The cut-e Assessment Barometer 2012/13 The Global Survey of Psychometric Assessment Usage

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1 The cut-e Assessment Barometer 2012/13 The Global Survey of Psychometric Assessment Usage cute-e Group Hamburg 2013 All rights reserved. The data and findings in this paper may be used freely on condition that all use bears clear attribution of the data and findings to the cut-e Assessment Barometer 2012/13 and cites cut-e and this report appropriately wherever the data is referred to.

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3 The cut-e Assessment Barometer 2012/13 The European Survey on Psychometric Assessment Usage Introduction Summary of key issues, questions and trends 2012/13 Part 1: Trends, priorities and benefits Trends and priorities in HR by market maturity by country by company size Expected benefits from psychometric assessment by market maturity by country by company size Part 2: Current use of psychometrics Use of psychometric assessment in organisations by market maturity by country by company size Types of psychometrics currently used in organisations by market maturity by country by company size Versions of psychometric assessment currently used in organisations by market maturity by country by company size Current use of psychometric assessment in the employee life cycle by market maturity by country by company size Current use of psychometric assessment for different levels by market maturity by country by company size Part 3: Why isn t psychometric assessment used more widely? Why isn t psychometric assessment used more widely? by users and non-users by market maturity by country by company size AND users / non-users Part 4: Requirements for psychometric suppliers and tools What companies consider when selecting a supplier by market maturity by country by users / non-users by company size AND users / non-users Most important features for tools by market maturity by country by users / non-users by company size AND users / non-users What else should be assessed? Part 5: Statistics and methodology and participant statistics APPENDICES Part 6: Our partners for the cut-e Assessment Barometer Page 3 of 53

4 The cut-e Assessment Barometer 2012/13 Part 1: Trends, priorities and benefits Introduction Dear Reader The last time we undertook this survey was in 2010/11, a time of considerable economic turmoil, with first signs of recovery. But then reality showed that recessions and crisis would drag on much longer. Currently, again, we are seeing first indications of economic recovery but only time will tell which way the economies are really heading. It is under these conditions that the data for this report was collected during the second half of We can see how companies are using psychometric assessment to gain competitive advantage in these times. The aim of cut-e Assessment Barometer is to monitor the changing deployment of psychometric assessment, and the consequences this has for improved recruitment and retention rates within the different countries. cut-e is at the forefront of innovative uses of psychometric assessment and is pioneering new technologies and ways of increasing certainty in HR decisions. We wanted to know what trends there are and how they change over time. We monitor this on a two-year cycle. In the last report we focused on Europe. In this report 2431 participants took part this was more than double the number of respondents in the last report. We are able to analyse and report on trends and usage of psychometrics in 15 different countries. Additionally, we have analysed the data this time according to market maturity and have some surprising findings. This overall report focuses on key differences and similarities from the data. A deeper look at country specifics comparing local with previous and international data will be available as country-specific and issue-related chapters follow. Make sure you register to get the updates as they are published over the coming months: Thanks to all respondents for taking the time to complete this survey. Particular thanks to our cooperation partners, listed at the end of this report, for helping to generate all the respondents to allow us to evaluate. Andreas Lohff / Dr Achim Preuss Founders and Managing Directors of the cut-e Group Page 4 of 53

5 Summary of key issues, questions and trends 2012/13 Globally, recruiting against competencies is becoming more important than ever. Big data and Talent Analytics have become a hot topic. While this is welcome as it enhances the impact of psychometric data on business performance, it also requires careful methodical and ethical reflection. Mature markets show usage of close to 100 the question is more what to assess rather than whether to assess. Behaviour, opinions and challenges are more similar according to company size than country. Companies want more proof of professionalism when choosing a supplier. There is a clear move towards online assessment in all countries. Size of company seems to influence behaviour and perceived challenges more than market maturity or country differences. New trend: increased use of psychometric assessment in development. Are companies growing their own talent more? HR decision-makers don t know the full range of tools available. Page 5 of 53

