The rise of Talent Assessment Technology
Assessing employees against pre-defined measures for a said position is an age-old practice. The science of assessments, however, is relatively new. The science of assessment like most other management practices started in military applications and the first intelligence (IQ) test was developed by Robert Yerkes1 for army recruits during World War I.
While members of the army chain of command were unimpressed by the test results, the creators labeled it as a huge success. It soon became popular and led to an assessment boom. This early division of opinion seems to be valid even today almost 100 years later. While a lot of progress in terms of reliability and validity of such talent assessments have been made, the field remains shrouded in mystery. It struggles when compared with unscientific and intuitive methods like “managers judgment.”
Assessments are undergoing a sea of change with the introduction of new-age technologies like machine learning, artificial intelligence, robotic process automation, gamification, natural language processing, voice recognition, crowdsourcing, social media and big data analytics. These technology solutions are fundamentally questioning the manner and beliefs of talent assessments. Some early technology solutions which leverage these newer approaches are coming to the market and this seems to polarize the believers with nonbelievers further as the talent assessment industry continues to prove its linkage with business results and its own reliability and validity.
Talent assessment as a market is estimated to be USD 2 to 4 billion2 depending on whose estimate you are considering, but it is a noteworthy market segment within the burgeoning HR industry and a growing one at that. It is estimated to grow anywhere between 5-10% over next few years. This particular niche within the HR technology space hence makes for an interesting space, and we attempt to look at the forces shaping this space and also talk about some innovative solutions in this space.
The drivers of growth
When one looks at the reasons for growth in talent assessment solutions and its usage in business applications, one sees that quantity and quality of talent are the two key aspects that businesses of all sizes are looking to solve by using effective and efficient talent assessment solutions. The talent assessment solutions can broadly be classified into pre-hire and post-hire assessment solutions. Some industry estimates3 clearly indicate that 80% of the talent assessments are being done at the recruitment stage while only 20% are being done focusing on learning and development. This indicates that companies across industries and sizes are using pre-hire assessments primarily to identify the right “fit” talent for their purposes. The definition of this “fit” varies from company to company, and there is lies the challenge of assessment solutions. The ideal assessment solution has to strike a balance between its user-friendliness and ensuring the user is engaged through the assessment process while also ensuring that the results of such assessment process correlate closely with on ground performance, thus being able to justify the investment in the assessment solutions. Many times, however, companies are looking to use the assessment frameworks as rejection tools than selection tools. The tool still has to prove that it is free from any bias in performing its duties and many organized players in this space primarily focus on this aspect in their efforts to get a foothold in the industry.
With sourcing and recruiting driving majority of the growth for most HR technology players, assessment frameworks are more likely to be bundled in the entire sourcing model. The combination of ability, culture and other types of assessments combined with the power of social, local, mobile and AI are likely to fundamentally change how companies look at the challenge of sourcing right talent and assessing its “fit” with the role and the organization.
With more and more companies focusing on analytics to drive their talent decisions, assessments are likely to find a business case as they are likely to give unbiased and consistent data about the hiring process, especially in a geographically diverse business. Many talent assessment solution providers already offer data analytics as a service where they primarily look to identify the correlation between the assessment data and other parameters of the individual including the performance data. This focus on analytics-driven decision making with an objective of creating a predictable model will only increase use of assessments in various industries and businesses.
The inherent global nature of this business makes it an attractive value proposition for any entrepreneur and business investing in assessment technologies. With English being a universal language of business, once a particular assessment solution is created for a particular market it can be adapted to work in other markets with some minor changes and modifications. Especially in psychometric assessments; country-specific norms and variety of data available from previous research efforts provides a rich fertile ground for further assessments efforts to quickly take shape and be effective.
While many talent assessment solutions have typically focused on profiling or assessing the individual, profiling or assessing the work context is equally important. And some solution providers have made some progress in this area; however, it is still behind in terms of the ubiquitousness and productization of such solutions. This represents a huge opportunity for growth where instead of job descriptions companies can directly create an assessment ready job context which helps them determine the “fit” of candidates applying for the position based on various scientifically analyzed parameters which go beyond just keyword searches.
The HR Tech Market Landscape published earlier this year identifies close to 50 different companies in this particular niche, and we believe this is only going to grow in coming years. This space has a long history of acquisitions, and we believe more consolidation within the talent acquisition solution providers is likely to accelerate this process. If past behavior of HR service and HR technology companies is any indication, talent assessment as a niche will continue to grow and consolidate in the near future. To make that case here are some examples of past acquisitions in this space.
