership) or fields of activity (e.g. conceptual tasks).
Particularly in internal career planning, potential analyses can be an important tool for eliminating risks: for example, promoting employees who currently have certain competencies but little potential for more advanced areas of responsibility. Or overlooking those who, while currently below their potential, have great potential and would flourish in other roles.
Conclusion and outlook
In the wake of digital transformation, job roles are changing in dynamic ways. Teams are working together in increasingly agile structures. In a flexible working world, potentials are gaining importance as a new constant. They describe the ability and motivation to adapt to new roles and accept challenges. Modern personnel diagnostics is an excellent means of identifying talent, recording the competencies and potential of candidates, and safeguarding personnel decisions. The more the interests, motives and values of external candidates and internal talent match those of the company, the more they will contribute and the more successful both companies and people will be in the market.
With this contribution in the e-book “GmbH-Geschäftsführung 2021” Michael Kühner makes an important contribution to the discussion of a modern and personnel diagnostics for GmbH managing directors. In this issue, you can expect 48 practical articles to help you make quick and sound decisions in your day-to-day business.