6 The cut-e Assessment Barometer 2012/13 Part 1: Trends, priorities and benefits Part 1: Trends, priorities and benefits Trends and priorities in HR The number of respondents who agree that selection decisions are based on competencies as opposed to only on knowledge and experience is up from the last report by 7. Recruiting against competencies is still the most important factor and is becoming even more important. Is the new focus on development a trend: grow your own talent to combat the shortage of talent? Rated the least was the statement that demographic changes are an increasing challenge, which was rated 2 less important than in the last report. Increasing planning horizons for development and retention was rated 9 more important compared to the last report. That talent shortage is impacting HR work also seems to have become more of an issue by 4. Country versus company size Throughout this report we will see that similarities of behaviour are often more related to company size rather than which country respondents are in. Question asked (Q4.) Which of the following statements is TRUE for your business? (Multiple answers possible, 2013 included N=2039) 2012/ /11 Change Selection decisions are based on competencies as opposed to only on knowledge and experience. Planning horizon for development and retention of key staff is increasing é é +9 Shortage of talent is increasingly impacting HR work é +4 We recruit to consider diversity ê -4 We are moving towards defining non-managerial career paths in the context of flatter hierarchies é +4 We are sourcing talent in new ways / from new geographies é +3 Demographic changes (e.g. aging workforce) are an increasing challenge ê -2 Page 6 of 53

7 Getting Talent Analytics from Big Data in HR Dr. Achim Preuss, Founder and Managing Director and responsible for product innovation and development within the cut-e Group, explains one way the shortage of talent could impact HR work relating to Big Data. With the availability of Big Data, that is the huge amounts of data about individuals ranging from information about their habits, buying patterns, history to both private and professional, there is some temptation for companies to use this data perhaps even unethically or illegally in recruitment and selection decisions. So what is ethical and legal? In Europe we are strongly governed by data protection laws which cut-e takes very seriously. We only use the data, which applicants have specifically allowed us to use. Within, and perhaps due to, these constraints we are seeing a trend towards much smarter solutions. More specific questions and data needs are being formulated relating to the company, the job or the individual applicant. Everything we do at cut-e is based on data, statistics, norm groups, validity studies, helping companies identify what the critical success factors are in terms of personality and ability. And also, what doesn t matter and therefore could widen the pool for potential talent helping companies achieve diversity targets and cope with demographic changes. Data is not linear We have many years of experience in crunching data collected from applicants, with their permission. We see several things: Relations in psychometric data sets are typically not linear: you can have TOO much of something. For example, for sales profiles a certain degree of detail consciousness is very helpful but people with too much focus on detail tend not to be successful in sales roles. Analysing data to recognise important but nonlinear patterns requires specific methods and experience. Asking the right questions, using the right methods and combining this to give sensible, ethical and legal answers is the challenge facing companies right now. Trends and priorities in HR by market maturity Looking at the data according to market maturity, the area of biggest difference is how the importance of demographic changes is rated. Intermediate maturity markets rated this issue the highest, 22 higher than developing countries. The move towards non-managerial career paths is rated similarly by all markets. Market maturity Demographic changes Nonmanagerial career paths Mature Intermediate Developing Min / max difference 22 6 Page 7 of 53

8 The cut-e Assessment Barometer 2012/13 Part 1: Trends, priorities and benefits Trends and priorities in HR by country Slovakia and Czech Republic put the biggest focus and priority on selecting using competencies. In comparison, Spain, Netherlands and USA rate this point less than half but it is nevertheless rated the most in comparison to other trends they see. Andreas Lohff, Co-Founder of the cut-e Group and responsible for the cut-e Partner Network, explains: This focus on professional HR practices is what we saw in the last report and expect to see in countries with developing market maturity: Our colleagues in these markets are educating and convincing about the merits of competency-based HR practices. In comparison the more mature markets are focusing on how to improve building on what is already accepted practice. The least difference between the countries is in developing non-managerial career paths, which the Norwegians rated the highest. Internationally this is rated fifth out of seven points. Question asked (Q4.) Which of the following statements is TRUE for your business? (Multiple answers possible, 2013 included N=2039) Results showing responses with the maximum and minimum country differences, full responses in appendix 1 Min Max International 2012/13 International 2010/ Slovakia Spain 41 Malaysia 15 Norway Selection decisions based on competencies Moving towards defining non-managerial career paths Trends and priorities in HR by company size Priorities are similar to the global trends. Larger companies tend to place more emphasis on all trends than smaller ones but the sequence of priorities remains the same. Question asked (Q4.) Which of the following statements is TRUE for your business? (Multiple answers possible, 2013 included N=2039) Shows most and least rated statements Full results in appendix 2 > < 1000 Selection decisions are based on competencies as opposed to only on knowledge and experience. Demographic changes (e.g. aging workforce) are an increasing challenge Page 8 of 53