- Aon Hewitt’s acquisition of Co-Cubes and Cut-e
- CEB’s acquisition of SHL and IBM’s acquisition of Kenexa and
- PeopleStrong’s purchase of Wheebox
All the above acquisitions indicate great potential for this particular niche. Now, let’s look at some of the existing and exciting solutions in this space
While looking at this specific niche, we have to use peculiar criteria to clearly identify potential solutions which have the necessary long-range focus. While the use of latest technologies is critical, it has to be combined with ensuring the reliability and validity of the assessments is maintained at acceptable industry standards while providing excellent candidate experience. The talent assessment solution providers need to do a balancing act to create a winning solution which businesses world over would be willing to use to drive business results.
HireVue is one of the first few companies which created a platform for video interviewing, and claim to analyze data collected during each video interview to help companies ascertain the right “fit.” The company uses AI and Industrial and organizational psychology knowledge to assess multiple verbal and nonverbal cues captured via video interviewing. The platform is considered an innovator for making a complicated theoretical process easily accessible via a medium that most people are now comfortable using in their personal and professional life. While the company does not offer any insight on its reliability and validity studies nor does it offer any insight on any correlation studies done to ascertain the effectiveness of the video assessment platform, the solution is definitely proving useful for many organizations across the world and many similar products have now come to the market. The company does list creating long-term value via crafting valid assessments as part of its services on their website but does not provide any specific data about the same.
Talview provides a comprehensive solution anchored around assessments. The company seems to understand the problem of different companies using different types of assessments for different roles. Thus it aims to provide all such assessment types under one roof and provide a uniform view of the candidate via the platform. With features like candidate profile enrichment, it uses the power of social media to provide updated information about the candidate beyond what is mentioned on the resume. Its assessment types include simulations, video interviewing, and other skill assessments. The product features like gamification, behavioral insights, talent insights and joining probability prediction are definitely value-added tools in the hands of the hiring manager and HR alike. The company claims to use many of the current technologies like machine learning, data science, and psycholinguistics amongst others. While we see some evidence of client case studies in specific business situations present on the company website, during the writing of this article, there was no specific and valid information available on their website.
With 60% of the staff having Ph.D. qualification, this is one talent assessment company that’s has a solid background in theories of assessment. The solution combines the insights gained over the years in neuroscience research to build DNA of cognitive and emotional functioning. It then compares this data with actual on job performance to determine unique algorithms based on this data, which when used for hiring have a higher potential for success. The company claims to use AI and ML to ensure candidates are matched to the right job irrespective of what job they applied for and also claims that the algorithms are dynamic and change based on newer performance data. This solution is also one of the few new technology-driven solutions that clearly states that they are compliant with most industry standard regulations applicable to talent assessment making it a very unique and innovative offering in this space.
This company uses the power of the network to help you create an interview process which is customized yet built for your purpose. The company provides you with a library of interview scripts and on job simulations created by experts to create your unique interview process. The candidates then go through the defined interview process on the platform and you view the results to decide on what you would do with the best candidates. The platform automates tasks such as informing candidate status of their application once they complete a particular step thus ensuring hiring manager and the recruiter can focus on specific tasks of identifying the best-fit candidate. While this approach is very simple and innovative as it uses collective wisdom, it still does not protect the organization from bias and other challenges of interview process which is critical in any talent assessment solution. The process also does not offer any analytics on which job simulations are more effective in predicting actual performance or any other analytics based on larger data set available to the platform.
The talent assessment space is ripe for action and while there are players who are using newer and innovative technology solutions, the market is now getting ready for a comprehensive solution which offers many of these benefits under one platform. For that to happen, talent acquisition technology solution providers will look to collaborate and create pre-built solutions that offer an end-to-end candidate experience while ensuring the business and HR professionals can derive the value and ROI they look for from the talent acquisition technology stack in general and talent assessment technologies in particular. Like in many other categories within HR Tech, this one particular niche is an exciting niche and we expect to see a lot of investment in this space as it can allow for the creation of unique IP based solutions in the talent acquisition space. Within the talent acquisition technology stack, this is the only place where technology companies can look to create some product IP while ensuring that other parts of the process digitization are taken care of.
- Yerkes’ Army Intelligence Tests
- Rocket-Hire Talent Assessment Market Overview
- Complete Talent Assessment Study 2018
Other Recommended Readings:
- The HR Industry Size 40,000 Crores - People Matters HR Industry Study
- The Global Assessment Barometer 2016