Sunday, April 3, 2011

An Introduction to Assessment Centers

A reader asked me to provide a primer on assessment centers. While I’ve written a lot of posts on the topics of leadership potential, assessments, and selection interviewing, I’ve never addressed the topic of assessment centers – so thanks Rebecca - good idea!

What is an “assessment center”?

When I first heard about assessment centers for management selection, I pictured this big CIA-like campus where a potential management hire or promotion was sent to be tested, poked, prodded, and studied to determine how well they could perform. I imagined scientists in white coats, with clipboards and stopwatches, running stressed-out candidates through an exhausting gauntlet of drills until they passed out.

Sounds pretty silly, right? Well, when I actually visited and participated in my first management assessment center, that’s pretty much what happened. Except it wasn’t a big campus…just a plain office building in New York City. No white coats – the assessors wore suits. It took a day and a half….I was tested, timed, interviewed, and yes, stressed out and exhausted by the time it was over.

An assessment center is basically a series of tests, interviews, simulations, and exercises designed to predict how well a candidate will perform in a specific role. For you sports fans, think of the NFL Combine, used to assess collage players to help teams decide who to pick for the draft.

Is a center really a place or is it a thing?

A little of both. A “center” can indeed be a place where you send candidates to – run by companies who specialize in assessment methodology. Or, you can have an “in-house” assessment center, using your own trained managers or HR staff, with the assistance of an outside firm. Some companies are even offering “virtual” assessment centers, as a way to save time and money. Everything is done online with the help of technology like Skype and video-based behavioral simulations.

Who does this stuff?

There are a lot of companies that will sell you assessment center services. The ones I’m most familiar with and can recommend are Development Dimensions International, PDI Ninth House, Korn Ferry/Lominger, Right Management, and Hay Group.

One of the things to watch out for is potential conflict of interest and bias when shopping for an assessment center provider. For example, a search firm that offer assessment center-like services might be biased to come in and show you that your managers are all morons so they can come in and find you new ones. Or a training provider might want to again show you your managers lack skills so they can sell you training programs. I’m not saying they’ll all do this – the one’s I’ve recommended seem to be able to remain objective – but just be aware of it.

How expensive is it?

Unfortunately, very. This is the number one reason why many companies don’t use them and you may have never heard of them. Chances are your company didn’t use one when they hired you. (-:

Of course, prices will vary by provider, the type of position you are assessing for, and the complexity of the methodology, but for a senior level executive hire expect to pay anywhere from $8,000 to $20,000 per candidate. In-house centers and group assessments can save money, but it’s still a big investment in time.

Do they work? And are they worth it?

Yes, I believe they do. A well designed, valid and reliable assessment center can usually predict potential success in a role and minimize the chances of making a bad hiring decision. I’ve talked to enough providers, peer practitioners, reviewed the research, and have worked in companies that use them to be convinced of this.

Assessment centers have other side benefits too. Once a candidate is assessed, if hired, they can get valuable development feedback. If you train your managers and HR staff to participate in a center, they get better at assessment and selection. Finally, most candidates come away impressed with a company’s commitment to its hiring practices and perceive the process as more fair and unbiased.

However, “are they worth it” is a trickier question to answer. I’d say it depends on the importance of the position. For a C-level executive hiring decision, where a selection mistake can cost a company millions of dollars, maybe even billions, spending 12-20 grand to make a better decision sure makes sense to me.

For most other positions, I’m not so sure. There are far less expensive options that many companies might not be using that will get you a better ROI. For a management hire, I’d recommend:

1. A well designed internal development and succession planning system. By carefully grooming and observing your own pool of internal candidates, you won’t need to rely on external assessments and experts. Besides, external hires are also usually more expensive and riskier than an internal promotion.

2. A rigorous interviewing methodology. While some prefer the old behavioral based interviewing method, I love the Topgrading interviewing and selection method. Either way is far better than the seat-of-the-pants method most managers use (i.e., “what would your mother say are your greatest strengths and weaknesses?”).

3. Getting multiple perspectives, references, and background checks. The more data the better. Using an interview team, or selection committee, will help overcome your own biases and improve the accuracy.

4. Administer your own validated selection assessment tool. There are many, and they cost anywhere’s from $50-500. A couple that I've used and would recommend are Hogan and Caliper, but there are hundreds. You can test for personality, values (motivation), skills, and intelligence.

5. Use a competent, trusted search consultant. The best recruiters are so good at what they do, their own “sixth sense” is often more accurate than a roomful or Organizational Psychologists.

That’s my two cents on assessment centers. However, I’m certainly no expert, and my experience is limited. I’m not a professional recruiter, just a developer. How about the rest of you? What are your thoughts on assessment centers?

7 comments:

Mike Zuehlsdorff said...

I think the assessment center is a good idea, but way to expensive. The big question is it worth it in the long run? Do the employees tend to stay with the company long enough to recoup the cost? I don't think it is worth it now days, since so many employees switch companies so often.

davidburkus said...

I was loving this post until you brought up Topgrading. Still, it's a great summary of assessment centers.

Mike Moore said...

This sounds like a very timely opportunity for many companies. making a complete assessment will go a long way to focusing on individual development and better management training. companies need to really look at this approach. Many missteps in management development could be avoided.

Ilango said...

Thanks Dan for sharing this article. I never come across such assessment centers for the companies I worked for. However, it sounds like a good investment in using the external assessment center to hire someone at the higher level in the organizational chain and keep an in-house center for the lower level to avoid additional expenses.

Dan McCarthy said...

Mike -
Thanks. Then again, would better assessment and selection help reduce turnover?

David -
Thanks. I know you're not a fan of the "weed out the bottom 10%" aspect of Topgrading. I was only refering to the interview process.

Mike -
Thanks!


Ilango -
Thanks!

Lynn Dessert said...

Dan, this is a nice overview of assessments.

I am not sure if you are aware of an article I have on Elephants at Work: The list of assessments grows 31 and counting... has close to 100 assessments all from readers.

This information provides the basis for a new website called AssessmentRatings.com. The site helps people to research and evaluate assessment products and find practitioners or consultants who can assist them in administering and interpreting them. I am in the process of contacting publishers to submit their information.

Anyone can rate or provide feedback on an assessment. If your favorite one is not listed, let me know and I can always move it up on the list to be published.
Dan – I welcome you to write a guest article for the blog when it debuts.

Dan McCarthy said...

Lynn -
This will be a great resource for buyers and sellers of assessments. Thanks for putting it together!