9 Expected benefits from psychometric assessment Companies clearly expect the quality of their HR decisions to improve through the use of psychometric assessment. Particularly in terms of decisions being more reliable and thus Stable trend: Making more reliable HR decisions is clearly rated as the number one advantage second time round. reducing the risk of making poor decisions. Predicting performance, saving time and making assessments fairer and defensible, and therefore transparent decisions are also rated high. Saving time and money were not rated as a top priority. This is encouraging as it suggests that HR decision-makers are focusing more on the quality of the instruments than the cost. Interestingly the easy interface to existing HR systems was rated relatively unimportant. Dr Preuss offers the following explanation: We see this repeatedly with our clients: they just want it to work. And expect that systems can seamlessly pass and exchange relevant information in a secure and safe way. Any supplier who cannot guarantee that isn t going to be on the market long. The results from this year s survey follow the same ranking as the 2010/11 findings although the most important benefits seem to have become even more important. It seems that the expected benefits across the world are the same. Question asked (Q5.) What benefits do you expect from the use of psychometric assessment? (Multiple answers possible, 2013 included N=1962) 2012/ /11 Change More reliable / less risky decisions é +5 Predict performance é +3 Fairer decisions é +6 Save time Defendable decisions é +6 Save money é +1 Faster decisions é +1 Easy interface to existing HR systems é +3 None of the above 3 4 ê -1 Other, please state: Page 9 of 53

10 The cut-e Assessment Barometer 2012/13 Part 1: Trends, priorities and benefits Expected benefits: Free text answers In addition to the predetermined answers, there were four areas respondents see as being additional benefits to the use of psychometric assessment: To provide additional interview to support the further decision-making process in terms of second interview or promotion decisions. Diversity and fairness in decision-making in terms of recruitment. Some companies felt that an additional benefit is that psychometrics allows applicants from non-traditional backgrounds nevertheless to shine through a recruitment process. There was a new, clear focus on development use: to use the information gained in the assessment to set up development activities from the beginning of someone s career path. The last point made by several respondents was to increase the professionalism of HR by adding consistency to HR language and a basis of comparison across business units, jobs, even countries. Talent Analytics from Big Data at career outset Dr Preuss gives an example how Talent Analytics can be used in the hiring process: Collecting a load of psychometric data during the selection and hiring process gives companies the opportunity to eliminate risk later on but you have to know what to look for and how to use it. Crunching data to enable risk mitigation plans after the hire can take several forms. An example: our client, an IT solutions company (Dell), is looking for IT sales professionals in an increasingly competitive and tight market. Based on the data analysis they are able to ignore selection criteria previously thought to have been important but which actually proved not to be related to sales success, e.g. degree. And by doing so, they have widened the talent pool. Another initiative based on Talent Analytics to ensure success: a process by which any potential hire with risk areas in the selection process is only permitted to be hired if there is a full development plan in place prior to start. Expected benefits by market maturity The biggest differences between the markets according to maturity were when it came to rating the benefits: predicting performance and defendable decisions. Predicting performance is rated important in mature markets 31 more than in intermediate countries and only 14 more than in developing countries. When it comes to defendable decisions the difference between the lowest (developing countries) and the highest (intermediate markets) is 27. The benefit where maturity makes the least difference was faster decisions. Here there is difference of only 2. Market maturity Predict performance Defendable decisions Faster decisions Mature Intermediate Developing Min / max difference Page 10 of 53

11 Why do markets with intermediate maturity behave differently? The intermediate maturity markets are made up mainly of Germany and France. These two markets have very formalised education and qualification systems. In Germany, certificates and diplomas in vocational but also in higher education are often specific to an industry as well as a discipline. So as long as you avoid real selection mistakes, you can be sure to get at least average performance on a technical level. This attitude of many companies in France and Germany has, however, negative influences in terms of flexibility, employability and, of course, maximising performance. Expected benefits by country Norwegian and Swedish HR professionals expect more reliability in their HR decision-making through the use of psychometric assessment than other countries. Romania gives more reliable decisions the lowest importance in comparison to the other countries. Predicting performance, fairer decisions and saving time are rated more important than reliable decisions in Romania. Mr Lohff comments: In Norway and Sweden we have the highest quality certification standards for psychometric tools and suppliers. DNV, the Norwegian and international quality assurance company, checks and accredits psychometric instruments. Swedish and Norwegian users expect this accreditation and understand terms such as reliability and validity in both theoretical and practical terms. Question asked (Q5.) What benefits do you expect from the use of psychometric assessment? (Multiple answers possible, 2013 included N=1962) Results showing responses with the maximum and minimum country differences, full responses in appendix 1 Min Max International 2012/13 International 2010/ Slovakia France 15 UK Russia Faster decisions Fairer decisions Page 11 of 53

12 The cut-e Assessment Barometer 2012/13 Part 1: Trends, priorities and benefits Expected benefits by company size No matter what company size, the order of expected benefits according to importance remains the same as the international and market maturity pattern. Top of the list of expected benefits, by a long way, is taking the risk out of decisions. Right at the bottom of the list, but nevertheless with nearly a quarter of respondents finding it important, is the easy interface to existing HR systems. This suggests that although interfaces are becoming more standard and therefore smoother, HR decision-makers are not yet taking it as a given. The smaller the company, the less the benefits are rated but this trend holds for all the listed benefits. Question asked (Q5.) What benefits do you expect from the use of psychometric assessment? (Multiple answers possible, 2013 included N=1962) Shows most and least rated statements, full results in appendix 2 > < 1000 More reliable / less risky decisions Easy interface to existing HR systems Page 12 of 53

13 The cut-e Assessment Barometer 2012/13 Part 2: Current use of psychometrics Part 2: Current use of psychometrics Use of psychometric assessment in organisations Internationally, over 60 of the respondents currently use some form of psychometric assessment. This percentage was the same in the last report so there has been no increase globally. Yet the country profiles show some clear changes since the last report. Use of psychometric assessment by market maturity If we look at the data by market maturity, we see that the usage within mature markets is 22 higher than in developing countries. The more mature a market, the higher the usage of psychometric assessment. Market maturity Users Non-users Mature Intermediate Developing Min / max difference Use of psychometric assessment by country Drilling further down to a country level, we see there are individual differences. International usage has stayed constant, yet in comparison to the last report, usage particularly in UK, Ireland and Sweden seems to have increased significantly. Netherlands is leading the usage table followed by UK and Ireland, Sweden and Norway. In Romania usage is almost half of the international figure. Page 13 of 53

14 The cut-e Assessment Barometer 2012/13 Part 2: Current use of psychometrics Question asked (Q6.) Do you currently use any form of psychometric assessment in your organisation? (2013 included N=1856) 2012/13 Users 2010/11 Users Change International total Netherlands UK (UK / Ireland figure used for 2010/2011) é +14 Sweden é +11 Ireland (UK / Ireland figure used for 2010/2011) é +10 Norway é +2 Spain ê -6 Germany (DACH figure used for 2010/11) é +6 Malaysia France USA Russia Slovakia Czech Republic é +1 Portugal Romania Use of psychometric assessment by company size Company size influences how widely psychometric assessment is used in companies: the larger the company, the more widespread the usage. Question asked (Q6.) Do you currently use any form of psychometric assessment in your organisation? (2013 included N=1856) > < 1000 Users Non-users Page 14 of 53

15 Types of psychometrics currently used in organisations The respondents who indicated that they use some form of psychometric assessment were asked more details about their usage. Personality questionnaires still the most widely used psychometric instrument, followed closely by competency-based interviews. Internationally, the instrument most widely used is the personality questionnaire, but used nearly on a par with competency-based interviews and followed hotly by use of ability tests and individual assessment. Comparing to the last report, the use of the top three instruments has risen by 7 or 8 for all. Similar to the last report, value questionnaires, interest inventories as well as development centres and management audits are at the bottom of the list. Why do you think value questionnaires and interest inventories are less widely used? Statement from Andreas Lohff, Founder and Managing Director of the cut-e Group: Questionnaires measuring values and motives as well as development centres and management audits are used at a more senior level in the organisation. Development centres are often used in order to identify the talent for the next career step or to filter applications for specific promotions. Management audits are used on senior teams to get a better understanding of key strengths and development points of individuals as well as the management team as a whole. This means that the number of people to whom these instruments apply is relatively limited. Question asked (Q7.) What type of psychometric assessment do you currently use? (Multiple answers possible, 2013 included N=1168) 2012/ /11 Change Personality questionnaires é +8 Competency-based interviews é +7 Ability tests é +8 Individual assessment ê -1 Assessment centres é degree feedback é +1 Motivation questionnaires Development centres é +1 Value questionnaires Interest inventories 11 8 é +3 Management audit 9 11 ê -2 Other, please state: Page 15 of 53

16 The cut-e Assessment Barometer 2012/13 Part 2: Current use of psychometrics Types of psychometric assessment used: free text answers Additionally, individual answers mentioned simulation exercises, situational judgement questionnaires, culture assessments, emotional intelligence measures and work samples. Types of psychometric assessment used by market maturity The biggest differences are in the usage of personality questionnaires with usage in mature markets being 42 and 43 more than in intermediate and developing markets respectively. A similar pattern is with the use of ability tests: in mature markets usage is 40 more than in developing countries but only 2 behind intermediate mature markets. Usage of interest inventories, however, is at a similarly low rate, no matter how mature the market. Market maturity Personality questionnaires Ability tests Interest inventories Mature Intermediate Developing Min / max difference Types of psychometric assessment used by country Norway, Sweden, UK and Ireland lead in the usage of personality questionnaires as well as ability tests internationally. Romania, Spain and Germany use personality questionnaires the least. And Romania and France use ability tests the least. Norway, Sweden, UK and Ireland lead in usage of nearly all types of psychometric assessment. Romania consistently has the lowest usage. Spain, UK and Malaysia have the highest use of individual assessments and the lowest is in Norway and Romania. UK, Ireland and Sweden lead the usage of competency-based interviews and these are least used in France and Romania. Malaysia has the lowest usage of nearly all types of psychometric assessment other than in individual assessment where Malaysia is near the top of the usage table. Amongst the mature markets there is an interesting difference: UK, Ireland, Sweden and Norway have the highest usage of the most common instruments whereas only Netherlands has high usage of interest inventories. Mature markets show usage of close to 100 so the question is more WHAT to assess rather than WHETHER to assess. Page 16 of 53

17 Question asked (Q7.) What type of psychometric assessment do you currently use? (Multiple answers possible, 2013 included N=1168) Results showing responses with the maximum and minimum country differences, full responses in appendix 1 Min Max International 2012/13 International 2010/ France, Romania 35 Ireland, UK Romania 43 Norway, Sweden Romania 3 Netherlands Romania 19 Sweden Romania 19 UK Competency-based interviews Personality questionnaires Interest inventories Ability tests Assessment centres Why do the Dutch like interest inventories whereas the other mature markets prefer other instruments? Dr Preuss offers an explanation: The assessment types used in most of the high maturity markets are those with proven predictive value and can be classed as effective and efficient types of assessment. They can be used to assess large numbers, filter those applicants with the best fit and reduce risk of bad decisions. These countries value efficiency of process. In the Netherlands we tend to see a slightly different behaviour a clear focus on interest inventories. This matches with the Dutch value placed on individuality. Also a very mature market, Dutch companies often are looking for candidates with the best fit in terms of interest basing long-term retention on cultural and interest fit. Types of psychometric assessment used by company size In general, the results show that the larger the company, the higher the usage. But companies large and small use personality questionnaires, competency-based interviews and individual assessments most frequently. Interest inventories are the least used in all company sizes. There are two exceptions to the patterns the larger the company, the higher the usage: in interest inventories and value questionnaires. In these areas usage is higher in smaller or medium-sized companies. Dr Preuss offers an explanation: As we saw previously, the larger the company the more importance they place on the assessment helping make decisions defendable. This tends to be less important for smaller companies. This is more difficult to prove with interest and values questions, therefore larger companies might use them less. Smaller companies are often very proud of a strong identity and personality of the company and often use this as a unique factor in their recruitment communication. Trying to achieve a closer fit could be the reason why we see a higher use of interest and values assessments in smaller companies. Page 17 of 53

18 The cut-e Assessment Barometer 2012/13 Part 2: Current use of psychometrics Question asked (Q7.) What type of psychometric assessment do you currently use? (Multiple answers possible, 2013 included N=1168) Shows the three most and the three least rated statements, full results in appendix 2 > < 1000 Personality questionnaires Competency-based interviews Ability tests Value questionnaires Management audit Interest inventories Versions of psychometric assessment currently used in organisations 7 increase in usage of online assessment in the last 2 years. 83 of respondents either use pure online assessment or a mix of online and offline assessment. This is a rise of 7 compared to the last report. Respectively the use of only offline versions has fallen by 7. Question asked (Q8.) Which versions of psychometric assessment do you use? (Multiple answers possible, 2013 included N=1178) 2012/ /11 Change Online versions (Internet-based) é +3 Both offline and online versions é +4 Offline versions (paper-and-pencil or computer-based) ê -7 Page 18 of 53

19 Version of psychometric assessment used by market maturity In mature markets there are hardly any companies who solely use offline versions of assessments and clearly most of them have moved to pure online solutions. Intermediate markets have a higher usage of pure offline versions than developing markets; respectively, developing markets have a higher mixed usage that would suggest that they are moving towards more and more online. Whether the intermediate markets show the same movement remains to be seen. Mr Lohff comments: We are glad to see that this is a clear trend in all countries. In the developing countries we are educating people about the benefits of online assessment and they are taking it up enthusiastically. We expect this trend to continue for some time. In the intermediate countries we would expect a faster move onto online assessment: the technology has been proven, online access is available, we don t see any reasons why companies would not move to get the full benefits of the speed, immediacy and return on investment. Market maturity Offline versions Online versions Both offline and online versions Mature Intermediate Developing Page 19 of 53

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